Strategic Procurement Planning
This content covers strategic procurement planning, including models of inventory cost, principles of safety stock, and investment in suppliers. Learn about procurement needs, order management, distribution, and emergency response in supply chain management.
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Presentation Transcript
Procurement Planning WFP Logistics, We Deliver
Lesson Objectives By the end of this lesson, you will be able to: Describe the models of inventory cost and turnover 1 2 Describe the principles of safety and free stock Describe strategic procurement and investment in suppliers 3
Strategic Planning Process 1. Identify your requirements 2. Develop your Procurement Plan with reference to lessons learned 3. Coordinate your requirements with The Vision different GOVT departments to unify overall supply sources 4. Identify your opportunities & threats 5. Adopt your Procurement Plan
Procurement Planning Needs Identified Order Management Distribution Internal Users Central Warehouses Internal Users Emergency Response / Beneficiaries Emergency Response / Beneficiaries Procurement Sourcing Field Stock Warehouse / Hubs Replenishment Stock Replenishment
Strategic Planning Process Whether to procure How to procure What to procure How much to procure When to procure Taking into account: Distribution schedule & capacity Characteristics of the product Inventory management
Managing Numerous Supply Chains Inventories Across the Supply Chain Delivery Points Local Networks National Networks Regional Networks Customer 1 Frequent Customer 2 Infrequent Chopra & Meindl 2010: Ch. 10
What is happening in an Emergency Uncertainty of exact demand Push Pull strategy A lot of stocks are pushed into the operational area. Right or Wrong? In groups, define the pros and cons. 5 minutes to prioritize and discuss
What is happening in an Emergency Right or Wrong? Yes, but .. Tents request from Program: 10,000 Tents NOW Available Week 1 Week 2 Week 3 Planned Demand 10,000 Distribution 1,000 1,000 1,000 Received 5,000 air 5,000 air Available 4,000 8,000 7,000
Example: Haiti Emergency Shelter Tents request from Program: 10,000 Tents NOW Available Week 1 Week 2 Week 3 Planned Demand 10,000 Distribution 1,000 1,000 1,000 Received 5,000 air 5,000 air Available 4,000 8,000 7,000 Good planning Available Week 1 Week 2 Week 3 Planned Demand 1,000 1,000 1,000 Distribution 1,000 1,000 1,000 Received 4,000 air 0 3,000 sea Available 3,000 2,000 4,000
Inventory Management How inventory management is linked to your Procurement Planning Process 1. Free stock 2. Safety Stock 3. Emergency stock
Definition Free Stock Physical Stock on hand Stock on order from suppliers Free Stock Stock in Transit Stock allocated to consignments Stock reserved for special purposes
Inventory Management System Commercial sectors are using different methodologies such as: Minimum stock level Maximum stock level EOC (Economic Ordering Cost) EOQ (Economic Ordering Quantity) Not used in emergency situations except for medical items where minimum stock level system is used.
Scenario Exercise: Procurement Planning In Mewong, you are in charge of planning the procurement of the tents for the Southern province. Constraints The Government of Mewong ask you to keep always 2000 tents in stock in Negeri for possible new influx of IDPs Your distribution capacity (trucking and helicopters) is 10,000 tents per week Your actual stock in Negeri is 12,000 tents. No stock anywhere else. This stock has been donated by the government of Japan. So, no cost involved for you Cost calculation is up to Negeri warehouse. It does not include the last leg Assumption You may assume that when a consignment arrives to Negeri, it can be dispatched the same week.
Scenario Exercise: Procurement Planning Task: 1. Build your procurement plan in a cost efficient manner and tell us where you stand at week 8, using the tables you have in your hand out, and detailing your ordering and your dispatch plans. Prepare a group presentation to explain your results and your reasoning 2. 45 minutes to prepare/calculate 30 minutes per groups for presentation See your hand out for more details
Scenario Exercise: Procurement Planning Procurement Plan Order Qty Dispatch Qty Date Supplier Mode Cost Arrival Week 1 8,000 Ahmad Bros. (stock) Air 5,200,000 8,000 Week 2 Week 1 2,000 Canvas Tech (stock) Road 800,000 2,000 Week 2 Canvas & Tents (stock) Week 1 10,000 Rail & Road 5,000,000 10,000 Week 3 Week 1 30,000 Ahmad Bros. Sea 3,000,000 10,000 Week 5 3,000,000 10,000 Week 6 3,000,000 10,000 Week 7 10,000 Canvas & Tents Rail & Road 5,000,000 10,000 Week 4 Week 2 Week 3 5,000 Canvas & Tents Rail & Road 2,500,000 5,000 Week 5 Total 65,000 27,500,000 65,000
Scenario Exercise: Procurement Planning Distribution Plan Opening Stock in Negeri Closing Stock in Negeri Stock on Order / Transit Tents Dispatched Time Qty Recd Supplier Week 1 0 Stock 12,000 10,000 2,000 50,000 Canvas Tech (2000) Ahmad Bros. (8000) Week 2 10,000 2,000 10,000 2,000 50,000 Week 3 10,000 Canvas & Tents 2,000 10,000 2,000 45,000 Week 4 10,000 Canvas & Tents 2,000 10,000 2,000 35,000 Week 5 15,000 Ahmad Bros. 2,000 10,000 7,000 20,000 Week 6 10,000 Ahmad Bros. 7,000 10,000 7,000 10,000 Week 7 10,000 Ahmad Bros 7,000 10,000 7,000 - Week 8 0 Canvas & Tents 7,000 5,000 2,000 - Total 65,000 75,000
Recap Lesson Recap Lesson Questions: What are the key considerations for an efficient procurement plan? 1 What is the link between procurement planning and inventory management? 2
Questions WFP Logistics, We Deliver
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