undefined | unit 3 project resources and site planning

Unit - 3

Project Resources and Site Planning

Q1) What are the objectives of material management?

A1) To meet the primary objectives, the primary functions of the materials management are given as follows:

Materials Requirements Planning (MRP)

Planning of materials requirements in manufacturing is a necessary function in any organization, as inventory of materials involves about 60% of the total investment of the organization.

The profit earned depends on the utilization of these materials and reducing the inventory of the materials.

The latest technique used is called Just in Time (JIT) is referred practically to no inventory. However, in the present situations in any of the organization particularly manufacturing organization, it is not absolutely possible to keep no inventory of materials required for production.

The MRP is a technique used to plan the materials starting from the raw materials, finished parts, components, sub-assemblies and assemblies as per Bill of Materials (BOM) to procure or produce them to support a Master Production Schedule (MPS).

Purchasing

All the organizations need an efficient and economic purchasing and procurement of its various supplies of materials from the suppliers.

The function of purchasing can be stated as follows:

The requisition of material is necessary by proper authority to initiate its purchase.

To select proper supplier for the materials requisitioned, before placing an order.

To negotiate about the price of the material from the supplier and it will be purchased at the cheapest price.

The quality of material must be assured and should not be compromised with the cost of the material.

The material should be purchased of right quantity and right quality at proper time at the cheapest cost.

Inventories

The zero inventories are the ideal planning. There are three types of inventories.

Raw materials

Purchased goods

Finished parts and components

Inventory at different levels is necessary to make sure about the availability of all these types of materials and goods and their proper flow from one facility to another at different levels of production centers in a manufacturing concern.

Ascertaining and Maintaining the Flow and Supply of Materials

The distribution of materials requisitioned by the various production centers and other departments must be ascertained and the materials management department must maintain its flow and continuity of supply.

The management has to maintain continuity in production to meet this uncertainty in demand and control the situation by proper flow of materials supply and distribution at various production facilities and other departments as per changes in production quantity.

Quality Control of Materials

The quality of the product manufactured by the organization depends upon the quality of the materials used to manufacture that product. It is a very important and necessary function of materials management to purchase the right quality of materials.

The inspection, quality control, simplification, specification, and standardization are the activities which are to be followed for the measurement of quality of the materials.

Departmental Efficiency

The objective of this function is to ensure the efficiency of the system adopted. Management Information System (MIS) and feedback control at every stage of working must be adopted to control and make the management and employee work as efficiently as possible to achieve the best results.

There can be number of secondary functions.

Standardization and Simplification:

Standards define the quality, reduction in sizes and variety, interchangeability of parts and products. It ensures efficient utilization of materials and reduces wastages.

The objective of this function will be to produce standard product reducing the overall cost of the product.

2. Design and Development of the Product

The variety in product and functionality are the important factors to promote the sales of a product. The new techniques of designing a product using Computer Aided Design (CAD) has made possible to develop variety of products at faster rate.

3. Make and Buy Decisions

These types of decisions are the policy decisions of the management. The capacity of the organization and the various facility developed by the organization to manufacture various items is the main objective of every organization.

4. Coding and Classification of Materials

This is an important function of the materials management to help the production and purchasing department of every organization.

It uses its own methods of classification of materials used to manufacture the product or a company selling various goods.

ABC analysis is one of the simple and standard method used by most of the firms for classification and storing their variety of materials.

5. Forecasting and Planning Materials

Requirement’s planning is based on correct forecasting of sales and demand of the products in the market.

The market fluctuations are to be observed to control production of the organization. Forecast of future demand of sales sets the planning of materials supply.

Analytical methods are adopted for systematic forecasting and planning to procure the various materials required for production.

In case of fluctuating demands, there can be uncertainties in supply as well. This can be overcome by maintaining the proper quantity in inventory of short supply materials at proper time.

Q2) How are stores classified?

A2) Stores are classified basically in the following broad categories.

Functional stores – Functional stores are named based on the function of the materials stored

Examples are fuels store, chemicals store, tools store, raw materials store, spare parts store, equipment store, refractory store, electric store, explosives store, and finished goods store etc.

b. Physical stores – Physically stores can be centralized stores or decentralized stores. These stores are named based on the size and location of the store. Examples are central store, sub store, department store, site store, transit stores, receipt store, intermediate store, open yard store, and covered store etc.

c. Stores are also classified by naming them after the departments to which they serve.

Examples are construction stores, operation stores, rolling mill stores, blast furnace stores, and steel melting shop stores etc.

Advantages.

Centralized store can cater to a wider range of materials which is not possible in a smaller store. Hence user department is to look for the material of its need only at one place.

It contributes to the inventory control in the entire organization since the requirement of all the departments gets clubbed up.

It makes better control feasible.

It provides economy in storage space as materials when stored in larger quantities, occupy less specific space.

Large stores can be provided with better and modern handling facilities. The operation can also be automated.

Delivery at a single point decreases cost of delivery.

Disadvantages

If there are slippages or system not being well organized then there can be shortages of the materials which may results into unnecessary interruptions in production.

There may be necessity of additional internal documentation in the store.

The risks due to the fire and thefts are higher since the entire stock of the materials are concentrated at one place.

The variety of materials to be stored can be large and it can create complications in the systematic storage as well as in storage procedures

Q3) What are the functions of store?

A3) Functions of a store

Store personnel are responsible for carrying out the following functions.

Receipt of incoming materials

Supervision of unloading of materials and tallying of materials

Checking for damages or shortages and preparation of the report

Filling of ‘goods inward’, ‘day book’, or ‘daily collection’ register

Completion of vendors consignment note (challan)

Making arrangement for inspection and getting the inspection completed

Preparation of ‘goods receipt note’ (GRN)

Preparation of ‘goods rejection memo’ (in case of rejection of materials)

Sending of materials to the respective stores

Sending of the relevant documents to the respective departments

Ensuring all storage and material handling facilities are in proper working order

Ensuring good housekeeping and cleanliness in the storage space

Checking, counting and tallying of materials before issue

Making prompt entries in ‘Bin card’ or stock card

Ensuring correct documentation of material receipts and material issues

Ensuring safe and proper handling of materials so as not to damage them

Ensuring proper record keeping and correct accounting of materials

Ensuring regular stock verification

Q4) What is record keeping?

A4) One of the main parts of accounting is recordkeeping or bookkeeping. Recordkeeping is the process of recording transactions and events in an accounting system. Since the principles of accounting rely on accurate and thorough records, record keeping is the foundation accounting.

Accounting is used to identify events that need to be recorded, recording the transactions of these events, and communicating the effects of these transactions with people inside and outside of the company. As you can see, record keeping is only a small part of the broader definition of accounting.

Q5) How to record keeping using excel?

A5) Record Keeping using excel

Step 1: Start with a bookkeeping Excel sheet template.

The template is separated into three parts:

First, the chart of accounts is the bookkeeping Excel sheet that will include all of the accounts that make up your books. You can think of each account as a category. Every transaction you record needs to get sorted into one of these categories.

Next, the list of transactions will contain details of every business transaction you enter—the date, a description, the amount, and the account. Transactions may be divided into separate income and expense sheets, or all included in one big sheet.

Finally, the income statement sheet will be where the numbers from your list of transactions are copied over, either automatically or by hand. The income statement contains the calculations that summarize what you’ve spent and what you’ve earned, and also shows you your net income.

Step 2: Customize the chart of accounts within your template.

Customize the chart of accounts, the chart of accounts sheet will serve as your point of reference—reminding you how to categorize different transactions.

excel bookkeeping

As the figure displays, make a list of every type of expense or income your business uses, and create an account type for each. However, to keep your accounts in Excel, each account should be categorized as one of the following:

Income: Any account you use to track money coming into your business

Expense: Any account you use to track money leaving your business

Cost of goods sold (COGS): The money you spend creating the product you sell your customers or clients

Step 3: Customize the income statement sheet.

After customizing the chart of accounts, next work on customizing your income statement sheet. As shown in the figure enter the information from your chart of accounts making sure to include all accounts, but keeping them separated according to whether they’re income, expenses, or COGS.

excel bookkeeping

After editing the income statement Excel bookkeeping sheet, make sure to duplicate this sheet (if your template only has one). In order to generate monthly income statements, you’ll need separate sheets for each month. Make 12 copies of the original income statement, one for each month in the year—don’t forget to label each one and enter the date range in the appropriate cell.

excel bookkeeping

Step 4. Add a sheet for tracking invoices.

When you enter income from paid invoices into your transactions sheet, include the invoice number. By doing this, you can cross-reference it to avoid errors like forgetting to enter invoice payments, or entering the same payments twice. It’s much easier to cross-reference if you’ve got a separate sheet to track your invoices.

You can add a tab within your bookkeeping Excel document, or, once again, download an invoice tracking Excel template. If you download a template, you can copy and paste the contents into a new sheet within your master bookkeeping Excel document.

If you want to add an invoice tracking sheet, keep this sheet next to your transactions sheet within the Excel document—this will make it easier to check for reference.

Step 5. Add a sheet for projecting cash flow.

Just like the tracking invoice sheet, you can simply create a new sheet within your master document and paste a cash flow tracking template or, of course, make your own. Download Fundera’s cash flow template here.

Step 6. Save the file to a secure location on your computer.

After you’ve edited and added all of the different sheets within your master Excel bookkeeping document, save the file in a secure location on your computer or drive. Therefore, make sure the file is secure, yet accessible when you need it to perform your day-to-day bookkeeping tasks.

Q6) What is ERP?

A6) Enterprise resource planning (ERP) is a process used by companies to manage and integrate the important parts of their businesses.

Many ERP software applications are important to companies because they help them implement resource planning by integrating all of the processes needed to run their companies with a single system.

An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more.

Q7) What are the features of ERP?

A7) ERP software can integrate all of the processes needed to run a company.

ERP solutions have evolved over the years, to make typical web-based applications that users can access remotely.

ERP applications also allow the different departments to communicate and share information more easily with the rest of the company. It collects information about the activity and state of different divisions, making this information available to other parts, where it can be used productively.

ERP applications can help a corporation become more self-aware by linking information about the production, finance, distribution, and human resources together.

Because it connects different technologies used by each part of a business, an ERP application can eliminate costly duplicate and incompatible technology. The process often integrates accounts payable, stock control systems, order-monitoring systems, and customer databases into one system.

ERP offerings have evolved over the years from traditional software models that make use of physical client servers to cloud-based software that offers remote, web-based access.

Q8) What is ABC Cycle?

A8) ABC analysis is a system for inventory control used throughout materials and distribution management. It is also sometimes referred to as selective inventory control, or SIC.

ABC analysis can be put to use for a wide range of inventory items, such as manufactured products, components, spare parts, finished goods, unfinished goods or sub assemblies.

Therefore, ABC analysis is a system of categorization, using three classes, of which each class has a differing management control.

The first, A, is the category for items that are outstandingly important, or business critical.

The second, B, is the classification for items of average or middling importance.

Category C is the designation for relatively unimportant items.

As a basis for a control scheme, each class ought to be handled in a different way.

The Pareto Analysis, can be put to use with the ABC analysis for inventory management.

Under this rule, in terms of consumption, 80 percent of the value of inventory would be held in about 20 per cent of the items. By using this principle, categories B and C would make up the remaining 80 per cent of the items, perhaps B with 30 per cent and C with 50 percent.

However, in terms of their consumption value B and C would make up on 20 per cent of the value combined, with C the least, perhaps split at 15 per cent and 5 per cent respectively. The percentages will vary based on a distributor’s unique inventory control needs.

This means that ABC analysis conforms with the Pareto principle which states that items that account for a large proportion of the overall value are small in number and that items with a low overall value are high in number.

Q9) Explain delivery process.

A9)

After inspection by Central Receiving, the team will make delivery of materials to the requesting department as indicated in the purchase order record.

If the delivery is a Materials management supply order, the delivery is made within 24 hours of the order being received by Materials Management Inventory. Peak receiving periods may extend the delivery time unless special handling is required.

Upon delivery, the driver will obtain the signature of the individual accepting the materials for the requesting department. The number of cartons delivered should be verified against the delivery log before signature.

After the driver leaves, the requesting department should verify the contents of each carton against the purchase order. The driver will not be responsible for opening cartons, stocking shelves, installation or assembly of items received.

Shortages, overages, or incorrect merchandise received must be reported to Central Receiving immediately upon receipt.

Q10) What are the objectives of store manager?

A10) An efficient stores management has normally the following main objectives.

To ensure uninterrupted supply of materials without delay to various users of the organization.

To prevent overstocking and under stocking of the materials

To ensure safe handling of materials and prevent their damage.

To protect materials from pilferage, theft, fire and other risks

To minimize the cost of storage

To ensure proper and continuous control over the materials.

To ensure most effective utilization of available storage space

To optimize the efficiency of the personnel engaged in the store

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