Procurement and Inventory Analysis Series - Solutions

Solutions

Brace yourself. Here are some solutions we offer.

Creating good relationship with suppliers

Bakso Solo Bu Umi's Management need to rediscussed their relationship with supplier. They need to talk about professionalism and intimacy (just like in Godfather Movies). Professionalism is needed for creating a Standard Operating Procedure (SOP) and contract. While intimacy is important because after all, business is another form of human relationship. 

Choosing the right suppliers.

They should choose supplier that meet these requirements:

1. High quality meat.

2. Able to supply 100 - 130 kg a day for production

3. Supplier location shouldn't be more than 10 km from production center

4. Supplier able to supply at 7 to 9 pm to meet the production needs.

5. Quick response when more or less meat is needed.

6. Supplier could give stable price

7. Low price since we buy in big unit

8. Trust each other

9. Could give innovative ideas or solution if problem occur

Keeping Up Product Data that Requires by Supplier

We need a way to keep the data from Supplier. We also need to be able to manage daily procurement, inventory, raw product, and storing any other data accurately.

Refining Procurement Process

1. Procurement planner

Process to determine what item do we need, when do we need it, and how to get it. In this planning we should also include contract type, and get a picture of what kind of work need to be done.

2. Contract planning

Process that will determine raw material or item, evaluations, and SWOT Analysis (Strength, Weakness, Opportunity, Threat)

3. Response request from supplier

Process of gathering information, reaction, demand, and proposal from supplier.

4. Choosing supplier

Process for selecting supplier that has potential from Potential Supplier Analysis and Negotiation.

5. Alliance Contract

Formalization of alliance contract

6. Closing Contract

Evaluating Supplier Performance.

If a company and supplier has a good intimacy then we could easily evaluate Supplier's performance. We could evaluate supplier performance from many aspect. Such as service level, accuracy, punctuation, and meat quality. With that data we could objectively evaluate Supplier's performance.

And here are our solution toward raw materials procurements:

Inventory Cost & Cost for Finished Goods (Meatballs & Bakso)

Company will count maximal amount of finished good that can be held in  day. Since meat from company standard needs to be a meat that require no more than 24 hour after being sent by Suppliers. And company's standard toward Bakso is 3 to 12 hours after sent from suppliers  and need to be kept in 25 degree Celsius freezer. As you see the biggest problem is electricity bills from that big freezer.

Deterimining Service Level Towards Customer

Availability of product is a key toward good service level. Because of that, company needs to count the amount of product that will be distributed to every branch of restaurant and guarantee that the product will sold well. If somehow some product is not available, we still have an inventory to cover that. Fast response equals happy customer. 

In the next post, we're going to include our IT solutions.