Supply Chain- Material Management

Question 1

For what is Material management function responsible for?

Answer 1

Material management function is responsible for warehousing, inventory management, and operating Regional Centers in SLB

Question 2

What is the 2 main goals for Material Management?

Answer 2

• Reduce working capital
• Decrease stock outs.

Question 3

Describe Material Management (3 part discipline)

Answer 3

Materials Management is a three part discipline that

(1) Optimizes the flow of goods within a warehouse including the pick / count / putaway / receiving movements
(2) The streamlining of the transactions associated with those flows and
(3) the development of materials planning based on current and future demand requirements.

Question 4

What is the goal for Material Management?

Answer 4

It is to provide an unbroken chain of components for production to manufacture goods, on time for the customer base.

Question 5

What is the Major Challenge for Material Management?

Answer 5

The major challenge is maintaining a consistent flow of materials for productions.

Question 6

How and why does improved management of inventory affect Return on Investment?

Answer 6

The most critical aspect of management of inventory is setting up the proper upper & lower limits for each part that we want to keep in stock. Improper set-up of those limits will mean that either the inventory will have a very poor turnaround time (Costly since the parts are paid and just sitting there), or that we may find ourselves with no parts on the shelf for a critical job (again costly if that means that we need to miss a job due to this missing part, or pay extra fees for emergency after hours deliveries)

Question 7

What does RDC stand for?

Answer 7

Regional Distribution Centers

Question 8

What are the 3 key elements to an RDC?

Answer 8

• Inventory management
• Warehousing
• Freight management

Question 9

What is the goal for RDC?

Answer 9

RDCs achieve the goal of aggregating “demand signals” from the downstream GeoMarkets to pass a consolidated demand to the upstream product centers or 3^rd party suppliers.

Question 10

What else you can say about RDC?

Answer 10

Have segment-specific planners and are usually co-located with a logistics hub. Typically, the warehousing activity in RDCs is outsourced.

Question 11

What does VMI stand for?

Answer 11

Vendor Managed Inventory

Question 12

What is VMI?

Answer 12

It is a family of business models in which the buyer of a product (business) provides certain information to a vendor (supply chain) supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material.

Question 13

Where does SLB use VMI?

Answer 13

• Maintenance
• Chemicals
• PPE

Question 14

What is DSOH stand for?

Answer 14

Day stock on hand/ inventory days

Question 15

What is DSOH?

Answer 15

Days Stock on Hand is a calculation used to determine the inventory stock coverage period (in days), by item or total store value basis.

DSOH is used for M&S, inventory days are used for financial inventory.

Question 16

How DSOH is calculated?

Answer 16

Question 17

How often inventory days are to be monitored and reported?

Answer 17

Monthly, by comparing the target inventory days with the stores’ current inventory days.

Question 18

What is meaning of excess inventory?

Answer 18

On-hand inventory items, which are above the maximum stocking level, quantity, or value above 12 month’s usage, and are considered slow moving stock.

Question 19

What does FMT stands for?

Answer 19

Field Material Transfer

Question 20

What is FMT?

Answer 20

The physical and the financial movement of goods between locations and their respective cost center.

Question 21

What is the meaning of slow moving inventory?

Answer 21

an inventory item that has not been issued from a storage location in at least 12 months.

Question 22

What is Ex Works?

Answer 22

The price that the seller quotes apply only at the point of origin. The buyer takes possession of the shipment at the point of origin and bears all costs and risk associated with transporting the goods to the destination.

Question 23

What is FOB?

Answer 23

Free on board or freight on board. The seller agrees to pay all expenses related to the transportation of the freight to a specific point.

Question 24

What is Cycle Count?

Answer 24

Cycle counting is a process where, based on the ABC stratification a counting schedule is created to ensure that the location counts A items four times per year, B items twice per year, and C items once per year.

Question 25

How often cycle count needs to be performed?

Answer 25

Cycle counts are to be performed daily, or at maximum, weekly.

What he physical count is the process of periodically auditing all inventory assigned to a financial entity, across all storage locations, to validate that the quantity is correct.

Question 26

What’s the difference between a cycle count and a physical count?

Answer 26

Physical Counts:

• Labor and time intensive
• Provides yearly data on inventory variances
• Requires business downtime
• Occurs once a year

Cycle Counting:

• More labor and time efficient
• Reduces inventory variances regularly
• No business downtime
• Occurs on a regular basis

Question 27

What is the Kanban system and what is it used for?

Answer 27

• A system to maintain inventory levels.

When inventory is depleted to a certain extent, a Kanban card is used to trigger replenishment, or box is placed in a spot for vendor to fill.