Summary.
The title of this work is: "Inventory Management, a way to efficiently and effectively improve its management in a Construction Company". It was carried out in a Construction company, in which a procedure was applied to diagnose Inventory Management with independent demand.
From the development of the investigation, it was possible to determine the main suppliers and classify the inventories using the ABC method, contributing to the entity's decision making.
To achieve and fulfill the objectives of this research, the bibliographic review was used as a technique, thus providing all the information necessary for the development of this work. In addition, the Endnote9 software was used for automatic processing of the bibliography and bibliographic references.
Abstract.
The present work has for title: «The Management of Inventories, resources to improve with efficiency and effectiveness their management in a Company Manufacturer.» The same one was carried out in a company Manufacturer, in which a procedure was applied to diagnose the Management of the Inventories with it demands independent.
To leave of the development of the investigation you could determine the main suppliers and to classify the inventories using the method ABC contributing to the taking of decisions of the entity.
For the achievement and execution of the objectives of this investigation was used as a technique the bibliographical revision, facilitating of this Form all the necessary information for the development of this work. Also the automatic prosecution of the bibliography and bibliographical references the Software was used Endnote9.
Introduction.
Today's world, so globalized, where the flows of materials and information are so frequent and intense, both nationally and internationally, has established new behaviors in business management in order to achieve the much desired competitiveness.
Logistics is a very good tool, which can produce good competitive advantages, among which we can mention, first of all, the optimization in the production of a product or article, as well as obtaining good quality products, reducing costs in all processes, which results in being able to offer them at competitive prices.
Logistics as a business activity is old and it could be said that it is what was previously known as distribution. It has its origins in military activity, which developed this tool to supply troops with the necessary resources and supplies to face long hours and camps in war. It reached the business field about four decades ago and it has been in this where it has found its greatest field of development.
The organizations of the XXI century must contemplate in its essence the knowledge that they do logistics, changing their initial paradigm, they should only do it as distribution of merchandise, and they must incorporate advanced technology in storage, stock management, route design, processing and preparation. of orders, to be able to reach the best place in the market and increase profitability. Based on this approach and in accordance with modern managerial approaches, logistics services should not only include the traditional elements of transport, storage and distribution, but must cover all aspects of the business value chain or Supply Chain.
In the future, effective logistics management will no longer be an option, but an obligation for any company that wants to survive in the market.
For this reason it is necessary to go deeper into this topic within Construction, and therefore the essence of this work will be focused on it.
As a consequence of the reasons stated above, the scientific problem of this research is derived: Knowing the current state of the Construction Company X.
Taking into account the above, the following could be considered as scientific questions:
· What are the theoretical bases that support inventory management in service and / or production companies?
· How to characterize, diagnose and evaluate inventory management?
· What tools or techniques to use to manage inventory?
Based on the foregoing in this thesis, the following general objective is proposed: Carry out a diagnosis of Inventory Management in Construction Company X, applying the procedure developed by Ortiz Torres (2004) for the management of inventories with independent demand in commercial and service companies.
Among the specific objectives are:
1. Prepare the theoretical framework, based on the bibliographic review.
2. Characterize the entity under study "Construction Company X", as well as the inventory management in it.
3. Apply the procedure of Ortiz Torres (2004) that allows to manage inventories in the Construction Company X.
In this work, tools are applied to improve inventory decision-making and expose some of the fundamental criteria for their management.
For the practical implementation of this work, various methods and techniques were used simultaneously, both quantitative and qualitative, but with the ultimate goal of reaching conclusions in tune with the needs to solve the research problem. Among them we can mention: survey, interview, direct observation, document review, brainstorming and group work, as well as analysis and synthesis techniques, the ABC method and mathematical economic models.
Development
Emergence and Development of Logistics.
The current globalization of markets imposes increased and dynamic competition on companies. This process requires companies to have a range of strategies so that purchasing, production and financing have lower costs.
The rapid development of logistics as a science has called for a periodization, on which several authors have also proposed various criteria. Dr. Maritza Ortiz Torres (2004) in her doctoral thesis discusses this aspect and frames the development of logistics in four major moments.
According to the author González, (2007) on the website
www.gestiopolis.com/el-paradigma-emergente-de-la-cadena-logistica/ There are different definitions around the logistics chain. For this we are going to cite some of them.
According to Opertti, J. (2006) ¨ is the location of resources in the right place and at the agreed time. ¨ Similarly, the same author points out that etymologically the word logistics comes from the Greek ¨logistikos¨, which means know how to calculate.
Now, according to Acevedo, J. and Gómez, M. (2000: 6), the modern concept of logistics describes it as: ¨ the action of the labor collective aimed at guaranteeing the activities of design and direction of the material, informational and financial, from their sources of origin to their final destinations, which must be executed in a rational and coordinated manner in order to provide the customer with products and services in the quantity, quality, deadlines and place demanded, with high competitiveness and guaranteeing the preservation of the environment.
In general, integrated logistics is a very broad management system for the entire supply chain, from raw materials to the distribution of manufactured goods to the consumer.
Logistics Systems.
The management of the logistics system or logistics management consists of the creation and operation of efficient flow systems to manipulate materials and information, it is the tool of technology and the economy of the circulation of materials and information in the total supply chain, It covers all the activities related to the transfer-storage of products that take place between the points of acquisition and the points of consumption.
As well stated on the website
jaibana.udea.edu.co/groups/logistica/Modelo%20de%20Referencia.htm the function of the logistics system in these new conditions is the establishment of policies, procedures and plans that allow:
1. The planning of the resources that must be stored and therefore acquired (Purchase planning) to fulfill the production, service, distribution or sales programs. Supply Logistics or Supply Logistics.
2. The selection of suppliers and the definition of the relationships to be established with them. Supply Logistics or Supply Logistics.
3. The acquisition of said materials (Purchases) in the best economic, delivery and quality conditions. Supply Logistics or Supply Logistics.
4. The storage of products, a process that goes from reception to guarantee that they comply with the quality and quantity contracted and their best distribution in line with the needs of the organization. Production Logistics.
5. Inventory control both in the warehouse and in transit, the basis for future planning of materials and for accounting for inventories and their movements. Supply Logistics or Supply Logistics.
6. The distribution and commercialization of both the products that come from the supplier to the organization and from it to external customers. Distribution Logistics.
7. Return Logistics. Flow of materials in reverse direction. In this phase, the new use that will be given to the final products and waste is formed once their life cycle is over. Reusable packaging is also included.
The logistics system is made up of the suppliers, the organization, the customers, and the distribution channels that allow products to move from suppliers to customers. In this system there are three flows, the information that goes first from the customer to the supplier and then returns to the customer, the material that goes from the supplier to the customer and the financial one that goes from the customer to the supplier.
In conclusion, for a logistics chain to function in an integrated manner, it is necessary to reconsider the supplier-client relationships, so that they cover not only the material and financial flows, but also the flow of information that can be used by the companies in the chain to improve service, reduce costs and improve the ability to adapt to changes.
Logistics costs.
Logistics plays a preponderant role in the efficient and effective performance of business management, to achieve high levels of competitiveness. For this, it is necessary to carry out an exhaustive and quantifiable study of the costs associated with logistics systems.
The logistics costs, in general, are quite high, variable between economic branches, between dispatch modalities and between products. In countries with advanced economies, they can be 20% of the gross domestic product of the industry, and yet they are very often ignored.
This study assumes the opinion advanced by Dr. Maritza Ortiz Torres (2004), in her aforementioned doctoral thesis, in the sense that each one performs the classification according to their own definition and that, in both cases, the costs that actually affect the logistics function in the organization are related in one or another group. Likewise, both criteria are shared here and the classification proposed by it that is detailed below, in which, taking as a basis the close interrelation that exists between purchasing and supply management with inventory management, groups all of these as costs associated with Supply Logistics. Thus, the classification assumed here is:
Ø Logistical costs associated with purchasing and inventory management.
Ø Logistical costs associated with transportation.
Ø Information and logistics administration costs.
Supply management in commercial and service companies.
The provisioning function, according to Correa, IMSE (11-2006) on the website http://www.gestiopolis.com/gestion-de-compras-y-aprovisionamiento/, is a relevant factor contributing to the economic performance of the company. It is usually defined as the set of activities that companies develop to ensure the availability of external goods and services that are necessary for the performance of their activities.
The general objective of this function is seen under the parameters of effectiveness and efficiency. From the point of view of efficiency, it is about ensuring that the product or service is available when it is needed, with the right quality, the necessary quantity and in the right time. The efficiency, the supplies try to get the cost of resources used to carry out various activities to achieve the above object as small as possible.
Procurement management comprises three basic activities:
- Purchase management.
- Warehouse management.
- Inventory management.
Purchase management.
Purchasing is an activity within the procurement function. This activity is complex, among other aspects, due to the diversity of products or services to be acquired, the variability of demand, the scarcity of capital, the growth of financial costs, the constant increase in quality requirements by customers, as well as like the globalization of markets.
The main processes of the purchasing activity can be summarized as follows:
· Study of supply sources and selection of suppliers.
· Management of offers, based on the required quality levels and price management.
· Negotiation and contracting.
· Budget management and payment management.
· Management of claims and returns.
· Monitoring of the operations carried out, in all the agreements and conditions established by the supplier.
The purchasing decision process requires the analysis of four parameters that are fundamental for negotiation. These parameters, according to Ignacio Soret Santos, are:
- Price Quality
· Payment conditions
· Delivery term
These parameters are vital, which is why almost all purchasing definitions refer directly or indirectly to each of them.
Warehouse management.
For Gemeil, MT, JR Daduna, et al. (February, 2007), the warehouse is a technical facility made up of different areas equipped with the means of mechanization or automation destined for the storage activity, whose objective is aimed at achieving the process of reception, location, ordering, control, conservation and preparation of production for consumption and dispatch of material values, to guarantee the continuity of production and consumption in accordance with the growing needs of society.
The basic mission of a warehouse is configured and developed in the following functions:
- Receipt of articles and identification thereof.
· Storage, placement and custody.
- Product delivery.
Finally, it is useful to reiterate that the purchasing, storage and inventory functions are closely interrelated: proper purchasing management implies knowing the available storage capacity to keep products in good condition until there is demand.
Inventory management.
Once the prices have been defined, the possibility of maximizing the profits in the business for the different participants in the chain is given by the adjustments in the operating costs, and it is precisely there where an efficient management of the quantity and variety of available products -That is, Inventory Management is one of the keys to business success.
Inventory management is one of the determining factors in the supplier - distributor - consumer chain. What the customer buys or stops buying, and in the amount they want, defines the actions of each of the members of this relationship. An efficient inventory management generates cost savings for the entire chain and allows each of the players in this business to maximize their profits.
Inventory classification
According to Gemeil, MT, JR Daduna, et al. (February, 2007), inventories can be classified, among other criteria, according to: their nature, their rotation speed, their level of access, their position in the logistics process and their functionality.
1. According to its nature.
- Raw materials and materials: These are products that will be used to form part of the finished product. Their replacement will raise volumes up to a previously determined maximum inventory standard. Of products in process: Refers to parts and pieces that will be part of the final product still unfinished. They are found throughout the production flow, and their behavior is a function of the operations before and after the moment or place of the process in question. Finished products: Once the product is finished, it is packed (and sometimes also packed) and becomes part of the finished product inventory, ready for subsequent distribution and sale.
2. According to the speed of rotation.
- Current inventory: Refers to inventory that moves within typical turnover ranges. Slow-moving inventory: Made up of products whose few outflow movements lead to their relative immobilization. Idle inventory: Made up of products with no outputs during a given period of time. Its most relevant origin is in unjustified purchases and to a lesser extent in obsolescence due to technology change. Obsolete inventory: Made up of products that, mainly due to a change in technology, become useless, becoming idle.
3. According to the level of access.
- Strategic inventory: These are products that are reserved according to a national, branch or business strategy because they can serve as a replacement for a vital equipment for a certain activity or that their acquisition and purchase is very complex or slow. Inventory of state reserve: These are the inventories that are kept for contingencies or natural catastrophes. They must be rotated to avoid excessive aging according to their own nature. Untouchable Inventories: These are reserves of the Armed Forces for use only in military cases and must be properly rotated.
4. According to their position in the logistics process.
- Inventory in stock: These are the products that are in a warehouse. Inventory in transit: These are the products that are moving on a transport equipment between two nodes (warehouses) of the logistics network.
5. According to its functionality.
- Normal inventory : Normal inventory ensures the demand for a product, therefore when it exceeds what is expected, it is necessary to resort to the safety inventory. Safety inventory: It is one that allows covering random fluctuations in demand and supply conditions (supply period and product quality). Available inventory: The total of the inventories that are physically in the warehouse, is called available inventory. It is the sum of the normal inventory and the safety inventory.
Mathematical Economic Models Associated with Inventory Management with Independent Demand.
There are different quantitative inventory models, developed by scholars of the subject for several decades, which allow the efficient management of inventories in organizations, based on establishing optimal or economically advantageous policies for managing them. To decide the inventory model to use, the level of dependence on demand must be distinguished.
Demand is independent when it is directly influenced by market conditions, and therefore is independent of the demand for any other item. Dependent is the demand that is directly related to that of another item; These are, basically, parts or assembly pieces, as well as products in process.
Taking into account the dependence on demand, the models are grouped into two categories:
- Unscheduled Replenishment Models: They are used to manage inventories with independent demand.
- Scheduled Replenishment Models, for inventories with dependent demand. Items are managed using requirement philosophies. This type of article is outside the scope of the study object of this work.
The foregoing shows how necessary it is for the current company to efficiently and effectively manage all its resources. Therefore, having a scientifically based procedure, with a systemic approach, where all the elements that affect it are integrated, and that allows it to design economically advantageous inventory management policies for the organization, is vital to obtain the efficiency levels with which companies must operate today.
Proposed Procedure for Inventory Management.
Many times, company policy requires the massive purchase of raw materials or finished products, as one of the systems to maintain costs or to take advantage of a good market situation. This brings with it the need to have rational means of storage and maintenance of the same, in such a way that it does not exceed the advantages that the purchase of these has entailed.
The procedure that will be used is in approximation to that proposed by Dr. Ortiz Torres (2004) that allows to efficiently and effectively manage inventories with independent demand, in commercial and service companies. It consists of three stages:
1. Characterization of the current situation of supply management in the organization under study.
2. Design of inventory policies using economic-mathematical models.
3. Control and periodic update of the results.
Characterization of the current situation of inventory management in the organization under study.
A very important aspect to consider at this stage is the characterization of the organization's supply function, in order to diagnose the situation of inventory management in it, relating it to the other elements that make up this function.
Selection and evaluation of suppliers.
One of the important decisions of the procurement process is precisely to define with which suppliers the organization should negotiate its purchases. This selection will be a step-by-step process, in which the characteristics of the supplier under study are increasingly deepened, in such a way that the list is gradually reduced until the final suppliers are determined, which will, of course, be those that meet the better conditions for the company, with which purchases will be negotiated and contracts signed.
The study of various evaluation methods, as well as the characteristics of the organizations studied, allowed Dr. Ortiz Torres to propose the method described below. The proposed method conceives to use the quantitative and / or qualitative approach in the evaluation of each factor. The novelty of the method is that in any of these situations, the parameter can be evaluated qualitatively.
Parameters to evaluate:
¨ Quality (C)
¨ Compliance with delivery time (CTE)
¨ Flexibility (F)
¨ Missing in delivery (FE)
¨ Prices (P)
¨ Stability of supply, in relation to product availability (ES)
Each parameter will be evaluated qualitatively, assigning it a numerical value in a range of 1 to 3 points where:
· 3 would be the highest score and will express the total compliance with the parameter.
· 2 for partial compliance, but which the organization considers acceptable.
· 1 for non-compliance with the parameter, and therefore, it is considered unacceptable.
The supplier evaluation will be obtained through a mathematical formulation, from defining weights for each of the parameters, which has the following expression:
Where:
: Reflects the weight that the organization gives to each parameter;
EPj: Supplier evaluation j.
The coefficients that allow weighting each criterion must be determined in each organization by expert criteria. The author recommends that whenever it is feasible to evaluate the indicator from a quantitative point of view, this evaluation be used.
Quality (C): Expresses the degree of compliance with the qualitative characteristics of the items supplied by the supplier. From a quantitative point of view, the evaluation will be carried out through the following indicator:
C = Total number of items accepted x 100
Total number of items received
For: C 90%, the score received by the parameter will be 3.
70% <90%, the score that the parameter receives will be 2.
C <70%, the score will be 1.
From a qualitative point of view, the evaluation will be carried out by comparing the quality of the merchandise sold by the supplier, with the quality of other similar products that are offered in the market, according to its supplier portfolio.
§ If the quality offered is superior to that of similar products on the market, the score received by the parameter will be 3.
§ If the quality offered is equal to that of similar products on the market, the score received by the parameter will be 2.
§ If the quality offered is lower than that of similar products on the market, the score that the parameter receives will be 1.
In the specific case of the quality parameter, the author considers that it should be evaluated from the two points of view explained above and the final score for the parameter will be the average between the two scores received.
Compliance with Delivery Time (CTE): Evaluates the degree of compliance with the agreement, that is, of the total applications received, how many have met the agreed delivery deadlines. From a quantitative point of view it will be through the following indicator:
CTE = Number of applications received in the agreed time x 100
Total applications received.
For: CTE 90%, the score received by the parameter will be 3.
70% <90%, the score that the parameter receives will be 2.
CTE <70%, the score will be 1.
From a qualitative point of view, the evaluation will be carried out through the relationship:
§ Actual delivery time = Agreed delivery time, the score that the parameter receives will be 3.
§ Actual delivery time = Agreed delivery time + 1 or 2 time intervals, the score that the parameter receives will be 2.
§ Actual delivery time = agreed delivery time + 3 or more time intervals, the score that the parameter receives will be 1.
Flexibility (F): Measures the degree of response of the provider to new requirements of the organization, which are not contemplated in the contracts made.
§ If there are no variations with respect to the contracts, or if the supplier's response to a variation is satisfactory, the score that the parameter receives will be 3.
§ If the answer is moderately satisfactory, the score that the parameter receives will be 2.
§ If the answer is unsatisfactory or changes are not accepted, the score that the parameter receives will be 1.
Missing in delivery (FE): Evaluates the degree of compliance with the quantities requested in each order quantitatively, through the following indicator:
FE = Number of items or lots received x 100
Quantity of items or lots requested
For: FE 90%, the score received by the parameter will be 3.
70% <90%, the score that the parameter receives will be 2.
FE <70%, the score received by the parameter will be 1.
Prices (P): Assesses whether the prices offered are adequate or not, through the relationship between the minimum price established by the market (PM) and the price set by the supplier (PS)
If: PS <PM, the score received by the parameter will be 3.
PS = PM, the score that the parameter receives will be 2.
PS> PM, the score the parameter receives will be 1.
Stability of the Supply in relation to the availability of the product (ES): Evaluates the degree of stability that the supplier presents, with respect to the availability of the products at the time they are requested.
§ If the supplier maintains a stable offer, the evaluation received by the parameter will be 3.
§ If the supplier maintains an unstable offer, but with a certain frequency, the parameter will be evaluated as 2.
§ If the supplier presents a very unstable or temporary offer, the evaluation received by the parameter will be 1.
Depending on the characteristics of each organization, new parameters may be deleted or incorporated.
Design of inventory policies for products with independent demand, through the use of quantitative models.
In this stage is where the inventory policies that the organization must follow are specifically designed to efficiently manage them.
Classification of products.
The objective of classifying the products that make up the inventory is given by the need to differentiate the items that comprise it, so that, depending on the degree of importance that each one represents in the efficient and effective performance of the organization under study, establish differentiated strategies for its management.
The ABC method, also known as the 20-80 rule, is one of the most universally applied techniques to select the most important elements within a given group. It allows the organization to differentiate articles according to their level of importance, in order to establish differentiated strategies that enable efficient management.
In essence, with this technique, inventories can be classified in order of importance in three fundamental categories (A, B, C). The general procedure is to order all inventories by the total value of the factor selected for analysis. For each inventory the accumulated value is determined (its value plus the accumulated value of the immediately preceding one).
Demand projection.
The objective of this process is to determine, for each item in the inventory, the quantities required by the organization to fulfill its mission. It is important to carry out purchasing plans without incurring excess inventories, as these excesses later have an impact on the increase in conservation costs.
Demand projection is characterized by the need to prepare a large number of forecasts, for a large number of articles, generally for short periods. Before projecting demand, the organization must analyze the following factors that determine the projection:
¨ Customer analysis
¨ Classification of demand
¨ Needs forecast
For articles with independent and random demand, most of the consulted bibliography uses forecast models based on time series and, within these, Exponential Smoothing.
However, when these conditions are not present in the organization, Dr. Ortiz Torres proposes to use qualitative forecasting methods, based on the elaboration of alternative scenarios. In this way, the organization has different alternatives in the decision-making process.
Provisioning costs.
The main challenge that the company faces when managing its inventories is to keep the relationship between the service provided to the customer and the costs associated with the system in balance. Hence the need for a good estimate of them.
The common cost classification used in inventory management systems is:
Ø Cost of acquisition of the products.
Ø Launch costs of the order.
Ø Cost associated with keeping the products in the warehouse.
Ø Costs of stock breaks.
Control and periodic update of the results.
Any system needs effective feedback to function properly. This last stage allows this; hence its high importance. Control systems must be designed, appropriate according to the particularities of each organization, that allow unwanted situations to be detected quickly, taking into account the changes that occur in the environment, in order to make the necessary adjustments for the system to work.
On the other hand, the control system that is established must allow:
Ø know the situation presented by the suppliers with whom the organization maintains contractual relationships.
Ø quickly detect new products on the market and potential suppliers.
Ø get to know customers.
Ø an effective communication of the purchasing staff with the marketing area, to avoid buying products that do not meet the required quality standards or are not preferred by customers.
Ø continuous monitoring of stocks when periodic inventory review systems are established to avoid obsolescence of stored products.
Ø updating the results obtained in the event of variations in the starting data.
Description of the object of study.
CONSTRUCTORA X, the company under study, is in charge of carrying out authorized tourist works, under the turnkey modality, being the Client or Property the Real Estate company that has the financial resources for the execution of these prioritized works.
The competitors in the same sector are the Union of Constructors and other Construction Contingents, which have the same corporate purpose, to build buildings.
Potential competitors for CONSTRUCTION COMPANY X are constituted by companies that are dedicated to the repair and maintenance of hotel facilities.
Clients: Real Estate.
Suppliers: Our main supplier of material resources and equipment is a trading company, and as suppliers of human resources are two construction companies, which are in charge of guaranteeing the number of workers necessary to comply with the work execution schedule.
The mission of CONSTRUCTION COMPANY X is: To build the hotel infrastructure works in the tourist center for the development of the tourist industry as the locomotive of the country's economy. Counting on the professionalism, responsibility and creativity of efficient work teams, and fulfilling, with special care, our responsibility in preserving the environment.
The main process of CONSTRUCTION COMPANY X is the execution of hotel facilities, in whose entry the materials, raw materials, and other resources are contemplated, which are transformed with the support of auxiliary processes and the workforce, until obtaining as a result end a hotel facility with the characteristics and quality required by the customer, that is, the future operator of the hotel. In addition, as a result of it, the experience and know-how is obtained for all those involved in the execution of this great process.
CONSTRUCTION COMPANY X is made up mainly of twelve departments, Construction Management Department, STUDIES Department, Roofing and Exterior Finishing Department, Structure and Exterior Areas Department, Logistics / Purchasing Department, Finishing and Furniture Department, Training Department, Quality Department, AGF Department, General Facilities Department, Human Resources Department and LEGAL and CONTRACT MANAGEMENT Department.
The study carried out serves as a reference to demonstrate that efficient management of supplies guarantees an improvement in the economic results of companies.
Application of the proposed procedure in the Construction Company X.
It is necessary to clarify that the procedure of Ortiz Torres (2004) proposed to carry out this research in order to design a new inventory policy based on a mathematical economic model, could be partially used since the necessary information was not provided by question security of the company, reaching only the goal of classifying products serving to make decisions, forecast demand as well as calculate supply costs.
Characterization of the current situation of supply management in the organization under study.
The Construction Company X has its safety inventories and a priority for the provision of service to external clients. For this, the purchasing strategy is governed primarily by the work execution schedule and also by the stock levels of the products to be used and their demand, assessing their quality and price at all times.
The supply is carried out when the proposals of the suppliers regarding prices, quantities, delivery times, payment credits, quality of the merchandise and guarantees are studied, to proceed with the purchase of the same according to the needs of the organization after studying stocks in warehouses and security inventories.
To carry out the supply management (purchase and storage), the company requires financial resources, which are agreed upon in the closed price of the contract and financed by the Real Estate Agency. The entity's purchases are decided by the Purchasing Committee.
The company's procurement process is based on the study and knowledge of the supplying entities that operate at or outside the border, either because they propose the offers or because of knowledge of the existence of the same in commercial entities by specialists. The action of buying is one of the most important for this type of company. Therefore, it must be done with a full conviction of what, to whom, how much, when and in what way to do it.
The inventory control system that is carried out in this organization is a computer tool, used to monitor and control the products given their purchase order, from when the product arrives at the warehouse until the request for dispatch to the Work, giving even its specific location in each warehouse. In addition, 100% inventory control of products is carried out by the Company.
For the selection of suppliers, the Trading Company offers the purchasing department and the specialists by activity, the contracts, to evaluate the economic feasibility through the purchasing college. It is possible for them that for each selected product they contact at least 3 suppliers looking for prices, quality and competitiveness, also avoiding extreme dependence on a single supplier. Although the exchange and relationship process is through the purchasing manager, the suppliers are selected within a framework of collective and collegiate management. Relationships with suppliers are on a contractual basis, which allows establishing product quality, delivery times and payment terms.
The Construction Company X has a transport infrastructure that does not allow it to face the supply process, for which it contracts this service from third parties.
The facility has a purchasing department that is in charge of implementing a mechanism to regulate import and local purchases. Suppliers are selected by specialists by activity and the purchasing department.
Procedure for Purchases.
The procedure for making purchases at Construction Company X, carried out by the Purchasing Department, consists of different stages.
1. Issuance of Bid Request or Purchase Request.
2. Preparation of Technical Reports.
Supply guarantee.
Safety and hygiene sheet.
3. Preparation of Purchase Orders.
4. Preparation and Development of the Contracting Committees.
Diagnosis of the current situation of inventory management.
Within this large warehouse, the area corresponding to Ceramics is taken as the object of study for the diagnosis, as it is one of the areas with the highest levels of inventories.
These inventory levels can be classified according to the criteria of Gemeil, MT, JR Daduna, et al. (February, 2007), in:
® According to its nature, raw materials and materials.
® According to rotation speed, current inventory and some percent Slow moving inventory.
® According to its position in the logistics process, Inventory in stock.
® According to its functionality, Inventory available.
To know the current situation in the area, methods such as: direct observation, interviews and brainstorming were used.
The behavior of the inventory level in the last 4 years is reflected below:
2006 4 490.7 MUSD
2007 10 390.5 "
2008 9 736.3 "
2009 18 414.4 "
Today we have 4.5 times more stock than in 2005 and twice more than 6 months ago and without growing in warehouses or premises, spaces between containers have been enabled, but it is insufficient both in capacity and in conditions, given the increase in Works in execution.
What causes this situation:
1 Excess merchandise in the warehouses that makes it difficult to locate them in the warehouse, causing delays in dispatches as well as problems in inventories.
2 Need to store goods in the yard with the risk of deterioration and loss of the same.
3 Constant relocation of merchandise that loses its original location with the subsequent lack of control that this originates in the software.
4 Missing and surplus inventories due to the merchandise not appearing as its location is very difficult.
5 Idle products in stock increasing inventory levels, which are left over from completed works.
6 Storage of products returned from works due to breakage or poor quality thereof.
7 Neither the costs of ordering the order nor the storage costs are taken into account by the Purchase Committee when planning purchases.
However, despite the fact that some of the negative signals have a significant impact on the company, there are also positive aspects related to procurement and inventory management such as:
1. Very good relationships are maintained with suppliers and customers.
2. There is cohesion in the Purchasing Committee and all its members have already accumulated periods of experience.
Selection and evaluation of suppliers.
In the case of suppliers, it is necessary to point out that the vast majority normally maintain a stable supply to the company, although sometimes there have been problems in exceptional situations (hurricanes, sea penetrations, etc.). Provider shall be considered to be any entity that benefits CONSTRUCTION COMPANY X through the sale of products and / or services.
To evaluate them, the procedure will be developed previously and as the center of this we worked with the group of experts, composed of:
· Head of the Purchasing Department.
· Deputy Purchasing Department.
· Warehouse Manager.
· Finishing Activity Specialists.
· Warehouse clerk.
The following table shows the results by provider and by parameter.
Table 3.1. Evaluation of Ceramic Warehouse Suppliers.
| Parameters | |||||||
| Provider | Quality (C) | Compliance with delivery time (CTE) | Flexibility (F) | Missing in delivery (FE) | Price (P) | Stability of supply (ES) | Final evaluation |
| 0.35 | 0.25 | 0.15 | 0.02 | 0.03 | 0.2 | ||
| Emp. Cuban marbles | 3 | one | one | 3 | 3 | one | 1.80 |
| NMC | two | two | two | two | two | two | 2.00 |
| Wenton | two | one | one | two | 3 | one | 1.43 |
| Emp. C. Tunas. | two | two | two | two | two | two | 2.00 |
| Pamesa | 3 | 3 | 3 | 3 | 3 | 3 | 3.00 |
| Multidoor | 3 | 3 | 3 | 3 | 3 | 3 | 3.00 |
| BD Caribe | one | one | one | one | one | one | 1.00 |
| Mapei | 3 | 3 | 3 | 3 | 3 | 3 | 3.00 |
| Cogeco | two | two | two | two | two | two | 2.00 |
| MIDEA | two | one | one | two | 3 | one | 1.43 |
Source: Own elaboration from the results of the application of the supplier evaluation method.
According to the procedure used, most of the suppliers were recommended, with special mention for Pamesa, Multidoor and MAPEI, which were the ones with the highest score, demonstrating their high level of competitiveness in the market due to the quality of the products they offer, the compliance with the delivery time, there are no shortages in the deliveries, as well as the stability in the price and in the supplies. BD Caribe reached the minimum in the score, since on occasions it does not commit to temporary requests from the company without being able to comply in time, presenting problems with quality, price and supply stability. Wendon and MIDEA should closely monitor the performance as they present scores very close to the minimum and could decline in the market.
Inventory policy design through the use of economic - mathematical models.
Product classification.
The compilation of the necessary information to be able to develop the proposed investigative process was made from the software, which uses the ABC Method to fulfill one of its functions, classify the existing inventory levels in order to know which of them affect higher percent on inventory.
The operation of the software is simple, once the data is entered into the system, it is in charge of classifying them into A, B, C or D, and for this it takes into account the number of existing products and their amount, performs a summation and calculates 80% of the value for products A which in turn correspond to 20% of the quantity of products in stock, 15% of the following value corresponds to products B and the remaining 5% to C. In this classification includes D products to all those whose inventory value is zero, that is, they correspond to the sample products.
The following table shows the classification of the products:
Table 2. Classification of Ceramic Warehouse products.
| Class | No. Prods. | % Prods. | Accumulated% Prods. | % annual value | Accumulated% annual value |
| TO | fifty | 18.94 | 18.94 | 77.67 | 77.67 |
| B | 71 | 26.89 | 45.83 | 17.02 | 94.69 |
| C | 143 | 54.17 | 100.00 | 5.31 | 100.00 |
| Grand Total | 264 | 100 | 100 |
Source: Own elaboration according to the results of the application of the ABC method.
Results obtained from the application of the ABC Method:
· Group A: Made up of 50 products, representing 18.94% of the total and 77.67% of the inventory value.
· Group B: Made up of 71 products, representing 26.89% of the total and 17.02% of the inventory value.
· Group C: Made up of 143 products, representing 54.17% of the total and 5.31% of the inventory value.
Based on this classification, the company's management can locate the products in the warehouse in order to obtain a better distribution of the inventory.
Demand projection.
Due to the importance of carrying out purchasing plans without incurring excess inventories, this step is carried out, as these excesses then have an impact on the increase in conservation costs.
Due to not having enough information to be able to apply forecasting models based on time series, specifically Exponential Smoothing, as explained in the procedure presented by Dr. Ortiz Torres, it was decided to project demand according to the criterion of specialists of the company, using qualitative forecasting methods, based on the elaboration of alternative scenarios.
The specialists proposed developing two scenarios: Most Probable and Optimistic. For the elaboration of the alternative scenarios, the real demand for type A products was taken as a basis. In the most probable scenario, the real inventory levels of 2008 would remain very similar for the same period of 2009. The optimistic one would correspond to an increase of 5% on the inventory levels of each month proposed in the Most Probable scenario, taking into account the criteria of the experts, that is, that the increase in the number of premises of an executive project would also be included in this percentage to another.
It is necessary to clarify that this company, due to the characteristics it presents for operating under the form of a Project, inventories are planned when the objective budget is prepared in the conceptual phase of the project to be executed. Based on the experience of the specialists in each activity in previous projects, they are expected to be around 5% above the required inventory, for any contingency that may arise during the course of the work.
Provisioning costs.
The Purchasing department is made up of 12 colleagues, including an expatriate as a Department Advisor. They are in charge of processing all the information they receive from the rest of the areas in order to ensure that there is no delay in the execution projects due to supply issues.
Of the supply costs, only those related to personnel could be taken into account for this analysis, since for company security reasons the data was not provided for the analysis.
Salary expenses = $ 3,932.73 / year
Food expenses = $ 6,692.40 / year
Transportation expenses = $ 1,372.80 / year
Total Expense = 11,997.93 $ / year
With the preparation of this chapter, it can be concluded that the procedure proposed by Dr. Ortiz Torres (2004) used for the development of this research, although it was partially used, served as a basis to identify the main suppliers of the Company, classify existing products in inventory with a view to making future decisions, as well as determining the main costs corresponding to supply.
Conclusions.
1. The study carried out serves as a reference to show that an efficient management of supplies guarantees an improvement in the economic results of companies.
2. The basis for the research is the procedure proposed by Dr. Ortiz Torres (2004) for the management of inventories with independent demand in commercial and service companies.
3. The procedure used by the Purchasing Department of the CONSTRUCTORA X Company to guarantee the timely operation of the Procurement Management in the Works of the same is consistent with meeting the main needs of the client "The work", although it presents some deficiencies.
4. An evaluation of suppliers was carried out following the procedure outlined in Chapter III, which allowed the entity to know which of them are more reliable and efficient, with Pamesa, Multidoor and MAPEI standing out for obtaining the highest score with respect to the rest.
5. The ABC Multicriteria Method was used to classify the products according to their importance and the results are shown below:
- Group A: Made up of 50 products, representing 18.94% of the total and 77.67% of the inventory value. Group B: Made up of 71 products, representing 26.89% of the total and 17.02% of the inventory value. Group C: Made up of 143 products, representing 54.17% of the total and 5.31% of the inventory value.
6. In addition, an analysis of the main costs that influence inventory management and a projection of demand based on alternative scenarios was made, which constituted the starting information for the design of a stock management model.
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