10. Which one of the following is false?
a. Inventory carrying costs should include only those which vary
with the level of inventory
b. Full costing method includes fixed costs and variable costs
c. Materials management can be an independent and isolated
function
d. Strategic materials management orientation is essential to
create customer value
CII Institute of Logistics
PGDSCM/DSCM/ADSCM & CERTIFICATE PROGRAMS
Semester-end Examinations- December 2011
PROJECT AND MATERIALS MANAGAEMENT
Time: 3 hours
Marks: 100
Part B
Part A
Answer all questions
(10 x 1 = 10 Marks)
1. Feature(s) of any project is /are
a. One time activity
b. No revenue
c. More varieties of technology
d. All the above
2. The basic difference between PERT and CPM is the uncertainty over time
a. True
b. False
3. An attribute of a good forecasting method is
a. Plausibility of forecasts
b. International Level
c. Collective Opinion Survey
d. Both b & c
4. Discounted Cash Flow Techniques are categorized as traditional methods
of project evaluation
a. True
b. False
5. “Negotiation & Contracting” is a part of which phase
a. The pre-investment phase
b. The investment phase
c. The operation phase
d. All the above
6. Key functions of Materials Management
a. Materials planning
b. Inventory control
c. Both a and b
d. None of the above
7. Market forecasting is an external interface of materials management :
a. True
b. False
8. Which one of the following is not a materials management cost
a. Transportation cost
b. Promotion cost
c. Wastage during production
d. Packaging cost
9. Materials management is a strategic issue in an organization :
a. True
b. False
Answer any four
1.
2.
3.
4.
5.
6.
(4x15= 60 marks)
List and discuss the important criteria that you may use to determine
(i)
possible sources of supply
(ii)
acceptable sources of supply
Explain the role of materials management in conserving the environment
How does TQM support in creating customer value in materials
management?
Materials flow and information flow are equally important in production
flow process. Why?
Describe the role of materials management in performing various
functions in the organization.
Differentiate between purchasing & subcontracting
Part C
Case study
(3*10=30 marks)
Please read the case and answer the questions given below:
EClL-An Overview
Electronics Corporation of India Ltd.(ECIL) is a Public Enterprise under the
Department of Atomic Energy established with the purpose of supporting India’s
Nuclear Power Programme and help the country achieve self-reliance in
professional electronics. Over the years the company evolved itself into a multiproduct and multi-disciplinary organisation with focus on Computers, Control
Systems and Communications. In the post-liberalisation scenario, the compulsions
of global competition on local soil guided its Vision, Mission and Objectives as
follows:
Vision
To help the country achieve self-reliance in Strategic Electronics.
Mission
To strengthen the status as a valued national asset in the area of Strategic
Electronics meeting the requirements of Atomic Energy, Defence, Space, Civil
Aviation, Security and such other sectors of strategic importance.
Objectives
⟩ To strengthen the technology base and thereby the capability to combat
technology denials
⟩ To promote creativity and innovation and realise higher levels of operational
efficiency through actionable learning
⟩ To attain and maintain world-class competitiveness by pursuing global
benchmarks
⟩ To lay down plans and programmes for effective succession at senior
management level
⟩ To consistently ensure a customer-centric organisational culture
⟩ To achieve steady growth in business performance and generate reasonable
internal resources
The operations are therefore focused towards meeting the requirements of
Strategic Electronics in the Nuclear, Defence, Security and such other sectors of
National Importance.
The Crisis
The post-liberalisation period of 90s was characterised by intense competition
from both the MNCs and private sector. The impact of the globalization process
and the sanctions in the wake of Pokhran-11 experiments has brought the
company to the brink of sickness in 1998-99. ECIL suffered a loss of Rs.10 crore in
1997-98 and a substantial loss of Rs.60 crore in 1998-99. The networth of the
company was badly eroded and ECIL had to be reported to BIFR.
The Initiatives in Materials Management
The Company had to initiate a number of innovative measurers to tide over the
crisis. Material costs constituting around 55-60 % of the total cost, it became
imperative for the company to introduce a host of innovative practices in the area
of materials management. These initiatives need to be in consonance with the
nature of global electronics business characterised by high rate of obsolescence,
falling prices, high quality inputs and global sourcing. More over the business
environment of ECIL is different even from other PSUs as there is no assured
market, customer-driven requirements and threat of denials. It is against this
background that the entire supply chain is addressed and briefed below are the
salient aspects of this process.
Supplier Communication
It was ensured that the requirements of the customers of ECIL are clearly
communicated to the suppliers, thus making the latter jointly responsible for
ensuring customer satisfaction. This is done through constant touch with the
suppliers to indicate the priorities through written and verbal means and by
hosting vendor meets Vendor Development and Quality Assurance
The suppliers were continuously provided all the support during product
development and engineering, prototype testing, evaluation, qualification and
guidance in the implementation of ISO 9000 Quality Management system and
other industry standards and practices. Emphasis was on prevention rather than
detection and correction. Suppliers are encouraged to imbibe the culture of
‘Ownership of Quality’ as?
Inventory Control
The scheduling of placement of orders and receipt of materials was streamlined to
ensure efficient inventory management covering such requirements as timely
availability of material, minimisation of waste and surplus due to obsolescence etc.
Negotiations and Payments
Suppliers are involved right from the tender stage to offer the most competitive
terms to the customers in terms of quality, cost and delivery. Mutually beneficial
payment terms are negotiated and strictly adhered to.
Implementation of IT
All the processes involved in Integrated Materials Management are fully
computerised for speedy disposal of material requisitions, resulting in substantial
reductions in lead times across various operations.
The Results
These simple intiatives were implemented effectively resulting in incredible results
that culminated in the historic turnaround of the company that brought wide
recognition and national awards like SCOPE award for Outstanding Performance
and Contribution to Public Sector Management. Specifically the following
achievements were realised.
Between 1998-99 and 2002-03
⟩ Turnover shot up from Rs. 250 crore to Rs. 1000 crore
⟩ Profitability reversed from a loss of Rs. 60 crore to a profit of 130 crore
⟩ Networth increased from Rs. 7 crore to Rs. 309 crore
⟩ Loans Outstanding and Statutory Outstandings became nil
⟩ Inventory levels and Sundry Debtors demonstrated efficient Working Capital
Management
⟩ Substantial cost Reductions were realised through negotiations and improved
quality levels across various processes
⟩ Procurement lead-times reduced substantially from about 60 days to 30 days
Customer Satisfaction
Index improved phenominally from 66% to 95%
⟩ MoU rating of ’Excellent’ has been achieved and is maintained and
⟩ Image of the company enhanced remarkably.
Future Plans
The multi-disciplinary competencies and capabilities of ECIL coupled with the
Strategic Sectors it has chosen, is bound to give the company a competitive
advantage to succeed in the national market but explore avenues in the
international market. Many of its products have been identified for export
promotion and the brilliant performance of the Electronic Voting Machines in the
recent general elections established its export worthiness with many countries
evincing interest in the product. While all the processes under materials
management are fully computerised, plans are underway to instal a fully IT enabled
Supply Chain Management including e-procurement. The company is fully aware of
the competitive global environment surrounding it in the high technology
electronics and is focussing continuously on enhancing its technology base and
enrichning its skill base to strengthen its status as a valued national asset.
Questions :
1. What was the core issue and how ECIL reacted to overcome it?
2. Discuss the communication strategy of ECIL.
3. How do you think the future plans of ECIL are achievable?
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