Page 320 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes The first interface is with the operations department. The operations and production department
sends the information about the requirements of materials, supplies, parts to the purchasing
department and purchasing department places the order. Purchasing system keeps a track on the
production and operation system so as ascertain the need for materials in advance and can keep
required inventory.
The next interface is with the legal department. The purchase department has to sign a lot of
deals and contracts with the suppliers and other concerned persons. The legal department also
keeps an eye on the code of conduct and ethical practices of the purchasing officers.
The accounting department keeps a track of the vouchers and the bills of purchase. The accounting
professionals are concerned with passing the bills and approving amounts for the required
material.
Data processing department records all the required information of the purchase transactions. It
also records the inventory levels and gives indication about level of inventory available form
time to time. It also records information about the suppliers, transporters etc. All the information
is collected in the data warehouse.
The design of the operations system would depend on the purchases made by the purchasing
department and in it turn the design department takes care of the purchasing pattern and design.
There also needs to be a frequency match between the design of the suppliers and the purchasing
organisation.
All the purchases made are collected by the receipt department and then send for further cross
checking by other departments. They check the bill of order and the voucher and collect the
materials.
The most important interface, though, is with the suppliers. The purchasing department interacts
the most with the suppliers and the suppliers interact with the purchasing personnel. All the
dealings with the organisation are made as a result of the interaction between these tow entities.

Caselet Fiat Sets up International Purchasing Office

— by Hindu News Bureau
riven by cost advantage that countries such as India and China offer, the Italy-
based Fiat Group announced setting up of an international purchasing office in
DNew Delhi that can support its global production facilities in Europe, North
America and Latin America. Through its purchasing office, Fiat will source components
for different vehicles, including tractors, cars and commercial vehicles.

"We are sourcing auto parts worth €30 million at present from India and by 2010, our
target is to increase the number to €50 million," said Mr Gianni Coda, Fiat Group Executive
Committee Member & Chief Executive Officer for the Group's international purchasing
operations.
Fiat began sourcing from China a year ago at a volume of €200-million worth of components
in the first year. When asked if China was more competitive compared to India, Mr Coda
replied, "There is not much difference. Both the countries roughly offer 12-15 per cent cost
advantage. It is just that in some parts like glass, India has an advantage and in some cases,
China scores higher."

Contd...

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