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Lesson 3

The document covers key concepts in inventory management and procurement, including definitions of terms like economies of scale, buffer stock, and supply chain. It also discusses processes such as continuous replenishment and vendor-managed inventory, along with techniques for effective procurement and negotiation strategies. Additionally, it includes exercises for matching definitions, listening comprehension, and job advertisement completion related to procurement roles.

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0% found this document useful (0 votes)
12 views22 pages

Lesson 3

The document covers key concepts in inventory management and procurement, including definitions of terms like economies of scale, buffer stock, and supply chain. It also discusses processes such as continuous replenishment and vendor-managed inventory, along with techniques for effective procurement and negotiation strategies. Additionally, it includes exercises for matching definitions, listening comprehension, and job advertisement completion related to procurement roles.

Uploaded by

doquanghuy267
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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LESSON3: INVENTORY MANAGEMENT

AND PROCUREMENT
Starter: Check your knowledge of key terms in
inventory management and procurement by
choosing the best definitions for these terms.
 Economies of scale:
-Reducing costs per unit by increasing
production.
-Cutting costs by reducing output.
 Buffer stock:
-Goods kept in store to cover seasonal demand
e.g. Christmas sale.
-Goods kept in store to cover unforeseen
shortages or fluctuations in demand.
 Factory gate pricing:
-Transport costs are not included in the
purchase price of a product.
-The price is lower because you buy directly
from the manufacturer.
 Supply chain:
-The close co-operation of all parties involved
in the making, selling, and delivering of a
product.
-Network of stores that supply customers with a
wide variety of products.
 Tender
-An assessment or calculation of the
approximate cost or value of a product or
service.
-An offer for goods or services that follows a
request for a quotation made by an official
body/ authority , e.g. local government.

1.1. Match the beginnings of the sentences (1-6)


with the endings (a-f) to make definitions of more
key terms.
1.Lead time is the time
2.Procurement is
3.A retailer is a business
4.Customer order cycle time is the time
5.A wholesaler is
6.JIT – Just in time is a concept

a. Customer order cycle time is the time customer


are prepared to wait for the delivery of their
order.
b.JIT is a concept of reducing inventories by co-
ordinating the delivery of materials just before
they are needed.
c. Lead time - it takes to produce and supply a
product.
d.A wholesaler is an intermediary between
manufactures and retailers which buys in large
quantities and resells in smaller quantities.
e. Retailer business that buys products from
wholesalers or manufactures and resells them to
the ultimate customer. (end-users)
f. Procurement is the purchasing of goods
(materials, parts, supplies, equipment) required
to run an enterprise.

1.2. Listen to an expert presenting an inventory


management system to the managers of a large
retail store. Then say which of the statement are
true (T) or false (F).
1.The inventory system is called CPR. (CRP)
2.It’s a sales-based system.
3.The system co-ordinates the flow of information
and goods in the logistics chain.
4.Young Fashion has used the system for six years
now.
5.Orders are electronically transformed to the
warehouse.
6.The store has reduced transport and inventory
costs by about 25 percent.
EDI electronic data interchange
1.3. Listen again and complete the sentences with
the words from the box.
stock lead times replenishment
processing generated data interchange
point schedule inventory retailer

1.Today I’m going to tell you something about


CRP, that means continue replenishment
2.I’ll also explain how it can be used to lower
inventory and operational costs and to shorten
product lead time
3.First of all, you decide what products you want
to order at what ………………….. level.
4.The system will use this information at the
……………… of sale in the retail store.
5.The leading Russian clothes …………………..
Young Fashion introduced continuous
replenishment three years ago.
6.With the new system all orders are
……………….. by computers, which process
data received from cash registers.
7.The orders are sent to the warehouse by
electronic ………………….. , where they are
processed.
8.And finally the goods are delivered to the
different outlets according to a
…………………
9.Since the introduction of the CRP system,
Young Fashion have managed to cut
……………… and transport costs by about
15%.
10. Moreover, error in order
…………………….have been reduced
considerably by using scanning technology and
EDI.
Obvious advantages JIT
THE PASSIVE
We often use the passive voice to describe
processes, especially if we are more interested
in the action itself than in the person who does
the action. It is formed using the verb to be and
the past participle (third form of the verb). We
use by at the end of the sentence to say who or
what does the action.
- The goods are delivered to a depot.
- The order is generated by the computer.

1.4. Put the processes described in the


presentation about CRP in the correct order.

a. Orders are generated based on data received


from cash register.
b.Goods are delivered to the retail outlet.
c. System is activated at the point of sale.
d.Orders are sent to the warehouse.
e. Orders are processed.
f. Sales information is transferred to the CRP
computer system.

1.5. Here are some more inventory management


techniques. Complete the sentences with the
passive form of the verbs in brackets.
1.A system in which the inventory …………..
(monitor), planned and managed by the
manufacturer on behalf of the customer (often a
retailer).
2.A system which is similar to CRP. It
…………….. (use, often) for products that
need to be supplied frequently and in small
batch sizes.
3.It means that orders ………….. (transfer)
electronically to the manufacturer. Then they
……………(deliver) to the retail store.
4.Real-time demand ………….(identify) by
electronic cash register and the product
movement ……………(co-ordinate) from
supplier to the retail store.
5.Products that have similar characteristics
regarding their selling profile ……………..
(categorize) into ‘families’.

1.6. Now match the planning techniques below


with the definitions in exercises 5.
a. DSD = Direct store delivery
b.CM = Category management
c. VMI = Vendor-managed inventory
d.CRP = Continuous replenishment
e. QR = Quick response

1.7. Complete the job advertisement for a corporate


procurement manager with words from the box.
fulfillment negotiation 3PL providers
procurement command vendors
supply chain relationship
We are looking for a proactive and dynamic
professional to take care of our strategic
procurement and supplier ……………….
management.
Reporting to the Director of Corporate
Procurement, the successful applicant will be
responsible for managing both internal and
external customers and for working with the
appointed ……………… While liaising with the
……………. team, …………………., and
related stakeholders, you will also be involved in
providing business support to optimize finance-
logistics processes, order…………….., and
logistics costs.
Other responsibilities include providing
initiatives to help maximize company business
profitability and efficiency.
The ideal candidate should have a degree in
……………..management or logistics
management with a deep understanding and
knowledge of the China logistics market. You
should have at least 5 years’ experience in a
multinational company and you should possess
outstanding ………………. skills. Based in
Macau, excellent …………… of English and
Cantonese is a must with Mandarin an advantage.
If you are interested in this role, please send your
CV in Word format to …

1.8. Read the job advertisement again and answer


the questions.
a. What area will the new corporate procurement
manager head?
b.What are the procurement manager’s main
responsibilities? List two or three.
c. Who will he/she collaborate with closely in
his/her job?
d.What qualifications are expected?
e. What kind of experience is required?

Can you think of other areas which are important


in procurement? Discuss with a partner.

1.9. Three purchasing managers are discussing


strategies for negotiating with a supplier.
Listen to the discussion and answer the
questions.
a. What kind of relationship do they want this the
supplier?
b.What would be the benefits of such a
relationship?
c. What market position does the company have?
d.What kind of products do they make?
e. What kind of agreement are they interested in?

1.10. Match the beginnings (1-6) with the endings


(a-f) of the sentences from the dialogue.
1.How do you
2.I think we could
3.What are your
4.Yes, and I also suggest telling them
5.In my opinion it would also be important
6.Good idea. And why don’t we

a. to point out that we’re interested in establishing


a long-term agreement.
b.that this a good opportunity to associate with a
brand like ours.
c. feel about that?
d.lower costs considerably.
e. say that it’s their chance to enter the
pharmaceutical market?
f. thoughts on that, Gisele?

ASKING FOR OPINIONS


- What do you think?
- How do you feel about that?
- What are your thoughts on that?
- Do you agree?
GIVING OPINIONS/ MAKING SUGGESTION
- I suggest that we…
- In my opinion we should …
- Perhaps we should …
- Why don’t we …?
AGREE
- That’s a good idea.
- That sounds good.
- I agree.
- That’s right.
1. I totally agree with this/ disagree with this
- I think I’ll support this opinion/ I’ll oppose this
opinion
- I think I’m in favor of this/ I’m against this
2. It is adj for sb to do st
It is useful for sb to do st (do st là ý người khác hỏi
mình)
Useful = reasonable = efficient = possible
Sb = me/ name of department
3. The reason is that pros structure/ cons structure
* Disadvantage structures
1. It is harmful/ impossible/ unreasonable/
impractical for sb to do st
2. It can make sb face st
3. It can make sb suffer from st
4. It can make sb confront with/ cope with
5. It can pose/ trigger/ provoke st and st
6. It can lead to st (negative impact)
7. It can has negative impact on sb/ st
8. It can result in st and st
9. It can give rise to st

1. Your opinion
- Every solution/ method/ way always has two
sides, including N
- If sb do st (N), sb will get both sides including
advantages and disadvantages
2. As for positive, pros structure
3. However, with regard to negative, cons
structure

** Question
- What do you think about doing st
- How do you feel about doing st
- What are your thoughts on doing st
- Do you think that we should do st
- Do you agree with doing st
1. Do you think that we should open up new route
from Haiphong to Shanghai?
1.1. Agree
- I totally agree with this
- It is beneficial for customer to transport their cargo
with cheaper freight
- It can make our company have more customers of
industrial zones
1.2. Disagree
- I’m against this idea
- It is unsuitable for doc employees to handle their
tasks
- It can make them work overtime and create a lot of
mistakes
1.3. Both sides
- If we open up a new route to ABC port, it will have
both advantages and disadvantages
- As for positive, it enables our company to earn
higher revenue
- With regard to negative, it can make employees
face working overtime/ burden workload/ heavy
workload
2. Do you agree with establishing online shop?
2.1.
- I think I’m in favor of this idea
- It is useful for us to show/ introduce/ advertise our
product to customer
- It can enable customer to choose clothes without
going to store
2.2
- I oppose this opinion
- It is difficult for us to control and manage online
orders
- It can make customer choose wrong size and
wrong color, especially with luxurious items

1.11. You have received the following email from


the purchasing department in your company.
Work out a few suggestions and reply to this
email.

Dear colleagues
We are currently looking into all areas of
procurement to see how we can optimize
processes and save costs.
Perhaps you could get back to us with a few
suggestions regarding possible improvements
in your own department or work environment.
Our method is to apply electronic process and
electronic documentation (based on online
environment). How do you think about this
solution?
Thanks in advance for your co-operation.

Regards
Luke

1.12. Work with a partners: suggest these points


and comment on your partner’s suggestions.
* Solutions
1.
- In order to do st (problem), I think the most
effective solution is for sb to do st (method)
- To be be more detailed, sb should do st (time,
number, place, sb, value…)
- By doing this, pros structure
*
- In order to improve productivity/ optimize
processes, I thik the most effective solution is
for employees to learn soft skills
- To be more detailed, they should learn
communication skills and team working skill
- By doing this, it can help employees
cooperate closely
**
- I’m in favor of this idea
- It is useful for supervisors to manage staff in
off
- It can make employees focus on their duty
2.
- To tackle this issue, the way forward might
be to do st
- Particularly, this involves doing st and doing
st
- As a result, pro structure
3.
- If sb want to do st (problem), they/ he/she
could do st (way)
- For example, this will be addressed by doing
st and doing st
- It will have efficient impact on sb/ st by st
* Giving opinion

1.13. A Spanish courier company receives a


quotation for packing labels and consignment
notes. Put the words or phrases into the correct
order to make sentences. The first parts have been
done for you.

Dear Ana
1.Please find attached / for three new products /
your request / our quotation / according to.
Please find attached our quotation for st
according to your request/ order
2.Our prices / annual consumption figures / the
basis of / your forecast of / are calculated on.
Our prices are calculated on the basis of
your forecast of annual consumption figures
3.As requested / pallets to / we will deliver on /
Barcelona or Madrid.
As requested we will deliver on pallets to A
and B
4.For a / we can offer you / of 2.5% / contract
term of / a discount / at least two years.
For a contract term of at least two years we
can offer you a discount of 2.5%
5.In the attached / all prices / have been listed in
/ your requirements / quotation sheet / columns
according to.
In the attached quotation sheet all prices
have been listed in columns according to
your requirements
6.If you have / me know / any further questions /
please let.
If you have any further questions please let
me know
7.We look / hearing from / forward to / you soon.
We look forward to hearing from you soon
Regards
Enrique

QUOTATIONS

When giving a customer a quotation it is


necessary to include details on a number of things
e.g. prices, discounts, and delivery terms.
Here are some useful phrases for quotations:
1.Prices
-Please find attached our quotation for (Name
of service and product)…
-We are pleased to quote a follows.
-We can quote you a gross/net price of …
-The prices quoted above include …
-We can offer you a price of …(number)…
per …(unit to calcutate)
2.Discounts
-We can offer you 10% off the retail price.
-We allow a 2% cash discount for payment
within 30days.
-Our prices are subject to a 25% trade
discount off net price.
-We grant a trade/quantity/cash discount of
…% on our list prices.
-If your order exceeds 2.000 items, we can
offer you a further 10% discount.
3.Delivery
-Delivery can be effected immediately after
receipt of order.
-As requested, we will deliver on pallets to

-We would be able to deliver within 10 days
of receipts of order.

3.14. Match the beginnings (1-6) with the endings


(a-f) of the sentences.
1.For orders exceeding 500 pieces, we grant a
discount of 5%.

2.We grant a cash discount of 3% on our list


prices
3.The prices quoted above include transport
charges
4.As requested, we will deliver on pallets to
Rotterdam
5.Our prices are subject to a 25% trade discount
off net price
6.The net price of this article is $25.000

a. will deliver on pallets to Rotterdam.


b.to a 25% trade discount off net price.
c. we grant a discount of 5%.
d.of this article is $25.000.
e. above include transport charges.
f. of 3% on our list prices.

3.15. Give a customer a quotation by email based on


the following details.
GPS system ‘Road Navigator TX-2300’
Price: $975.00
more than 10 items: additional 8% discount
price includes 15%VAT
delivery within 6 days of purchase order
- What is the challenge/ problem that government
and companies are facing?
1. The biggest challenge (that) sb is/are facing is
……to do st/ doing st
2. To more detailed, they/ he/ it have to face/
cope with/ suffer from/ confront/ experience/
witness/ see …(1)…,…(2)…as well as…(3)….
(increasing cost, low effectiveness of processes,
low productivity)
3. If they cannot find a suitable solution, they will
cope with more serious consequences.
- What is the solution for this challenge?
1.
2.
3.
STRATEGIC SOURCING IN PROCUREMENT
Most companies and government today are under
increasing pressure to operate more efficiently.
And many of them are realizing that effective
procurement can reduce costs, improve processes
and increase productivity. In the past few years
strategic sourcing has become a frequently used
approach in this context.
But what is strategic sourcing ? to put it simple,
it means that companies are adopting a new
strategy for how they buy services and products.
Strategic sourcing is a systematic process of
analyzing expenditures, internal and external
influences, and finding out what kind of supplier
relationships are necessary to help achieve the
company’s goals. Before the company decides to
purchase a product or service, strategic sourcing
is used to consider the total cost of a product or
action, not just price alone.
In the past, many purchasing managers neglected
the fact that low purchase cost does not
necessarily mean low total cost. In a strategic
sourcing process other costs are examined as well
e.g. the cost of purchasing, transport, support,
maintenance, and disposal.
Leading companies have realized how much they
can benefit from strategic sourcing, and many
have already achieved impressive cost reductions.

OVER TO YOU
1. What do you thinks of the strategic sourcing
approach?
2.How are goods purchased in your country?
3.Do you buy goods for your company? What is
the standard procedure?

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