Base Information Management

ITM Materials

Organisations today face twin challenges of globalization and shortened product life cycle. The one thing that organisations can count on is rapid change - and the new opportunities and challenges that change is sure to bring. New competition is pushing business to achieve higher levels of service, while evolving technology is compressing product - life cycles and forcing companies to adopt new technologies or risk losing market share.

What ITM™ Materials shall strive to achieve

  • Reduction in Inventory level.
  • Reduction in through put time.
  • Institutionalizing information and knowledge.
  • Increase operational efficiency
  • Minimizing cost and Maximizing service
  • Create a more efficient purchasing cycle

ITM ™ Materials provides you with a tool for your daily procurement activities. It helps you to eliminate routine work and concentrate on more productive and profitable activities such as price negotiations with suppliers, quality improvements, lead- time reductions thereby empowering users to quickly obtain the goods and service they need.

ITM™ is developed to deal with the unique procedure and methods followed by the company covering the following three areas of operations.

Procurement of Material

Buyers contribute to profitability by effectively selecting and managing vendors, handling exceptions and supervising the orderly purchase of parts and materials. ITM™ provides the tools like Base Work Flow™ which help in accomplishing those tasks without generating or managing piles of paper or making and receiving endless phone calls. The on-line purchase order status information and tight integration with planning, inventory, production and accounts payable allow the buyer to focus on value-adding activities while constantly staying in touch with the other areas of the business that support, and rely on, this vital function.

Vendor quote management, electronic requisitions, automatic MRP release (under your control) and comprehensive vendor performance analysis add to the buyer's tool-kit for effective purchasing control.

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Ownership of Items

The user dept is made responsible and accountable for "master information" for a particular item. This reduces ambiguity on description and understanding of specification. This procedure also aims at reducing the number of Item codes created for the same material.

As a part of this concept, the engineering and maintenance department would have to incorporate "Bill of Materials" of plant and machines to the item master so as to ensure that conforming spare parts and process to control and analyse the consumption of raw material. e.g. If a colour chemical required for dyeing of 100 meters of gray fabric of sort no 10987 is 10 kg of colour "Red" and if the actual consumption is more or less, it will reflect in variance information. Data mining would help in understanding the possible reasons of variance.

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Indents & Purchase Requisitions

User department can check availability of stock online and either have the product issued from stores or indent for fresh procurement. If the on- hand balance does not cover the requirement, the system creates a purchase requisition and forwards it to the purchase department for further action. The requistioner has access to the information on pending for approval, pending orders, pending indents along with current stock to avoid replication of indent for same requirement.

Where the recipient location of a material in the indent is different from the originating location of the indent requisitioned, it notifies the intended recipient of the indent details. A single purchase request can contain one or more items; if the item requires an authorisation from different departments, it automatically splits the indent and forwards it to concerned department through Base Work Flow™. The user can provide for additional item details like purity, tolerance preferred packing size. The system will provide for modification or deletion on checking the status and progress (placement of order) of the request.

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Online Catalog

The catalog consists of anything that has been bought such as production resources, spare parts, office stationery and non stocked goods. The catalog provides all end- users regardless of their needs, with one-sTop shopping. Users identify their need by making one or more selections from the online catalog. The need is automatically satisfied based on pre-defined business rules. Users do not need to be concerned about whether their need will be satisfied through inventory or procurement.

The business rules take care of fulfilling the need in one of the following ways

  • By tagging it in inventory for issue
  • By creating a release against a blanket order
  • By creating a purchase order
  • By creating a requisition

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Request for Quotes

For items where a suppliers exits and are on the approved list of the company, the enquiry is forwarded to all approved suppliers of the item. The user chooses his mode of communication and the system creates an purchase enquiry and forwards by Email, Fax or Post.

The accepted quotations form vendors are updated in the system and tabulated for comparison on Quantity, Price, Tax, Payment terms and other conditions quoted. The quotation from the suppliers can be accepted in EDI, email pre-defined formats.

Effective Cost calculations for the item can be carried out by considering recoverable cost like modvat benefits, resale value of packing materials, payment terms, and Tax setoff.

The enquiry will be closed when the referenced indent is closed or cancelled. It can also be closed or cancelled manually.

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Vendor & Vendor Development

For a given material the minimum and maximum number of approved suppliers are defined. The vendors are evaluated based on factors depending on the type of material, the quality restrictions, payment terms and conditions Suppliers background, location of supply source, delivery locations, customer list… and other criteria defined by the organization.

An approved supplier will be monitored and appraised on the following parameters

  • Ordered V/s delivery quantity.
  • Variance of price with purchase order rate and other suppliers.
  • Rejection analysis.
  • Timely delivery.
  • Variance analysis in supply of material tolerance strength etc.
  • Process improvements or technology advancements.
  • Document submission.

An approved supplier may be "Black listed", triggering a process to cancel its approval, pending orders, initiate sTop-pay instructions for bills payment. The procedure would require appropriate authorizations and would make the black listing effective from a defined date.

Suppliers are classified by the role it plays in your organisation.

  • Supplier of goods or services
  • Agent for a supplier of goods or service
  • Payee ( not a supplier)
  • Forwarding agent / Insurance company

The system records information like, terms of delivery, Payment, Transporters, Sales tax Details Specific requirement., Default discount, freight rates.

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Purchase Order

Purchase Order (PO) is the reference document for the receipt of material at the receiving location. The receiving location can take single or multiple receipt against a PO for quantity specified in the PO. In a PO there can be items from multiple indents with multiple delivery schedules. The PO is automatically closed when all the goods are received against the PO, which is re-open in case of rejection or returns.

On confirmation, the order copy is automatically transmitted through EDI to the location where goods are supposed to be received. Also the copy for supplier can be sent through EDI/Email/Fax.

The order, if required can be amended by issuing an order amendment document to the supplier. Like order, amendment document is also sent to the supplier and receiving location.

Purchase orders can be classified for procurement of

  • Stocked Items : Raw materials, dyes and chemicals, consumable, packing materials stores, spares
  • Capital Goods :Plant and machinery, Office equipment
  • Service and maintenance :Installation, repair, other service contracts
  • Job Work :Custom made materials
  • Sub- contracting : Manufacturing or processing of finished and semi- finished goods

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Job Work

A job work order can be issued to the supplier for conversion of material and supply a finished product or intermediate. The material to be converted can be issued from the stores to supplier. When received the finished goods system will account for the material issued and returnable by the supplier. The calculation of job work changes will be done by the system and posted to accounts payable.

The system will automate the procedure for excise and modvat involved in job work.

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Procurement from overseas sources, will be handled in the system with complete details. The orders can be raised in any currency; providing a conversion factor to value the order in base currency for analysis. The loss and gain due to currency fluctuations will be monitored by the system.

Opening of LC is directly linked to purchase order and automatic entries will be created in accounting system for margin money, TDR/FDR, bank charges. Complete information and detailed status about LC is maintained. On receipt of goods the LC will be closed as per the terms. All the accounting entries needed on closing of LC will be carried out like reversal of margin, TDR/FDR, payment at prevailing exchange rates.

On "clearing" of goods, duty and export benefits are calculated by the system with an option to link to the export sales module.

The system will capture and automate the bill passing of the clearing agents.

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Email : March 2000, Base Information Management