INTERVIEW QUESTIONS

K.S. MENON Management Consultant

101, Jai Gouri Housing Society, Juhu Versova Link Road, 4 Bungalows, Andheri (W) Bombay 400 058. Tel: 623 3844

October 13, 1993

Dear Shri Parekh,

The questions I had promised are enclosed. As I had said over the phone, most of the questions can be directed only to people who have applied for senior positions. I therefore prepared another set of 100 questions which can be directed to the middle and low level candidates.

There are 5 or 6 subjects on which I do have inadequate knowledge. I have left them out. I could have referred to some Text book and written out questions but I was faced with the problem of time because of my visit abroad.

We can discuss after my return.

Regards,

Yours sincerely (Signature) (K.S.Menon)

PS I have not kept a copy for myself. If you can give me a copy later I shall be grateful.

KNOWLEDGE BASE

1. MANUFACTURING RESOURCES PLANNING (MRP II)

i) Can you explain the difference between MRP and MRP II?

ii) Do you think we can adopt MRP II without the use of a computer? What are the reasons for your answer?

iii) It is generally said that in order to be successful with MRP II one should have a 95% forecasting and 95% stockroom accuracy. Why are these so important to the system?

iv) What is "netting"? Can you explain how it is carried out?

v) Preparation of an accurate Master Production Schedule is vital to the success of MRP. Assume that assumptions made during a month have gone wrong. What will you do?

vi) Accuracy of the Bill of Materials is vital to a MRP II System. How?

vii) How does MRP II control inventories?

viii) It is usually said that because of the uncertainties in India in regard to practically everything, it is difficult to schedule production accurately. Is this a valid reason for not adopting MRP II?

ix) Do you know of any company in India who have adopted MRP II successfully? If so do you know how they succeeded?

x) What are the main benefits that a company can get from MRP II?

2. NEW ITEM DEVELOPMENT/PLANNING

i) Assume your company is manufacturing a product with a range of say 6 specific types. It wants to develop a seventh type involving a superior state-of-the-art technology, and computer controlled. (If the student asks for the product, say: Pumps for giant users like a Hydro Electric Projects or a big Municipality). How will you execute the development plan?

ii) Quite a lot of R&D effort is required in making a new product. You do not have an R&D set up. What will you do?

iii) Today R&D can be purchased like any other service. Can you please tell us how, and what will be the basis on which you will proceed?

iv) Assume you have an imported technology for a new project. The technology has to be adopted for tropical conditions in India. One has to find out suitable vendors who can give reliable and suitable components. The Materials Manager has been given these two tasks. How will he go about doing this?

v) The ISRO wants to develop a new product for their Cryogenic technology. They have the basic knowhow. How will they develop this, assuming that they have found a capable vendor, say Larsen and Toubro. What problems do you envisage in such development?

vi) Your company was importing a costly sub-assembly from Russia. Russian suppliers have become most erratic and uncertain. The reason is that one part of the item is made in Russia and another in a factory in Azerbaijan which is another country now. Your MD feels that we should develop the item indigenously which is a tough problem. What alternative can you suggest to solve this problem?

vii) What is the difference between Vendor development and product development?

viii) You want a new item to be developed. You find that a vendor can make it. His problem is a suitable alloy which is not available in India. What strategy will you employ?

ix) Though many items can be produced indigenously many companies prefer imports. Why?

x) What are some of the problems of new item developments in India?

3. ELECTRO/ELECTROMECH COMP. - DEVELOPMENT 4. METAL FORMING/INJECTION MOULDING 5. ELECTROPLATING/FINISHING

6. RISK PURCHASE/LIQUIDATED DAMAGES

i) Can you define "RISK PURCHASE"? How does it operate?

ii) A company has a risk purchase clause in its contract with a vendor. The vendor fails in his supplies and the buyer buys the product from the open market incurring a loss of Rs 1.5 lakhs. The vendor refuses to pay. What can the buyer do?

iii) What is meant by liquidated damages? Can you give an example of how it can be applied.

iv) A purchase contract between a public sector company and a generator manufacturing company has a liquidated damages provision for delayed deliveries @ 1% per week subject to a maximum of 8%. The generator was late by 6 months. The purchaser applied the L.D. clause. However the project for which the generator was meant had been delayed for 1 year. The vendor argued that the buyer was not put to any loss as a result of the delay in the supply of the generator. If you are an arbitrator in the case what would you do?

v) The L D clause is really a penalty though many write "not amounting to penalty" in the clause. Is the L D clause valid when the buyer has not incurred any damage for which the L D is claimed?

vi) A purchase contract has an L D clause. A vendor delays deliveries and says there was a strike in his factory. This was not known to the buyer who enforces the L D clause. Has the vendor a case? (Handwritten note: "he valid")

vii) Will a Risk Purchase clause in a case where a force majeure situation is proved? (Handwritten note: "be waived")

viii) The vendor delays deliveries and the buyer gets the product from the market at twice the contracted price. The vendor argues that it is available for just 10% more and has produced proof of this and says the buyer did not buy prudently. As a judge what will you do?

ix) A vendor fails in supplies and the buyer invokes the Risk Purchase Clause and buys the product at twice the price. The difference is Rs 12 lakhs. The vendor refused to pay and said that the quality of the product was far greater than the quality contracted for and hence the price difference. The quality contracted for is available at the same price. Has he a case?

x) Can an L D clause and a Risk Purchase Clause be applied together?

7. PURCHASE COMMERCIAL TERMS

i) A purchase bid usually contains two distinct portions - the technical bid and the commercial bid. What are included in these portions?

ii) What are the usual commercial terms and conditions included in a Purchase Contract?

iii) If a vendor has not accepted a specific item in the contract, say an L D clause, what should he do legally to make his objection valid?

iv) Should warranty clause be part of the technical portion of a purchase order along with specifications or part of the terms and conditions of a purchase order?

v) Suppose there is a breach of a specific condition in a contract, say on deliveries. What is the remedy for the buyer?

vi) Should all terms of a contract be spelt out in the contract itself or do you think that the law of the land can take care of these, for example the Sale of Goods Act or the Contract Act?

vii) Is there a difference between guarantee and warranty? If a vendor has breached a warranty clause can the contract be rescinded?

viii) What is a force majeure clause in a purchase order. What situations are generally included in such a clause. What is the significance of this clause?

ix) Rejection of goods is one of the major areas of dispute between buyers and vendors. How should this problem be worded in Purchase Order. For example is it necessary to specify the method of testing for quality, and if so is the vendor's approval on this necessary?

x) Should a purchase order have a provision for cancellation of the contract. Will it, by its very nature, be one-sided. Should there be a provision for compensation in case of cancellation?

8. MATERIAL CODIFICATION/STANDARDS

i) Material identification these days is considered very important in Materials Management. A coding system is generally recommended instead of the system of identification by description. What are the advantages of a code?

ii) Can you mention the names of a couple of standard coding systems? How many digits do they use and what do these digits represent?

iii) Have you heard of the Kodak or NATO Classification system? If so, what is the structure of these coding system?

iv) What is your opinion of alphabetical or Mnemonic coding systems?

v) Codification of Spare parts poses the biggest problem as it usually contains references to the OEM's part number. What will you do to tackle this?

vi) Have you any practical experience of coding materials? If so what problems did you encounter in this work and how did you tackle them?

vii) What are standards? Do you think it is better for a company making TV sets to follow International standards or to adopt their own Standards? What is the reasoning behind your answer?

viii) The Bureau of Indian Standards has laid down many standards but many complain that some of them are very old and no attempt is made to update them as in the case of foreign standards. Is this true?

ix) Standardisation in a company helps procurement and also leads to variety reduction. How is this made possible?

x) A company is starting a new project and the Project consultants have advised that the best time to start codification is before

the start of the project itself. Do you agree? What could be the advantages of the consultant's suggestion?

9. COMPUTERISATION OF MATERIALS SYSTEMS

i) It has become a fad to computerise the materials system these days but most unfortunately in most cases, the manual system is just being translated into the computer system. What is wrong with this? What else do you think should be done?

 ii) "The starting point of good computerisation is to make a good structured system design giving an overall picture of the entire system and also showing the relationships between the various components of the system." Can you comment on this statement? What do you mean by a system design?

iii) Many people design a computer system without consulting the users. Even if they are consulted they cannot express an opinion because of their ignorance of the capabilities of a computer. The result is a half-baked computer system which does not exploit the capabilities of a computer and is no better than a manual system. What are your views on this matter and how do you think such a situation can be remedied?

iv) What do you understand by the term "a Materials system"? Can you identify some parts or modules of this system?

v) No part of the Materials System can be independent. There are very strong relationships for example between Production and Purchase and between Stores and Purchase etc. Do you not think that someone should have a clear idea of the entire picture before one attempts to draw up a Materials system. Who do you think is the best man to do this? Is it the consultant?

vi) Speed and accuracy are two main advantages of the computerised system. The production of a variety of reports has another advantage which leads to better decision-making both for operations and control. Can you explain how?

vii) What the computer can give is what one puts into the computer. If there is indiscipline among the staff and data is not fed in time or is fed wrongly, the computer will produce wrong information - GIGO. How will you remedy such indiscipline?

viii) What in brief do you think are the benefits of computerisation of the materials function? Should a small company go in for computerisation?

ix) Have you heard of LAN network? (Handwritten note: "Local Area") It is usually said that it is ideal for Materials. Can you describe it?

x) Today people are using EDI (Electronic Data Interchange) in the purchasing function. Do you know anything about it?

10. STANDARDISATION/VARIETY REDUCTION

i) What precisely do you understand by the term "Standardisation"? Does it pertain only to the use of International or national standards?

ii) A very big engineering company has found out that they are using a variety of components and parts serving the same purpose. They wish to embark on an exercise in standardisation. How best can they accomplish their task?

iii) A TV company in India has taken a decision to use its own company standards for its components and parts. Do you think it is a good policy? The company feels that it can make more money on selling parts than it makes on the sale of TV sets. Do you feel that it is a good argument?

iv) What do you think are the benefits of standardisation in a company? What specific advantages accrue to Purchasing as a result of standardisation?

v) A new automobile company feels that it should have all standard parts, without any part unique to itself. What precisely does this mean? What are the merits of such a policy?

vi) How does standardisation affect inventories? What precisely do you understand when one talks of "variety reduction, resulting from standardisation"?

vii) How does material codification help standardisation?

viii) A company has patronised seven air conditioning companies for the purchase of its AC equipments. A consultant has advised them that standardising on one company's products will help them costwise. What is the rationale of this advice?

ix. Can you mention six areas in a TV company where the concept of standardisation can be usefully employed?

x. A State transport Corporation has buses manufactured by 5 different companies and 18 models in all. A Consultant has advised them that standardising on one model of one company will help them greatly. How?

11. VENDOR QUALITY ASSURANCE

i) You will appreciate that Supplier Quality Assurance is an important responsibility of the Purchase Department. How best do you think can this task be undertaken by a Purchase Manager in regard to some very critical items used in Manufacturing?

ii) Under ISO 9000, quality assurance has been emphasised as a very critical area and some stringent conditions and procedures have been laid down. Are you aware of these? What do you think are some of the difficulties that the Indian Buyer may face in implementing these procedures?

iii) Generally in India, supplies from vendors are inspected at the premises of the buyer after they have been delivered by the vendor. This creates problems to the Buyer when goods are found to be unacceptable. What do you think are some of the problems involved in such a procedure?

iv) What alternative procedures do you recommend to inspecting quality of delivered supplies at the Buyer's Store?

v) In most cases of a company's purchases, quality inspection procedures have been laid down in the BIS standards. These procedures, however, take a long time, especially since the quantities are usually quite large. Because of this, the Inspection Departments adopt short cut methods and do not do their work properly. What is the remedy? (Handwritten note: "(AQL)")

vi) What do you mean by Acceptance Quality Level? Do you think it is an adequate system of inspection, especially for highly critical items?

vii) Do you recommend inspection by a third party at the supplier's end before despatch of the supplies to your factory? Give reasons for your answer. Would you prefer this system to inspection by your QC Inspectors? Why?

viii) Today, quality is becoming obsolete very fast and better quality products are being made literally overnight. By buying by specifications, therefore, one loses. How do you think one can overcome this problem?

ix) It is generally felt these days that one's Technical or R & D Department should get actively involved in Supplier Quality Assurance. What is your opinion?

x) Once a supplier delivers his products and collects his money he may not bother about quality if the product fails in actual performance. What is the remedy for this?

12. VENDOR PROCESS PLANNING

i) With speed of change in technology there is a constant urge on the part of companies to upgrade the technology of the components and parts used by it in manufacturing. For bought-out parts, this involves liaising with Vendors to adopt the new quality standards. How best do you think this can be done?

ii) Have you heard of the "partnership concept" in regard to buyer and vendor? This involves a close interaction between various Departments of the buyer's company and the Vendor in developing new processes or new quality of the supplies made by them. How can this be done?

iii) Do you think that the purchasing company should get itself involved in the Vendor's processes of manufacture? If it does, what are the likely benefits?

iv) You have a vendor who does not want to change his technology. (And there are many in India). He is a monopoly supplier for you and has been associated with you for several years. The result of this is that your product is suffering in the market. What would you do?

v) It is common to see these days a Buyer investing in the Vendor's company to upgrade the process of manufacture. Do you think it is a sensible idea?

vi) A company is deciding to "BUY" rather than making as it has been doing all these years. The historical reason for making a particular component as it has been doing so far, is secrecy. This is, however, proving very costly. What kind of contract can it enter with the vendor in regard to maintaining the secrecy of the manufacturing process?

vii) A buyer feels that it can advice the vendor in regard to upgrading its manufacturing process but the vendor does not want interference, and neither is it prepared to change on its own. There is no other vendor and imports are likely to be very expensive. What would you advice?

viii) What do you understand by "change in the manufacturing process". Can it improve the quality of the item manufactured?

ix) Can you give a couple of examples of items which can be improved by changing the process of manufacture?

13. MATERIAL PLANNING/INVENTORY CONTROL

i) You must have heard of the technique of Materials Requirements Planning (MRP). Can you explain how it works?

ii) Inventory tends to increase in most companies because of the absence of a good materials planning system. Do you think this is a fact? How is materials planning best carried out? What inputs are essential for a good Materials Planning system?

iii) Today a number of companies enter into blanket contracts with vendors once a year and they draw their supplies as per exact requirements. This saves the problem of issuing purchase orders on each occasion and inventories can be under good control. Do you think this is a good idea? What problems are likely to be encountered in regard to such blanket contracts?

iv) Materials Planning becomes rather tricky when the company is engaged in job work, making tailor-made equipment for its customers. What strategy would you employ in such cases?

v) What is the difference between inventory control and inventory reduction? A company had targetted an average inventory of Rs 6 crores and had achieved a figure of Rs 5.8 crores. Do you think it is good inventory management?

vi) Inventory is caused by various factors. Can you mention four of the main ones and also state how these factors can be controlled?

vii) The Japanese say that "Inventory is the biggest evil in a company". They have adopted various measures to get rid of inventory. They compare inventory to cancer which attacks a man's body and indentifies itself when it is already too late for any remedy. We, on the other hand, feel inventory is a "necessary evil". What is your view?

viii) Inventory is considered as "an asset but treated as a liability". What does this mean?

ix) The public sector had as much as Rs 27,000 crores of inventory at the end of the last financial year and this represented 22% of the total investment in the public sector. What do you think are the reasons for the accumulation of such high inventories?

x) It is usually said that inventory is the biggest killer in many companies which have fallen sick. Do you contribute to this view? How can we control inventories?

14. PROCESS PLANNING/TOOLING

I am not very familiar with this subject.

15. SPARE PARTS MANAGEMENT

i) What are some of the major problems in spare parts management in India? How can we tackle them?

ii) What are rotables spares and insurance spares? How do you classify insurance spares?

iii) It is usually said that poor maintenance practices are primarily responsible for the accumulation of spares in the country because people want to avoid problems relating to stockouts. What is your view?

iv) It is usually said that there are two major problems in India in regard to spares management. One is the presence of a large number of imported equipment. Secondly we have a tendency to use our equipment far more longer than most industrialised countries. To add to these two problems, is the problem of obtaining spares for old machines. What do you think are solutions?

v) Many old spare parts can be reclaimed by various processes like metalising etc. Do you know anything about this subject?

vi) Poor maintenance practices and the absence of records relating to spare parts usage are said to be two of the main difficulties in spare parts management. Do you think these can be remedied?

vii) It is usually said that there has to be a very close coordination between Production and Operations with the Warehouse regarding obsolescent obsolete machinery so that unnecessary purchases of spares need not be made for them. Can you expand this concept?

viii) Initial provisioning of spares poses the biggest problem in spares management. The OEM tends to dump unwanted spares on the buyer and he makes very good margins on these. Any comments?

ix) What is your estimate of surplus and unwanted spares in India? One guess is that it is around Rs 15,000 crores. What do you think can be done to prevent such unwanted accumulation of spares in future?

x) Do you think that a strong Government policy on spares is called for to prevent the proliferation of spares in this country, especially imported spares?

xi) Do you think that making the Maintenance Department fully responsible for spare parts inventory will help to reduce such inventories?

16. DISTRIBUTION/LOGISTICS

i) What do the terms "Logistics" and "Physical Distribution" convey? What do we mean by "the public distribution system"? How are the three different?

ii) What do you understand by the "Total Distribution cost concept"?

iii) It is usually said that the distribution channel has to be well designed after careful analysis and planning. What are the elements in this and how would you go about designing an efficient system?

iv) Have you any comments regarding the use of the railways as a transportation means for an item like TV sets? What are the reasons for your answer?

v) When we consider distribution costs, one of the major factors is obviously transportation costs. A company finds that 8 tonnes of product has to be moved from place A to place B on a regular basis. The road transport cost is Rs 780/- per tonne while the rail transport is only Rs 670/- per tonne. Which means should the company choose and why? (Assume that the road transport will take 3 days to reach and the rail 17 days).

vi) What do you think are the comparative advantages of road vs rail transport?

vii) One of the major problems in transportation in India is the problem of claims. Can you tell us something about how one should go about the business of making claims? What are the matters one has to be careful about?

viii) Can you tell us something about containerisation? What are some of the problems of containerisation in India?

ix) Depot location is one of the major problems in physical distribution management. Why is this so, and what proposals can you offer for an efficient and economical system?

x) Assume you are the manager of a distribution warehouse of your company. You have received an order from a customer. What are the actions you will take till the despatch of the supplies?

17. TRANSPORT/EXCISE/OCTROI

i) How will you make a choice of transportation for moving your goods on a regular basis to various destinations in India? Assume you are the distribution manager of a company making TV sets.

ii) What are the comparative advantages and disadvantages of rail and road transportation in terms of short distances (say less than 300 kms) and long distances?

iii) Containerisation has become a great boon for business and industry the world over, but in India it is catching on very slowly. Why is this? What do you think could be done?

iv) The main advantage of containerisation is that it is an "inter-model means". What does this mean? What are its advantages compared to the traditional means?

v) What is a carrier's responsibility in regard to loss or damage in transit of goods entrusted to him? Is this equally applicable to the Railways?

vi) Claims pose the biggest problem in transportation. Can you tell us a good procedure that may be followed? What do you think is the best method of follow-up on claims made on the Railways?

vii) Are you familiar with the new INCOTERMS? Can you tell us two differences between the old and new terms?

viii) What do you understand by the term "Load factor" in road transportation. How can one improve the load factor?

ix) What do you understand by the term marine insurance? Does road transportation come within its purview?

x) Can you tell us something about MODVAT? Do you think it is a good system? What are its advantages?

xi) There has been a lot of agitation of late in regard to the abolition of octroi. What is the cause for such an agitation? What is the main problem in the levy of octroi and why are the transporters particularly agitated over it?

18. VENDOR COST ESTIMATES

i) Do you think it is possible to find out what the costs of the vendor are to produce and market the materials you are buying from him? What do these costs consist of?

ii) How do you distinguish between COST and PRICE? How would you do a cost/Price Analysis?

iii) The words COST and PRICE are used in two senses in Purchasing Management:

(i) PRICE = Various costs like freight, packaging $\text{etc.} + \text{COST}$ ($\text{i.e. the landed price at the buyer's warehouse}$)

(ii) PRICE quoted by the vendor = $\text{his COST (raw materials, labour, overheads)} + \text{His PROFIT.}$

Do you not feel that a Purchase Manager should be concerned with his "costs" rather than the price that he pays for a product that he buys?

iv) While evaluating the costs incurred by a Vendor what you are really evaluating is the degree of profit that he is making so that you may know that you are paying the right PRICE for the item. By knowing exactly the vendor's costs and finding it reasonable, would it be right for you to conclude that the price he has quoted is right?

v) It is usually said that a COST/PRICE Analysis is desirable before any negotiation with the vendor on price. Do you support this view?

vi) You have requested 6 vendors who have quoted, to disclose their costs. All of them have done so and you are no wiser in regard to the prices because all of them have disclosed a very reasonable margin of profit. How will you utilise this information usefully?

vii) While evaluating costs, you find that a medium-sized company has greater percentage of overheads than a small scale company but yet the small-scale company's prices are only marginally lower than that of the bigger company. How will you tackle the situation?

viii) A vendor has disclosed that it has a profit margin of only 3%. Do you think that he is speaking the truth?

ix) You have insisted that all vendors disclose their costs. Four of the six vendors have done so. Two have not, but their prices are lower than the others. How will you proceed?

x) Do you think it is possible or desirable to evaluate the costs of a vendor? If not how will you know whether you are paying a reasonable price for a product?

19. RATE CONTRACTS

i) What are rate contracts? How are they different from RATE AND RUNNING CONTRACTS or BLANKET CONTRACTS?

ii) Most rate contracts for long periods, say one or two years, generally have an escalation clause. Can you tell us how such a clause is constituted?

iii) In most rate contracts, there is a price escalation and a price reduction clause. Have you had any experience of including these clauses in a contract? How do you word them. For example how will you make allowances for increased labour costs?

iv) A contract has an escalation clause for price increases in raw materials. The company wants to increase the cost of a product in direct proportion to the increase in raw material costs, on the basis that 60% of the price is that of raw materials. The Vendor does not agree. What could be his reasons?

v) When are rate contracts useful? Can they be applied for all purchases? A vendor says that he will give discounted rates, if materials are taken in larger lots at a time. The discount is worth 10% beyond a quantity which is equal to 5 months' requirement. Otherwise, purchases are made once a month. How will you proceed?

vi) Are there any risks in rate contracts where a price reduction clause is not included? The buying company feels that prices are not going to reduce anyway.

vii) A vendor has offered a cumulative discount clause in the rate contract. What does this mean? Is it attractive for a company to accept this, compared to the offer of another vendor whose prices are lower but the rates will be constant during the pendancy of the Contract?

viii) Do you think that rate contracts can be entered into for purchases other than for goods? If so, can you give some examples?

ix) A construction company offers a rate for building at the rate of so much per square foot of built up area? Is this a rate contract? If so what are the essential items that should be included in such a contract?

x) What are the advantages of a rate contract in purchasing, over normal purchase orders? Do you think that better inventory control is possible in introducing R/C's?

1. A B C ANALYSIS

i) What is the underlying philosophy of ABC Analysis? How does it work and on what principle is it based?

ii) How are ABC items categorised? For example is it based on the value of purchases per annum or the cost per unit $\text{etc.}$?

iii) Can ABC analysis be used all on its own or do you think it is better to use it with some other classification, like VED or HML, for example? What is the reason for your answer?

iv) When we talk in terms of just-in-time inventories these days do you think it is proper for a company to stock say one year's requirement just because it is a C item? What is the rationale behind your answer?

v) Have you heard of Pareto's curve? What is this significance of this in inventory control?

vi) You are aware that in the TV industry there is a very fast change in technology. What is used today becomes obsolete tomorrow and one generally finds that he cannot get a spare part for an old TV set. In such a situation do you think a company like Videocon should adopt ABC analysis and stock say 6 months requirement of a C item?

vii) How does ABC analysis differ from HML analysis?

viii) Why is selective inventory control advisable compared to strict control of all items?

ix) Have you any practical experience of having applied ABC system for inventory control? What has been your experience? Do you think it is a satisfactory system?

x) In spare parts management do you think that ABC type of control is the best?

2. MAKE OR BUY ANALYSIS

i) When Mahindras or Premier Automobiles established their plants they had set up plants for making quite a large number of their parts and components. Maruti today hardly makes any parts in its factory. What is the reason for this difference?

ii) Today the philosophy in equipment manufacturing companies is to buy rather than make. Do you know why this is so?

iii) What are the considerations that will prompt a manufacturing company to decide on making rather than buying its components?

iv) A company is today making all its components within its factory. It finds that it is not able to face competition from a new factory making the same goods but which is buying the components from the market. Do you think such a situation is possible? What could be the reasons for this?

v) Today many companies are buying "services" like for example accounting, staff cars, canteen, legal, office cleaning $\text{etc.}$ Do you think this is a good idea?

vi) Many companies prefer leasing compared to buying their own equipment. Why is this so?

vii) Many departmental Stores have come up in India. Do you know how they operate? Some of the items which they sell have their own trade marks. Do they make their own products?

viii) A company has a problem of cost if it makes all the components itself as the lot sizes are small in number and are not, therefore, economic. There is a problem of patents and secrecy in the technology involved. What should they do?

ix) Many pharmaceutical companies get their products manufactured on a system called loan licensing. Do you know about it? If so how does the system work?

x) Do you think that the Purchase Manager can contribute to a decision of make or buy? How?

3. ECONOMIC ORDER QUANTITY

i) What is the rationale of the EOQ concept? Do you think this technique is valid in today's age when people talk of JIT and zero inventories?

ii) The EOQ technique takes into consideration the cost of purchasing and the cost of stocking. What are the elements of these two costs, $\text{i.e.}$ what are the various costs which go to make up these two costs?

3. ECONOMIC ORDER QUANTITY

iii) Do you think the EOQ technique can be applied in all cases irrespective of the nature of the item? If no, can you cite some examples where it should not be applied?

iv) A company in Bombay decided that it will apply EOQ to imported products and took a decision to get all the items by air. Do you think it was a good decision? What is the logic behind your answer?

v) What do you think is the inventory carrying cost these days? How is it calculated?

vi) It is generally being felt that the EOQ concept has largely lost its significance and relevance. Do you think this is true?

vii) Have you any experience of applying the EOQ technique? What has been your experience?

viii) In deciding upon the EOQ quantities, do you think fixing them up say once in two years is adequate? If not what would be your recommendations?

ix) Do you think EOQ can be applied in a company which does job work $\text{i.e.}$ taking on work in terms of specific jobs as per customer's requirements and where each job varies one from another?

x) A company is buying paint on the basis of EOQ. Do you think it is a wise decision?

4. LIAISING (VENDORS/BANKS/CUSTOMS)

i) There is a lot of liaising work with regard to vendors. What sort of work is involved?

ii) Follow up has become very important with vendors these days thanks to the problem of getting materials on time. How best can this be done?

iii) Why do you think close follow up with vendors is important, especially in regard to category A items?

iv) What system of liaising do you think will work best with a vendor situated very far away in another city and who supplies critical items to your company?

v) Transport is a very critical item in purchasing these days and a close liaison is necessary with one's transport contractors. How can this task be best achieved?

vi) Today a close liaison is required with Banks by any company both in regard to their loan accounts and the speeding up of transactions. Do you think that the Materials Department should be involved with this function?

vii) The Materials Department is very much concerned with the company's bankers because the Department is responsible for a good part of the working capital. How do you think the Purchase Manager can tackle a Banker?

viii) There are many people outside the company that a Purchase Manager has to be in close relationship with viz. the Railways, Customs, Port authorities, Excise officials etc. Do you think that the Purchase Manager should tackle all these work by himself or should he entrust them to others? What is the reasoning behind your answer?

ix) Clearing and forwarding is a tricky subject in most companies as it involves the carrier and the Railways/Airport/Port authorities. What is the best method of doing this work?

x) Do you think that personal relationships help in dealing with Vendors/Banks and Customs? How?

5. PURCHASING POLICY

i) What is the difference between a purchasing policy and a purchasing procedure?

ii) Who do you think should formulate a company's purchasing policy? Do you think the Board or the CEO should be involved in it, say for example in regard to imports or for Capital equipment $\text{etc.}$?

iii) What do you understand by the term "purchasing policy"? What subjects are generally included in such a policy?

iv) A company has a policy which is across the Board from buying of project materials to nuts, bolts and stationery. Do you consider this good? If not, Why?

v) Circumstances sometime make it impossible to follow "policies" specially in the context of uncertain and changing environment. If you are a Purchase Manager and are faced with a situation like this $\text{i.e.}$ where your buying decision conflicts with policy, what would you do?

vi) Do you think that a policy should be rigid or it should be more of a "guideline"? What is the rationale for your answer?

vii) A Purchase Manager says "a policy makes me a boxer with his hands tied behind his back. I cannot use my brains or my skills". Do you think his remarks are valid?

viii) A CEO says that "a policy should be followed in the spirit and not in the letter". Do you think it is a fair attitude? Why?

ix) A company wants to formulate a purchase policy and has given the task to the Financial Controller. Do you think this would be proper method to adopt? What are the reasons for your answer?

x) Do you think the legal and Finance Department should be involved in formulating a purchase policy? Why do you take a particular view?

6. CONTRACT WRITING

i) Do you think a Purchase Order is a Contract? Why? If so what do you think are the necessary ingredients in such a contract?

ii) A company is entering into a contract with a company for setting up a cement factory. What do you think should be done of the major items relating specially to materials to be included in such a contract?

iii) What will you include in a Purchase Contract regarding Quality Assurance of supplies?

iv) You are buying capital equipment from a local supplier. His job is to design the equipment according to certain performance characteristics required by you and manufacture and install the equipment. What conditions will you include in the Contract regarding Quality Assurance?

v) What is the difference between Guarantee and Warranty? What warranty clause would you include in the purchase of TV tubes from a manufacturer?

vi) Can you enter into a contract with an Agent of a manufacturer say while you are purchasing a generating set costing Rs 30 lakhs? What would be the major provisions in such a contract?

vii) Do you think that for the purchase of capital equipment for a major project undertaken by your company, the Purchase Manager alone would be adequate for writing the contract or do you think others should be involved? If so, who and why?

viii) Though many provisions exist in a Contract, one finds that it becomes difficult to enforce them because of delays in courts. What is the remedy?

ix) Arbitration is a usual remedy for resolving contractual disputes. How is this carried out and what provisions should exist in regard to this matter in a purchase contract?

x) Can there be an arbitration clause on quality in a purchase contract?

7. COORDINATING (SALES/PRODUCTION)

i) In the matter of controlling inventories, it is usually said that coordination between Sales Production and Purchase almost on a weekly basis is most essential? Why is this so?

ii) A company finds that its finished goods inventory has jumped from Rs 3 crores in January 1993 to Rs 7 crores in October 1993. The Production Manager says it is due to bad forecasting while Sales puts the blame on

recession. Do you think these arguments are valid? What could have been done to prevent this situation from happening?

iii) What do you understand by the term coordination? Is it merely sitting round a table and exchanging information or ideas or exchanging MIS reports?

iv) Today inter-personnel relationship are stressed in the coordination process. What does this involve?

v) In what specific areas should Purchase coordinate with Production and Finance? What is the significance of the subjects mentioned by you?

vi) Do you think coordinating is best done by formal or by informal means? Why?

vii) A CEO feels that "coordinating" means "Getting prior approval of". Is he right?

viii) In spare parts management close coordination with Maintenance is very vital for controlling inventories. How can this be done?

ix) What benefits can be had by a very close relationship between Purchase and Sales Departments?

x) "Coordination should take place in the early stages of an activity if it is to be really effective. It is the action that has to be coordinated not the results of executive action. If one coordinates results one is merely presenting a record of what has already taken place and, therefore, one cannot have any influence on what preceded the results." Do you agree with this view? Can you cite a few examples from the Materials function?

8. HANDS-ON USE OF PC

i) In what ways can the use of a computer help in the Materials Management function?

ii) A company has purchased computers for all its departments and the computer manager has merely translated the manual systems into the computer. The result is that the company has had no real benefits. What do you think went wrong?

iii) What do you understand by the term "Hands on experience on a computer"? Have you had such an experience?

iv) What benefits do you think can a person have if he has had "hands-on experience on a PC", compared to one who knows quite a lot, but has had no personal experience.

v) Do you think that having had a very limited hands-on experience with a PC would be of real benefit to a person? If not how could one have a real benefit?

vi) A good computerised system involves the designing of a good structured system where the capabilities of a computer are fully exploited both for operations and control. Do you think this is a true statement? If so what does this involve?

vii) "I do know how to operate a computer, but I have a good idea how it work or what it is capable of," says an MD of a company. Have you any comments?

viii) "Hands-on experience with a Computer should not be confined merely to the clerks who use a PC but by everyone upto Senior Managers". Why is this desirable?

ix) "A computer will do what you want it to do". What does this mean and involve?

x) Do you feel that computerisation is a cure for most Management problems especially regarding accuracy, productivity, union problems, decision making $\text{etc.}$?

9. MATERIALS SYSTEM DESIGNING

i) When we think of computerisation we must first think of a good system design. Can you please say what this really involves?

ii) If you are given the task of designing a Materials System what are some of the important modules that you would include?

iii) Purchasing would be an important element in a Materials System. What aspects would you cover in such a system?

iv) A Supplier Master file is a necessary part of a Materials System. What information would go into it?

v) How will you proceed step by step to design a good Materials System with computerisation as an objective?

vi) "Inventories do not come into existence on their own - they are created by various factors". While designing an inventory module in a Materials System how will you integrate the various factors which lead to the creation of inventories so that controlling inventories becomes simpler.

vii) How will you co-relate the physical distribution system with the materials system in a total integrated logistics system?

viii) Describe a Systems Flow Chart and state what its function is. What steps are involved in making such a chart?

ix) In a computerisation project one designs a system first. What are the subsequent steps?

x) How does one integrate Sales Forecasts and consequent production schedules into the Materials System? Where are the linkages?

10. TECHNICAL REPORT WRITING

i) In a feasibility study for a new Steel project coming up in Surat you have been assigned the task of writing a Technical report on the availability of materials. What topics will you include in the Report?

ii) Your company wishes to buy a running TV factory and you are part of the Technical team assigned to study and write a Report on the proposed purchase. Your area is materials. How will you go about your task?

iii) You have been asked to assess and report on the technical competance of a vendor from whom you propose to purchase an expensive and critical component. What areas will you cover in this Report?

iv) How will you structure a technical report on the viability of diversifying into an altogether different product line with special reference to materials?

v) How does a technical report differ from a report on a company's strategic plan for the next 5 years?

vi) A Technical Report that you are writing is meant to be submitted to your MD and two Directors of the Board who are all non-technical people. How will you go about this task?

vii) Some technical reports contain a report on the financial implications of the proposals. How will you go about this task assuming you have not much expertise in the area of financial management?

viii) In any report, technical or otherwise, what should be the broad structure of the contents?

ix) Today, Report writers use the computer for making out illustrations. How is this done?

x) Have you had any experience in writing reports, technical or otherwise? If not, have you been curious to find out what are the peculiarities of such writing?

11. DOCUMENTATION

I am not very clear what is really meant by documentation. I have framed some questions based on my own assumption $\text{i.e.}$ Documentation is the means by which you acknowledge material you have used from outside sources in the Report.

i) In a report that you are writing you have borrowed several information from various sources $\text{i.e.}$ text books, articles in journals, manufacturer's technical literature and catalogues $\text{etc.}$ You have to acknowledge them in the body of the Report. How will you go about this task?

ii) A bibliography of published literature at the end of a Report often is vague and one does not know what information is available in it and where. Many report writers use documentation as an alternative procedure. How can you do it?

iii) Does acknowledgement of sources from which you have borrowed information in writing your report help readers? How?

iv) Some use information borrowed from several sources in one's technical report but make no mention of these sources. Do you think this is unethical? Why do you say so?

v) Some writers feel that two much of documentation may make readers come to the conclusion that you have merely repeated what others have stated without any real contribution of your own. What is your view?

vi) Do you generally refer to available current literature on a subject when writing a Report?

12. NEGOTIATING (PRICES/TERMS)

i) Why do you think it is desirable to hold negotiations with vendors? Should this be a general rule or an exception? What areas of purchase are generally negotiated?

ii) It is usually said that "negotiations are meant to resolve conflicts" and that "there has to be a positive attitude by both parties to move from their stated positions towards an agreement." Can you explain this?

iii) One company as a policy calls all parties who have quoted to negotiations and asks them to re-tender quoting "lowest price". In the process the prices quoted by each vendor is known to all others. Do you consider this a good policy? Can you give reasons for your answer? The company's experience is that it invariably gets the best price.

iv) Some company officials demonstrate a very rigid attitude while negotiating mainly because they feel that their bargaining power is very strong. Do you think this is a good policy?

v) Do you feel that a person has to develop negotiating skills and he cannot go to a negotiating table to do "bazaar bargaining" If you agree, what skills are required in a good negotiation?

vi) It is usually accepted that a cost-price analysis helps in negotiations. What is such an analysis? How does one differentiate between cost and price?

vii) "One has generally to develop a strategy while negotiating in a project contract. There is a package consisting of several modules. The total package has to be advantageous and not necessarily all the modules". What are your views on this statement?

viii) During a negotiation, a vendor whom you consider as the best in terms of quality and delivery is rigid about his price which is higher than 4 others by margins of 3-8%. He says "sorry", and threatens to leave. How will you handle the situation? Assume you are anxious to get him round.

ix) Do you think a purchase negotiation is best conducted by a team rather than individually? What are the reasons for your answer?

x) It is generally said that "negotiation is an art". Do you think so. Can it be learnt?

13. LEADERSHIP

i) In all spheres of Management, human relations seem to have come to the fore as one of the most important traits that a manager should have. He must manage his men together as a team of which is the leader. What is implied in this statement? What exactly do you have in mind when one speaks of a manager as a leader?

ii) In the Materials Management context, the subject of human relations is of primary importance not only within the department but also in terms of Vendor relationships. Today, the concept is that a vendor should be treated as a partner and not as a rank outsider. How can one cultivate such relationships with a vendor?

iii) What in your opinion are some of the leadership skills that a manager should have? Do you think that such skills are inherent in a person or is special training necessary to impart such skills?

iv) Assume that your boss is temperamentally always agitated and loses his balance on the slightest issue. He shouts not only on subordinates but also at his Boss and practically with all vendors. Do you think you can try to bring him around to see reality? How will you go about this task?

v) Do you think that manager as a leader should have superior knowledge than his subordinates? For example, there is purchase manager who is not a technically qualified person. However, he has technically qualified subordinates to help him to analyse technical problems. Do you think that this manager will have a major drawback in the performance of his duties?

vi) A Manager is intrinsically self-opinionated and feels that he is a know-all. He will not tolerate others' views. Do you think he can become a leader and a good manager? Assuming that you are his boss, what would you do?

vii) A leader must guide his subordinates and in this process he has to be a good listener. What do we mean by a good listener?

viii) A person is a very participative type of leader and he generally goes by concensus. Unfortunately in his team, most people who contribute to discussions are not knowledgeable with reference to the specific problem with the result by

adopting this approach, wrong decisions are sometimes taken. How do you assess the leadership qualities of this manager?

ix) A good leader has to possess certain social traits which alone can make him acceptable to his peers and his subordinates. What do you think are some of the important social traits that a manager should have?

x) Can leadership qualities be acquired? What have you in mind when one talks of leadership qualities?

14. TEAM BUILDING/MOTIVATING

i) What do you understand by the term "Team Building", and what do you consider as some important characteristics of a good team?

ii) A person is excellent at human relations but has inadequate technical knowledge in regard to his assignment. He is able to get work done, but the quality is often suspect because of his shortcomings in regard to his technical knowledge. How will you assess this person?

iii) A person is excellent in regard to the job knowledge and can take excellent decisions. However he is a very poor leader and cannot tolerate inefficiency in subordinates. To make matters worse, he believes in groupism and feels that if all the subordinates team together there can be trouble for him. He produces excellent results but has a divided house within his department. How will you assess this person?

iv) You have a subordinate under you who is a loner. He is brilliant in his work but is afraid to mix with others. His work involves interaction with not only his colleagues in the Department but with others in other Departments. He is very shy by nature. These traits have an adverse effect on the quality of his performance and on the Department's performance. What would you do with this person?

v) Motivating subordinates is a very necessary part of a manager's job requirements. What is involved in this?

vi) Unlike old days, there is a high degree of specialisation in each persons work. The total work is divided among various people, with the result a team effort is called for in every work situation. How can such teamwork and a high sense of team spirit be brought about?

vii) We often hear that our cricket and hockey teams do not succeed primarily because teamwork is poor. What is implied in this?

viii) A Purchase Manager interacts with not only his team mates but with vendors, who are outside the company. Vendor relationships are considered essential for quality and delivery assurance. A vendor has to be motivated by the buyer in regard to both these factors. What do you think a purchase manager can do in regard to this matter?

ix) Negotiating with vendors is usually done by a team of managers representing say the user department, Production, Engineering, Finance and Purchase. There is a teamwork involved. What should be the characteristics of such teamwork?

x) Do you think a person can be motivated merely by admiring his work openly? A Manager praises the work of his subordinates publicly and is prepared to close his eyes in regard to their mistakes. The result is that the subordinates have been developing a sense complacency. Do you think this is right?

xi) It is generally believed that if Managers are able to create an atmosphere in which people obtain satisfaction like recognition, achievement, advancement etc, they will be fully motivated. Do you agree with this view?

15. PLANNING/ORGANISING

i) In a business environment, it is generally considered today that one has to do a PEST Scanning $\text{i.e.}$ the Political, Environment, Social and Technological analysis. What is involved in this and why is it done?

ii) What precisely do you understand when one talks of strategic planning? What is the difference between strategic planning and other types of planning, for example production or materials planning.

iii) What is the difference between a Long Range Plan and a Short Range plan? A company takes a decision to acquire another factory producing altogether different products. This is a strategy towards diversification. Not much thought has been given to the purchase except that the Managing Director feels that since the company already has an extensive marketing network it can sell the new product without difficulty. Is there any planning involved in this? If not what are the defects of such a decision?

iv) A Purchase Manager does not do any purchase planning. Whenever any new requirement comes up he merely floats an Enquiry in the market, obtains quotations and satisfied the user. The user is unaware of the degree of availability of the product, its varying quality, or its price. Do you think that this

Purchase Manager is right? Should he not do any advance planning in regard to scanning the market for possible suppliers on a long term basis?

v) When we talk of purchase or inventory planning, what precisely is involved? Is it a single person's responsibility or do you have other views?

vi) What do you mean by the term "organising"? How can you organise a purchase department of a company which has six factories in the Western Region with Headquarters at Bombay?

Assume that about 50% of the materials purchased are common to two or more factories.

vii) It is generally said that an organisation has to keep pace with the changing environment and as such organisation should be constantly reviewed and altered where necessary. What is involved in this?

viii) What do you understand by the term Span of Control? A General Manager of a company has got 12 Departments under him and in fact 18 people report to him directly. Do you think the system is good? Why?

ix) Is there any difference between accountability and responsibility? If so what is it? A purchase officer blundered in regard to a specific purchase resulting in a loss of Rs 2 crores to the company. Can the Purchase Manager be made accountable for this loss? Please give reasons.

x) What is the difference between a line function and a staff function? Is Purchasing a line or a staff function?

16. AUDITING/FOLLOW UP

In regard to the word "auditing" I do not know in what context it is used, $\text{i.e.}$ whether it is an audit by an auditor or a self-audit by a manager. I am assuming the latter meaning in the questions that follows:

i) It is generally said that every Manager must do a good self-evaluation of his performance and also the performance of his subordinates. Such performance should not always be in general terms but should be on the basis of quantitative measurements. Is this statement true? Can you give a few examples?

ii) A self-audit is basically a control system where a Manager gets a good feedback in regard to how he is doing and he is able to take such corrective measures as necessary in order to improve his performance. What type of self-audit should the Purchase Manager do?

iii) In some companies every major decision is subject to a pre-audit. A third party evaluates the proposal critically and investigates whether improvements are possible in regard to the proposal. In the Purchase Department the quotations are evaluated in terms of price as well as the commercial terms involved. However, this system causes delays and quite often there is a friction between the auditor and the Manager. The top management is continuing the practice because it feels it is beneficial costwise. What is your reaction to this system?

iv) A good system of self-audit for the purpose of control involves setting up of a good Management Information System to enable one to gauge the efficiency of performance. Can you suggest some such reporting in regard to the inventory control system?

v) The Managing Director of the Company finds that the Purchase Manager has a good system of self-audit for his department. He insisted on the evaluation report being sent to him for his information. However instead of the objective of improving performance it turned out to be a means of criticising inadequate performance. Do you think the Managing Director was right?

vi) A self-audit throws up areas of deficiencies in performance. This is followed up by corrective measures, and quite often one person cannot do it, and this exercise involves both superiors and subordinates. In a specific case, the Purchase Manager felt that a subordinate has to be shifted. Senior Management was not satisfied with the reason for the change. The existing organisation continued and was causing several problem to the Purchase Manager. What do you think could he do?

vii) In Purchase Management a lot of follow-up is necessary with vendors. Why do you think it is becoming more important today than ever before?

viii) Follow up in Purchasing is resorted to, to assure prompt deliveries. This has become important because of the cost of keeping inventories. What do you think should be the best method of doing such follow up in a Purchase Dept?

ix) Follow-up is generally very expensive because of the cost of FAX, telex, telephone, $\text{etc.}$ This is unnecessarily adding to the purchasing cost, which as you know does not produce any value to the product manufactured. How can such follow up cost be reduced?

x) Especially in International purchasing, follow up is required for not only vendors in regard to despatches but with carriers like shipping companies or railways, with insurance companies for claims $\text{etc.}$ How do you think such activity can be organised especially in regard to insurance claims?

17. VALUE ENGINEERING

i) Can you please state in a few words what is implied in Value Analysis or Value Engineering. In fact can you start by defining the difference between these two terms?

ii) What do you think is the Purchase Manager's role in Value Engineering?

iii) Once, the concept of Value Analysis referred to cost reduction through material substitution. Today the concept talks of analysing of costs which go into manufacturing in order to find out whether the costs are producing value or not. Non-value producing costs are attacked by elimination if possible, or else by drastic reduction. Those costs which produce value are examined to find out possibilities of reduction of cost to produce the same value or efforts are made to produce more value at the same cost. Have you heard about this concept?

iv) Have you done any Value Engineering exercise and if so can you describe how it was carried out and what were the results?

v) Value Engineering today is considered one of the most potent weapons for cost reduction. Do you think it is true? How does one go about doing this?

vi) Value Engineering unfortunately has had very little recognition in many companies, who prefer to go along the trodden track, rather than seek new ways of doing things. Is there anything wrong with this Indian culture? What are your views?

vii) Value Engineering has contributed the maximum in Japan leading to new products, and new technologies in regard to the manufacture of these products. Cost gets reduced and quality gets improved. Do you have any knowledge about what is happening in Japan? If so, can you give a few examples?

viii) It is necessary in a Value Engineering exercise to have a team representing several disciplines and it is generally considered an inter-disciplinary approach towards problem solving, where creativity is of the essence. Do you think this is true? Can you elaborate on this concept?

ix) There are new materials coming into the market almost every day, be they electronic components or plastics, which are all capable of substitution for traditional items. The person who is in touch with the market is the Purcahse Manager. How can he use his position to bring about changes in the manufacturing process?

x) Why do you think Value Engineering has not yet caught on in Indian companies? Are we as a nation lacking in creativity, which is of the essence in Value Engineering?

18. PERT/CPM

i) Today one of the most important trends in Management is to use "Time" as a major resource and give as much importance to it as men, money, machines and materials. How is this concept translated into practice? (PERT/CPM also uses this concept).

ii) In project buying it is very desirable to know precisely when a particular item is required. A PERT Chart helps in identifying the exact time when various materials are required. Assume that such a Chart has been prepared but as the project progresses there have been considerable delays in its execution at practically every stage. How can the Materials plan be altered to cater to the changed circumstances?

19. SQC

I am not very familiar with this subject.

MATERIALS MANAGEMENT (GENERAL)

1 Can you explain the integrated concept of Materials Management? What are its benefits?

2 What should be the organisation of the Materials Department and whom do you think the Materials manager should report to? What are the areas of responsibility that should be assigned to him? For example could he be responsible for Finished Goods inventory?

3 Material Management has been a neglected subject in most companies. Do you know why? There has however been of late a greater appreciation as to what the profession can do to reduce costs. Can you tell us how MM can reduce costs?

4 Do you know what Materials Requirements Planning (MRP) is? What makes it different from the normal materials planning? Do you think that a computer will be helpful in operating an MRP system?

5 The Materials Manager has to coordinate with various Departments to achieve his Department's objectives. What do you think are some of these objectives? Who are the vital people with whom he has to have very close relationships? What about Marketing?

6 Inventory control is a vital function in Materials Management. It is now accepted that various factors contribute to the creation of inventories and unless these factors are taken care of inventories cannot be efficiently controlled. For example, consider bad forecasting, or unscientific and poor maintenance practices, poor production scheduling, bad Stores Management $\text{etc.}$ In what ways do these departments contribute to high inventories?

7 What do you understand by the term logistics? What role is played by the Materials Department in Logistics Management?

8 Today many companies opt for buying rather than making components and spares in their own factory. Why is this trend?

9 There is a trend towards computerisation in the Materials Management function. Can you throw some light on two matters -

(i) What can the computer do manually which is difficult to do. and (ii) What kind of information can you get of a computerised system which can help in operations and control? Do you think it can help in Inventory control? How?

10. How do you think Work in Process (WIP) inventories can be controlled? Is there any means whereby we can measure such inventories?
11. Really speaking, Finished Goods Inventories should be the responsibility of the Marketing Department. However they usually fight shy of accepting this responsibility. What best can be done in the circumstances?
12. Inventories contribute substantially to working capital Management. What is working capital? How can a Materials Manager help in this regard?
13. Do you think a Materials Manager can save money in the area of taxes? Can you give one or two examples?
14. Do you feel that choice of the right transportation is vital to cost savings. Can you explain how a Materials Manager can go about this. By choosing road instead of rail, what benefits do you think are possible.
15. Normally, many people do not consider Transit inventory. What is this inventory and how can it be controlled?
16. Can you tell us a few modern trends in purchasing that you must read or heard about?
17. Have you heard of WAN and LAN network? They are some of the modern trends in MM. Can you describe them?
18. Have you heard of Bar Codes? Do you think they can help in MM? How?
19. What do you consider are the benefits of mechanised materials handling? Have you heard of automated Warehouses? Can you explain how they operate?
20. It is normally said that Materials are nothing but money but in another form and as such they have to be accounted for as much as a Bank Cashier is accountable for the Bank's money. How can a Materials Manager take care of this responsibility?

21. Do you think a Manual for the Materials function is desirable. It is said that a Manual tends to make decision making more rigid and making it difficult to operate in a changing environment. What are your views?
22. Do you think that Purchase personnel and Stores personnel require specialised training? Why? What should they be trained in?
23. Space layout in Stores is of great importance as it affects costs greatly. How?
24. What kind of wasteful expenditure occurs in a Store. How can they be prevented?
25. Can you describe a few MIS Reports on Materials that needs to be submitted to Top Management?

PURCHASING

1. It is generally said that the RIGHT purchasing consists of the right quality, quantity, source, price and delivery. What do you understand by this?
2. What type of organisation would you recommend for a Purchase Department? In one company the Purchasing Manager reports to Production in another to the Finance Manager and in the third to the company Secretary. Do you think this is right? Why?
3. What would you do if your Boss insists on the award of the order to the lowest bidder and you know that he is unreliable on Quality?
4. In terms of priority for purchasing it was PRICE, DELIVERY and QUALITY. Today it has become Quality, delivery and price merely because you can have a lot of trade off with other costs for example, freight, mode of transport, packaging, taxes etc. Do you think this is sensible?
5. What do you understand by Vendor development? Assume you are now importing a critical component. With the development of the industrial infrastructure in India your MD feels that it should be possible to develop the product in India. What would you do?
6. What do you understand by a 'Make or Buy' decision? Can the Purchase Department contribute to such a decision?
7. What factors would you evaluate while considering a proposal for buying something that you are now making? The proposal has come about purely in terms of higher costs?
8. Are you familiar with our Import policy? It is supposed to be a liberalised policy. What do you understand by it?
9. There has been an increasing use of computers in Purchasing these days. Can you tell us what the advantages are and what the areas in purchasing where a computer can be really useful?
10. Today, Supplier Quality Assurance has become very important. How can a Purchase Department carry out this important task efficiently?
11. Value Analysis is stated to be a very potent cost reduction technique. Do you know anything about this technique? Do you know of any practical application where benefits have been achieved?
12. Negotiations are very important in most major purchasing contracts these days. Why? What are the various factors which are subjects for negotiation?

13. What do you understand by the term 'Import substitution'? What measures can be taken by a Purchase Manager in this direction?
14. What do you understand by public buying? How do you think it is different from private sector buying?
15. What do you think is the difference between COST and PRICE? Do you feel that cost is more relevant than price in a buying context.
16. Do you know the technique of COST/PRICE Analysis directed towards estimating the Vendor's costs in order to know whether the price he has quoted is reasonable? How is it carried out?
17. There are various types of price terms and payment terms. Can you mention a few of them? What are the advantages of a "cost-plus contract" while purchasing from an ancillary unit?
18. How do you define a "RIGHT SUPPLIER"? Is he the one who quotes a reasonable price, or one who is meticulous about deliveries? What other qualities should such a vendor have?
19. One generally finds that there is a tendency on the part of companies to enter into long term agreements with vendors and to limit the number of vendors to two or three. The concept of partnership between Vendor and Buyer has also started gaining ground in the country. Why is this significant?
20. How will a Purchase Manager decide on the right quantity to buy? Do you feel that EOQ is a right technique to use in the context of JIT and Zero Inventories? Why should someone buy and stock one year's stock of a C item merely because the EOQ formula says so?
21. What do you know of the Sale of Goods Act? Have you read it and if you have, are you aware of the significant aspects of the Act? Can you please tell us the difference between Guarantee and Warranty?
22. How will a purchase manager assure quality in an imported item? Assume that this item is being regularly imported.
23. Do you think it is very desirable for a purchase manager to know about the regular taxes that impinge on the products that he buys on a regular basis? Why is this so?
24. How will you evaluate a Vendor? Firstly why is it necessary to evaluate a Vendor?
25. What are proprietary items? How does one buy them?
26. A Purchase Manager tells his Engineering Manager/Design Manager that standardisation can save a lot in purchasing costs. What does he mean?

INVENTORY MANAGEMENT

1. What do you understand by the term 'Inventory'? Do you think that WIP and Finished goods inventory can be controlled by the Materials Manager?
2. What do you understand by the term 'Selective Inventory Control'? Why is it considered better than controlling all items in inventory?
3. What is the concept underlying A B C Analysis? Do you think that the Pareto's law is universally applicable? What benefits can be had by using the A B C method of control?
4. Do you think that ABC analysis should be used alone or with other methods of classification? Can you say how it can be used along with VED and HML classifications?
5. What are the benefits of codification? Numerical codes are said to help in computerisation. How? How is a code usually structured?
6. It is usually said that codification can lead to standardisation and variety reduction? Do you think so? How?
7. What do we mean by standardisation? Can you mention some Indian and International standards? Is the mere adoption of some standards called standardisation or is there anything more to it?
8. How can a company go about doing the work of standardisation? Can the Materials Manager do it by himself?
9. What is buffer stock? Do you think a company really needs this type of stocks? Today, when the whole world is talking of JIT and zero inventories do you not think that the concept of buffer and safety stock is an anachronism?
10. What do you understand by a 2 - Bin system? Do you think it is practical to have such a system for all materials?
11. What are the various costs that make up inventory carrying costs? What do you think is the average inventory carrying in Indian companies today?
12. What is meant by "Service level"? A company's Stores Manager says he was out of stock of items only in 5% of the cases. Do you think it is a good performance? (He did not say that it related to 678 indents and 50% of them being of critical items.)
13. What do you understand by the concept of "Economic Order Quantity". Do you think it is realistic to stock one year's requirement of an item merely because the EOQ formula says so?

14. Do you think that the EOQ principle can be applied to the purchase of spare parts? If not, why do you say so?
15. Do you think EOQ is relevant for jobbing and seasonal industries? Why?
16. Which department is best suited to control Finished Goods inventories? Assume that the Marketing Department in your company refuses to be burdened with the responsibility to control Finished goods inventories. What will be your attitude?
17. What are the elements of procurement costs?
18. Two systems are generally followed in inventory management for ordering of fresh supplies.--- the P system and the Q system. Can you describe them? What system in your view is better?
19. How can physical verification be done? What should a company do after the verification has been done and it is found that in 118 items there are discrepancies to the value of Rs.16.89 lakhs?
20. A sacred principle in issue of materials is FIFO. What does it mean and why is said that it is a inviolable principle? What is LIFO, HIFO and Weighted average, terms used in stock valuation?
21. What do you mean by supplier's lead time and administrative lead time? A company takes 7 days after the receipt of supplies for the preparation of the GRN and goods to be moved into storage. What would you do to reduce this lead time.
22. What would you say is the main cause for inventories in India. Is it a lack of knowledge, or is it attitudes, or sheer laziness on the part of various functionaries?
23. What do you understand by Materials planning? Can this be carried out by Computers?
24. How can the inventory function be evaluated?
25. What is the difference between Inventory control, inventory reduction and inventory management?

STORES MANAGEMENT

1. There are a lot of managerial responsibilities attached to a Store and the Storekeeper is not considered a mere keeper of goods as in the old days. Can you tell us how this change has taken place?
2. Material identification is an important aspect of storekeeping. How will you go about this task? Can you tell us of some specific systems of codification? What information is generally included in a material code?
3. Receiving of supplies from the vendor generally poses quite a lot of problems. What do you think are some of these problems? How will a Receipts Section manage rejected goods? Is it necessary for a buyer to return rejected goods back to the vendor? Do you know the law in this regard?
4. Have you heard of a quarantine store? Why is such a Store necessary in every Receipts Section? What happens when there is lack of cooperation from the QC Department in regard to inspection of incoming materials?
5. If there is a variation in the quantities mentioned in the Vendor's Invoice or challan and the physical quantities received what should the Stores Clerk do?
6. Is Follow-up of orders the responsibility of the Receipts Section? In a particular company this is the practice and all POs have a delivery date mentioned on it. What are your comments on this practice?
7. Do you think that spare parts should be indented by the Store on the basis of Maximum-minimum- ROL levels as in the case of other stores, say raw materials?
8. What do you understand by FSN analysis? After such an Analysis you find that some 600 spares have not moved for over five years. Will you take action to dispose them off? What are the reasons for your answer?
9. Do you think that the Stores Manager should have a responsibility for inventory control? If so how should he go about his task?
10. Scrap Management is a science all by itself. What do you think can be done in this regard. Assume you have scrap worth Rs.2 lakhs every month and consisting of a large range of metal scrap.
11. Space is a big problem in all Stores these days, especially in cities. What suggestions do you have of efficient space utilisation? What is your opinion about using high rise racks for storage in Aurangabad where there is not much of a problem of space. What are the problems of high rise storage systems?

13. Computers are being used extensively in Stores these days. What are the benefits of a computer system? Apart from speed, what other benefits can you get?
14. How can you prevent obsolescence in a Store?
15. What recommendations would you make for a Store which has a lot of scrap and waste (Rs.3 lakhs per month) in regard to disposal?
16. Materials handling is one of the major responsibilities of a storekeeper. Assume that there are considerable variety and numbers of MH equipments in your store. What aspects of management would you take care of in this regard, for example, what will you do with the layout of the Store to use the equipment efficiently, or how will you manage maintenance of the equipments etc?
17. How do you do stocktaking? What methods are best in a company having 12000 items? What are the demerits of taking an year-end inventory checking?
18. When there are large number of discrepancies found during a stock verification what steps would be called for?
19. What measures would you take in regard to safety and security in the Store? What about fire precautions?
20. You find that pilferage is on the increase in a Store where you are the Manager. What steps will you take to control this social problem?
21. Preservation is an important aspect of storage but most Stores hardly pay any attention to it. Why is preservation important? What in your opinion is called for to prevent deterioration of materials in storage?
22. A large number of Management Information Reports should be generated by the Store? Can you mention a few?
23. Differentiate between surplus and obsolete inventory. How will you treat them?
24. What are insurance spares? What system can be followed to classify them as insurance spares? How does one treat them?
25. Do you think that the Store should be held responsible for Stores Accounting? What are the systems for valuation of materials?

CMT

• Rahul will be in office in the afternoon. Pl. talk to him & settle about the EXCEL sheet in which these questions need to be entered by Sheetal/Pande.
• Then distribute amongst several consultants to enter against each question, relevant "Keywords" (at least 3/4 keywords, comma separated). Set a target date. Contributors names are mandatory.
• Get Rahul to upload.
• Phone & keep me updated

(Signature and Date: 26/05/09 - Date is handwritten and may be a reference date)