Stock Replenishment Process

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Questions and Answers

What is the objective of Stock Replenishment?

To maximize inventory holding without considering cost optimization

To focus solely on cost optimization

To minimize inventory holding without considering service levels

To maintain plant availability, integrity, safety, and environmental standards (correct)

Who decides the type and quantum of stock to be held?

Inventory Management Department

Supply Chain Management (SCM) (correct)

Asset Management Department

User Department

What does the Stocking Policy/Inventory Management Policy consider when optimizing stock holding?

Only economic cost

Plant availability and safety

Criticality of the equipment, maintenance option, lead-time, and sourcing strategy (correct)

User Department preferences

What does Inventory Management base its strategy on?

Optimal availability of critical materials with focus on plant availability Signup and view all the answers

What does the Stock Replenishment process aim to achieve in relation to inventory holding?

Maintaining required service levels while minimizing inventory holding Signup and view all the answers

Which department is responsible for deciding the stock holding strategy?

Supply Chain Management (SCM) Signup and view all the answers

What is a key consideration in deciding the type and quantum of stock to be held?

Criticality of the equipment, maintenance option, lead-time, and sourcing strategy Signup and view all the answers

What does the Stocking Policy/Inventory Management Policy aim to optimize?

Optimal availability of critical materials with focus on plant availability Signup and view all the answers

What is the primary consideration when deciding stock holding according to Stocking Policy/Inventory Management Policy?

Plant availability, health, safety and environment Signup and view all the answers

What is one of the controls used in Inventory Management?

ABC analysis and Perpetual Inventory only Signup and view all the answers

What does 'R' represent in the stock replenishment process?

Reserve stock to be carried Signup and view all the answers

Who is responsible for reviewing stock items when they reach or go below the minimum level in the reordering template?

SCM, Inventory Planning (N-5) Signup and view all the answers

What is the basis of measurement for the timeliness of the stock replenishment process?

Latest date for completion of stock replenishment process Signup and view all the answers

What is 'S' in the context of stock replenishment?

Stock available Signup and view all the answers

In what document does the Stock Report serve as an input?

SCM, Inventory Planning (N-5) Signup and view all the answers

What is 'q' in the context of stock replenishment?

Outstanding order quantity Signup and view all the answers

What does 'Q' represent in the stock replenishment process?

Quantity to order {net requirements} Signup and view all the answers

What is the frequency of the Stock Report document?

As required Signup and view all the answers

What is measured by the Accuracy of the Stock Report key performance indicator?

Number of material errors, omissions, and misrepresentations in the report. Signup and view all the answers

Who decides upon the quantity to be ordered when reviewing a stock item?

SCM, Inventory Planning (N-5) Signup and view all the answers

What method will be used for effective inventory management in NNPC Limited?

Material Requirement Planning (MRP) Signup and view all the answers

What will be incorporated into all contractual agreements for stock items?

Buy-back option Signup and view all the answers

How will stock replenishment of operative stock be ensured?

By setting minimum and maximum stock levels based on estimated monthly consumption Signup and view all the answers

What will be used to manage stocks for cost optimization in computerized inventory management systems?

Economic Ordering Quantity (EOQ) calculation Signup and view all the answers

When will sourcing for new materials be initiated?

After confirming stock availability Signup and view all the answers

What is considered the same as standard operating spares?

Spare parts for maintaining drilling equipment and rigs Signup and view all the answers

What will competent local suppliers be encouraged to hold for direct purchase?

Adequate stock of materials Signup and view all the answers

What will be used to decide the stock order quantity?

Estimated monthly consumption and current availability difference Signup and view all the answers

When will stock replenishment be triggered?

When stock quantity reaches or goes below the minimum level (re-order level) Signup and view all the answers

How are project materials restricted for use?

For use by specific projects only Signup and view all the answers

Study Notes

Material Requirement Planning (MRP) will be used for effective inventory management in NNPC Limited.
Supply Agreements will be set up for critical spare parts with either OEM or their accredited representatives.
Buy-back option will be incorporated into all contractual agreements for stock items.
Competent local suppliers will be encouraged to hold adequate stock of materials for direct purchase.
Drilling and completion materials are purchased for stock to meet the demands of specific drilling campaigns.
Spare parts for maintaining drilling equipment and rigs shall be considered the same as standard operating spares.
Project materials are restricted for use by the specific project only.
SCM shall make users aware of warehouse stock balances and consumption pattern when purchasing project materials.
Sourcing for new materials shall not be initiated without confirming stock availability.
Stock replenishment of operative stock shall be ensured through adherence to set materials management parameters.
Stock levels for office consumables and household goods shall be as lean as possible using Just-In-Time.
Minimum and maximum stock levels shall be set based on estimated monthly consumption, total elapsed time, average safety stock, and criticality.
Stocks shall be managed using minimum and maximum levels with provisioning levels agreed upon by the Supply Chain Management (SCM) and User departments.
Stock order quantity shall be decided by the difference between the estimated monthly consumption and current availability.
Economic Ordering Quantity (EOQ) calculation shall be used to manage stocks for cost optimization in computerized inventory management systems.
For manual stock replenishment, Quantity to Order (Q) can be calculated using estimated future average monthly consumption, period between ordering reviews, total elapsed time, stock on hand, and order quantity (q).
Minimum and maximum stock levels will be set based on average estimated monthly consumption, total elapsed time, safety stock, and criticality.
Stock replenishment shall be triggered when stock quantity reaches or goes below the minimum level (re-order level).

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Description

Learn about the framework for effective maintenance of NNPC Limited stock items, in accordance with NNPC Limited Stocking Policy, Asset Management and Accounting Principles. Understand the process of analyzing stock records and replenishment to ensure a desired service level for User Departments in an economic manner.