Methods of Correlation Analysis in Procurement and Supplier Management
MAGAZINE №2 (97) April 2020
AUTHORS ELYASHEVICH I.P.
CATEGORY Optimization and mathematical modelling Inventory management
ABSTRACT
When managing procurements and suppliers, one often has to deal with heterogeneous information from various sources that is not always amenable to formalization, since it can be defined by qualitative characteristics. Under the sanction pressure on the Russian economy, changes in the market trends for the sale of many goods and services are revolutionary in nature, making it difficult to objectively use mathematical statistics and probability theory for business planning purposes. The increase in the share of sales of innovative products with a short life cycle also limits the use of science-based forecast approaches to the need for supplies. Therefore, issues of improving and standardizing methods of processing and analyzing information reflecting the results of companies’ activities in various business sectors are quite relevant.
The article discusses the specifics of constructing non-linear dependencies of stock consumption on various environmental factors that can be used in calculating insurance stocks. In addition, the article substantiates the possibility of using mutually and autocorrelation functions when planning the need for supplies, as well as methods of multiple correlation and regression analysis. For the procedures for selecting counterparties in procurement, issues of using rank correlation methods are considered. The conclusions made in the article, methodologically, are based on a systematic approach to the analysis of the relationship between the companies’ performance and the influence of macro and microeconomic factors. When processing statistical information, econometric methods and models were used as ways to study quantitative and qualitative economic relationships. The results of the calculations carried out in the article show the effectiveness of the proposed stochastic methods that can be actively used in analyzing consumption trends and planning stocks of raw materials, materials, finished products, operational resources in production, trading and logistics companies.
Keywords:
Value Engineering at Cost Management of Operating Resource Purchasing at Coal Industry Enterprises
MAGAZINE №5 (82) October 2017
AUTHORS ELYASHEVICH I.P.
CATEGORY Analysis in logistics and SCM Industrial companies’ corporate logistics Sourcing
ABSTRACT
To optimize the level of stocks of operating resources and the associated costs of procurement and maintenance, it becomes necessary to determine such differentiated indicators as the costs of performing for individual logistics functions and operations. The resources purchased by coal companies to ensure their production activities are quite diverse in terms of their absorption by various types of costs that differ in the way they are included in cost of goods sold and accounted.
The results of accounting conducted by all enterprises of the coal industry do not meet the goals and objectives of optimizing costs associated with procurement and stocks of operating resources. To determine the contribution of each category of purchased resources to a company's total costs and to assess possible savings reserves it is necessary to redistribute the initial data by activity, functional units of a company or resource categories using indicators that are traditionally referred to as cost application base.
The calculations are performed using various application bases for indirect costs, at which the ambiguous nature of the results obtained and their interpretation for making managerial decisions is shown. In addition, the ways of correlation-regression analysis apparatus usage were proposed for estimating the tightness of the connection between different categories of costs and for performing calculations for planning individual components of a company budget.
Based on the calculations given in the article it is concluded that usage of the traditional indirect costs application bases can lead to significant distortions of the analysis results and to negative consequences for the business profitability. Therefore, when managing the costs of operating resources purchasing at coal companies, it is necessary to conduct a value engineering analysis of the cost of goods sold for individual stock items for logistical functions and operations.
Keywords:
Using the regression analysis tools to manage inventory in the logistics supply
MAGAZINE №6 (71) December 2015
AUTHOR ELYASHEVICH I.P.
CATEGORY Optimization and economic-mathematical modeling Inventory management Sourcing
ABSTRACT
Modern business is increasingly interested in the methods, models and approaches of the logistics theory, with the help of which it is possible to find internal reserves in order to provide resource conservation. Primarily, this is due to the fact that the increasing competition level in the goods and service market in Russia and the impact of various types of crisis lead to the gradual limitation of the profit margin. As a result, profitability increase is not about retail margin and sales volume, but about reducing current expenses, associated with the vatious aspects of the company business, including logistics.
Stocks requirement planning (which concerns all logistics function areas at whole and purchasing management in particular) can be considered as the typical example. It is known that overstocks can reduce profit margin because of additional costs, which are the following: storage costs, losses because of immobilization and formation of non-liquid assets (as a consequence of lower turnover). Most companies are faced with a situation where at the same time with an increase in sales volume, profitability is declining. Management decisions which are made periodically do not lead to the desired results. Moreover, they can make situation worse because of incorrectly established links between cause and effect.
In addition, when analyzing the current state of the inventory management system, it is difficult to assess how effectively interact with each other several divisions of the company involved various aspects of logistics activities.
It is possible to identify causes of these phenomena using correlation and regression analysis with the help of which the establishment of indicators interrelation can be made. These indicators reflect the results of company business activities when the interrelation between them is not functional or it is not ordistored by the imposition of indirect and incidental factors.
In order to use correlation and regression analysis successfully, systematic accumulation of statistical data on changes in the various indicators concerning the company stocks is needed. In particular, they are the following: income and sales volume (sending into production for industrial companies), stock balance, etc.
The inflation, the income level of residents, interest rates on bank loans, the cost of advertising, social and demographic structure of society and others can be noted as factors, which have direct or indirect impact on the individual business organizations efficiency.
Keywords:
