[0:12]Iman, from NajahCom channel, in the module on supply and stock management. So we have already seen and learned about the supply function, and then we started the steps of the purchasing function. We saw the definition of the need, the search for suppliers, and the selection of suppliers. So in the part about supplier selection, we saw three exercises, including exams that were given in previous sessions. And to watch all these previous videos, for those who haven't seen them yet, I'm leaving you the playlist link in the description. Just click on it and it will give you the videos in order, including the exercises of the supply module. So today, God willing, we will see the rest and we will see the negotiation of purchases and the triggering. So the fourth step in the purchasing function is the negotiation of purchases. Here, they didn't give us a lot of steps or a lot of talk, because we already saw it in sales techniques, and it is shown in the course that the negotiation to make a purchase is the same as to make a sale, almost the same, only I become a supplier at one point, and when I am making a sale, and when I am making a purchase, I am a client. Meaning, I negotiate with the supplier, we determine the conditions, I ask him to give me discounts, so this is negotiation. The only thing I need to focus on is that you have to prepare the negotiation to be able to conduct it afterwards. You do a preparation to negotiate with that supplier. So that's all there is to this part of the purchase negotiation. Now, we will move on to the triggering. What does triggering mean? It means the time when you will place the order, when you will decide to place the order. Why? Because you, as an ordinary individual, when you need a product, let's say shampoo, when you need it, it will run out and you will go buy it from the store, for example. But when it comes to a large company that has a large production or sells large quantities, it will not wait until it has zero in stock before going to buy that product. It places orders before, and then waits for delivery. This is the triggering, we will understand it better when we learn about these concepts, okay? The first thing we have is consumption. We must study the average daily consumption or the average monthly consumption. So that I know when I will need the goods, meaning when they will run out, I need to know how much I consume, how much I consume per day, or how much I consume per month. Consumption means either sales, meaning how much the company sells, or how much quantity of that product it needs to produce if it is producing. Okay? So to know when I'm going to order, when the goods are going to run out, I need to know how much I order, for example, per day, approximately, I mean, on average, how much I order per day. Okay? Then I come and define the minimum stock. So the minimum stock must allow the company to await delivery while avoiding stock-outs. It allows the company to wait for the delivery of the goods it will order, and at the same time, avoid falling into a stock-out, so that it doesn't run out of product in stock. Because, as I told you, the company will not wait until it has zero in stock before placing an order and waiting for delivery. It must do it when it has the quantity it will use during that delivery time. For example, you use a medicine or you use a product, for example, a pill, right? You take one pill a day, that's the consumption, you take one pill a day, right? Delivery, to buy, for example, from a pharmacy or a parapharmacy, you have to wait three days. Are you going to wait until you have zero pills before ordering it? No. You will have three pills left, you will order so that those three pills can be used during the delivery time. You don't wait until you have zero pills left and order and wait three days without having any of that medicine. So you have to take the delivery or place the order when you have three pills left. This is the minimum stock. It equals consumption multiplied by the delivery time. So in our example, the delivery time is three days, right? And consumption is one pill a day. For example, if you were taking two pills a day, you would do two multiplied by three, meaning you would need six pills. When you see you have six pills left, you will order. For example, you were taking medicine that had 10 or 8, or a little less, or 7. When you have six pills left in that medicine, you have to place the order so that the delivery arrives within three days, right, and you finish your medicine.
[4:59]But suppose the delivery is delayed. What will you do with? I mean, what will you drink? You will fall into a stock-out. Or you will not have your medicine left. That's why you need to have a safety stock. Meaning, not just when you have three pills left, then you order. No. Before reaching the minimum stock, you will order. Meaning, the minimum stock plus a safety stock. So this safety stock provides the company with a margin below which it would not want to descend: avoid stock-outs. Meaning, it allows the company to have a margin of a certain quantity, for example, it knows that the company sells 100 per day, and one day its sales increased, meaning its sales increased and it sold 200, and it will fall into a stock-out if it only keeps the minimum stock. Its calculation will be messed up, and it will fall into a stock-out. Therefore, in addition to the minimum stock, we keep a safety stock, we add it. So that safety stock, in the exercises, they usually give it to us as a percentage that we add to the minimum stock. So safety stock plus minimum stock is the stock that I need. When I see that I have reached it, for example, I had 1000 and I kept going down, down, down, when I reached a certain stock, I stop, I say, I need to place my order now so that the delivery arrives within three days, right, and my current stock runs out. All of this is called the alert stock or the reorder point. It indicates that we need to place the order. It tells you that you need to place the order before you fall into a stock-out. Don't wait too long, otherwise, you will fall into a stock-out. So what is the alert stock? It is the minimum stock, which is this, plus the safety stock. It is the stock that you will use until your delivery arrives, plus that emergency stock that you add, okay? So how do we calculate the minimum stock? We do consumption multiplied by the delivery time. If the delivery time is in days, the consumption is also in days. For example, I was using 200 per month, right, and I wanted to know the average daily consumption, I would do 200 divided by 30 because there are 30 days in a month.
[7:17]It will give me the daily consumption, and I will multiply it by the delivery time if it is five days or six days. If the delivery time is in months, meaning, for example, I buy from a supplier abroad or something, and it takes two months to deliver the goods to me, I will do the monthly average consumption. Okay? We will see two exercises in the next video to understand this well. So here we will have finished this video, which is about the negotiation of purchases and the triggering. The triggering is what we need to pay a lot of attention to because it has some exercises that we will do in the next videos, God willing, to understand it well. So this was the most important thing we saw in this video. So in the next video, God willing, we will see two exercises on the triggering to understand it well. And from now until the next video, God willing, I wish you good luck and see you soon.
