Materials Management Intro, Definition, Functions, Objectives, Stages, Factors responsible, Importance.
Material Management. • Material includes all the things from raw material to semi-finished and finished goods. • It has great significance as it has direct relation with the efficiency of a system. • Generally every manufacturing unit has 25% to 75% of sales turnover investment in materials. Which makes it critical part.
Material Management. • Expense made on Materials is invested in inventories, storage, transportation, insurance etc. • Previously only Marketing and Manufacturing were considered as important activities of an enterprise. • Material management has gained its importance due to costs involved and economizing the total activity. • Material Management is basic function of business that adds directly to value of product.
Definitions. • Material Management is a term used to connote “controlling the kind, amount, location, movement and timing of various commodities used in production by industrial enterprises.” • Material Management is a basic function of the business that adds value directly to the product itself. • Material management deals with controlling and regulating the flow of material in relation to changes in variables like demand, prices, availability, quality, delivery schedules etc.
Material Management. • MM covers various aspects of input process, like it deals with Raw-Materials, procurement of machines, other tools and necessary spares for the maintenance. • MM is preliminary to transformation process. • It involves planning and programming for procuring of material and quality goods of desired quality and specification at reasonable price and at right time. • It involves being up-to-date with market information, stores and stick control, inspection and transportation of materials.
Functions of Material Management. • The responsibility of material management ends only when the correct finished product in proper condition and quality passes to the consumer. -Bethel • General Electric Company (G.E.C) of USA, pioneers in the field of material management listed the functions of Material Management under the following heads:-
Functions of Material Management. • Planning and programming for materials purchased. • Stores and stock control • Receiving and issue of material. • Transportation and material handling. • Disposal of Scrap and surplus material. • Value engineering and value analysis.
Objectives of Material Mgt. • Material selection. • Low operating costs. • Receiving and controlling materials. • Issuance on receipt of app. authority. • Identification of surplus stock and take measures to reduce it.
Organization of MM department. • The Materials manager has 4 important duties. For which he appoints managers under him, viz. • Purchasing. • Production Control. • Inventory and stores control. • Physical distribution.
Stages of Material Management. • Decision Stage. • Sourcing stage. • Production planning stage. • Stage of ordering. • Receiving stage. • Inventory control.
Factors providing Economy to MM. • Volume of purchases. • Plant near the source of Materials. • Fluctuations in prices of Materials. • Design and engineering of product. • Design of equipment. • Pre-Inspection of material. • Specialized agency for purchasing.
Importance/Advantages/Benefits • Regular supply is ensured, aiding for uninterrupted production process. • Procurement and transportation costs can be controlled and checked. • Efficient stock and stores control minimizes waste. • Pre-inspection of RM minimizes chance of rejection of final product. • Timely supply and other inputs is ensured.
Importance/Advantages/Benefits • Best utilization of labor, capital and equipment is ensured. • Congestion in stores and confusion can be avoided, resulting in better services. • Manufacturing Cycle is reduced to min. • Slight changes in material costs, changes the profit statement of the co. • Shortages can be eliminated.