MATERIAL MANAGEMENT

Material management Cost of materials in the different industries may range from 50 to 85% of production cost. Planning and controlling the flow of materials

Definition It is concerned with planning, organizing and controlling the flow of materials from their initial purchase through internal operations to the service point through distribution. OR Material management is a scientific technique, concerned with Planning, Organizing &Control of flow of materials, from their initial purchase to destination.

AIM OF MATERIAL MANAGEMENT To get 1. The Right quality 2. Right quantity of supplies 3. At the Right time 4. At the Right place 5. For the Right cost

OBJECTIVES OF MATERIAL MANAGEMENT To minimize material cost. To maintain desired quality of material at minimum cost. To reduce investments tied in the industry. To purchase, receive, transport and store material efficiently. To trace new sources of supply & to develop cordial relation with them.

Four basic needs of Material management To have adequate materials on hand when needed To pay the lowest possible prices, consistent with quality and value requirement for purchases materials To minimize the inventory investment To operate efficiently

Classes of Materials Raw Materials: The raw materials are the unprocessed material which are used for converting into finished products. e.g. iron ore, cotton jute, sugar cane, artificial fibers, chemicals etc.

Classes of Materials Purchased Parts: The purchased parts are used in the assembling the product. e.g. nuts & bolts, screws, gears, wheels, etc.

Classes of Materials In-process Material: These are partly manufactured products which need further change of from processing.

Classes of Materials Finished Goods: The product complete in all respect, inspected and prepared for sale in the market.

Classes of Materials Supplies: All consumable items used in the manufacturing operation are supplies. e.g. oils, diesel, stationary, etc.

Scope of Material Management Material Requirement Planning & Control Procurement Inventory Control Receiving & Inspection Transportation Material Handling Disposal of Materials Value Analysis

Material Control Material control is a systematic control over the purchasing, storing and using of materials to minimizing the possible cost.

Objectives of Material Control To insure availability of materials. To avoid excessive investments in materials. To ensure the quality of material. To insure minimum wastage. To ensure timely action for procurement of materials. To maintain records of materials.

Purchasing Purchasing is the procuring of materials, supplies, machines, tools and services required for the equipment, maintenance and operation of a manufacturing plant. Importance Contributes to the competitive advantage of the firm, Significant portion of the logistics costs

Managing the Procurement Process Determine the type of purchase New Straight re-buy Modified re-buy Identify the type of purchase method Determine the necessary levels of investments of time & information. The more complex the purchase, the more time needs to be gathered to get it right the first time.

Managing the Procurement Process Perform the procurement process Do these activities that are necessary to effectively make a purchase and satisfy the user’s requirements. Evaluate the effectiveness of the procurement process Were the user’s needs satisfied? Was the investment necessary?

Concerns Cost of materials and Cost ON materials Timely delivery so as to have smooth flow and avoid DELAYS Service centric approach

Inventory Management What is Inventory? Stock of items required to meet future demand Purpose of Inventory Management - How many units to order? - When to order