Material management
Introduction
Material management is a function, which aims or integrated approach towards the management of materials in an industrial undertaking. Its main objects are cost reduction and efficient handling of materials at all stages and in all sections of the undertaking.
Meaning of Materials management
It is concerned with providing materials for production purposes with minimum total cost in an integrated manner for better functioning of an organization.
Thus, we can say that materials are the most important resources for any company since no goods can be produced without them. Material management controls the procurement, storage, amount, movement and consumption of materials that can be used by a company for production process. It covers various aspects of materials and supplies the necessary materials when required for converting them into finished products.
Definitions
According to Bethel “Material management is a term used to connote controlling the kind, amount, location, movement and timing of the various commodities used in and produced by the industrial enterprise”.
Benefits of Material management
1. Better accountability
A clear cut accountability is established because there is centralization of authority and responsibility for all aspects of Material management functions. Various user depths can direct their problems or requirements, with regard to materials to one performance of Materials management in an objective manner.
2. Better coordination
The centralization results support and cooperation in the accomplishment of the material function. This creates an atmosphere of trust and better relations between user depths and Material management.
3. Better performance
Effective communication, better speed, accurate results, judicious decisions; leading to lower costs, through better inventory turnover, reduced stock-outs, reduced lead times and reduction in paper work.
4.Adaptability to EDP (computerization)
The centralization of Material management function has made it possible to design the data processing system – whose facilities are; data collection, data representation and analysis, preparation of special reports. All these lead to better decisions.
5. Reduce procurement time.
6. Lesser shortage of material
7. Reduction in material cost.
8. Prevention of excess loss of materials.
9. Strict and efficient control of materials.
10. Increase in labour utilization.
Types of materials
Materials used in factories can be divided into the following classes:
1. Raw materials: - It comprises such items which must be purchased for converting them into finished goods. Sometimes, the finished product of one factory becomes the raw materials of another factory. Some of the examples of raw materials used in factories are metal bars, leather, cloth, chemicals.
2. Purchased parts: - This constitutes items used in the assembly of the product which are obtained from outside sources. Some examples of purchased parts are bolts, nuts, screws, bearing and gears.
3. Finished product: - Fully completed goods inspected and ready for sale to a customer are known finished product.
4. In-process material: - Materials used in the product upon which work has been performed to change its form, size or physical or chemical characteristics is known as in-process materials.
5. Supplies: - Consumable material used in the manufacturing process, which do not become a part of the product, are known as supplies. Example of supplies are sand paper, oils, cotton waste.
6. Equipment items: - These are expendable parts of machines and other physical facilities. Example fixtures, fittings, values, fuses, lamps.
Functions of Material management
1. Material planning: - It determines the needs of the consumers in advance and makes exact estimator of various materials that are required and the time they are required for production process.
2. Purchasing: - It ensures the interrupted supply of materials to achieve the goal of production. Purchasing of materials should be always done after market research.
3. Inventory control: - It maintains the sufficient inventory level of materials to meet customer needs. It also enables an organization to determine an appropriate inventory level by keeping in mind the carrying inventory cost.
4. Store keeping: - It manages the physical storage of materials, since it is required to store the materials until they are not consumed or sold. It is the responsibility of the materials management to receive, store, move, storage and issue materials until they are not consumed.
5. Stores accounting:- It maintains the record of materials to determine the recorder level. This helps a storekeeper to order the materials when the stock reaches the recorder level.
6. Transportation: - It manages the proper handling and transportation of incoming and outgoing materials.
7. Wastage management: - In minimize the wastage of materials by determining the causes for the rejection of material cost.
Components of integrated Material management
Material planning
Sales forecasting and aggregate planning are the basic inputs for material planning. The different tasks under planning are listed below;
1. Estimating the individual requirement of parts.
2. Preparing material budget.
3. Forecasting the level of inventory.
4. Scheduling the orders.
5. Monitoring the performance in relation to production and sales.
Inventory control
ABC analysis.
Fixing economic order quantity.
Lead time analysis.
Setting safety stock and recorder level.
Purchase management
Evaluating and rating suppliers.
Selection of suppliers.
Finalization of terms of purchase.
Placement of purchase orders.
Follow-up.
Approval of payments to suppliers.
Stores management
Physical control of materials.
Preservation of stores.
Minimization of obsolescence and damage through handling.
Disposal and efficient handling.
Maintenance of stores records.
Proper location and stocking of materials.
Future trends
Many organization in India are switching on to the integrated materials. Management concept because of the many advantages offered by it. However, this has also necessitated professional development of managers so that they can fulfill the requirements of integrated Material management function which demands an ability to bring together conflicting and yet interrelated functions. The economic pressure, such as inflation and credit squeeze will place exacting demands on Materials management in future.
Introduction
Material management is a function, which aims or integrated approach towards the management of materials in an industrial undertaking. Its main objects are cost reduction and efficient handling of materials at all stages and in all sections of the undertaking.
Meaning of Materials management
It is concerned with providing materials for production purposes with minimum total cost in an integrated manner for better functioning of an organization.
Thus, we can say that materials are the most important resources for any company since no goods can be produced without them. Material management controls the procurement, storage, amount, movement and consumption of materials that can be used by a company for production process. It covers various aspects of materials and supplies the necessary materials when required for converting them into finished products.
Definitions
According to Bethel “Material management is a term used to connote controlling the kind, amount, location, movement and timing of the various commodities used in and produced by the industrial enterprise”.
Benefits of Material management
1. Better accountability
A clear cut accountability is established because there is centralization of authority and responsibility for all aspects of Material management functions. Various user depths can direct their problems or requirements, with regard to materials to one performance of Materials management in an objective manner.
2. Better coordination
The centralization results support and cooperation in the accomplishment of the material function. This creates an atmosphere of trust and better relations between user depths and Material management.
3. Better performance
Effective communication, better speed, accurate results, judicious decisions; leading to lower costs, through better inventory turnover, reduced stock-outs, reduced lead times and reduction in paper work.
4.Adaptability to EDP (computerization)
The centralization of Material management function has made it possible to design the data processing system – whose facilities are; data collection, data representation and analysis, preparation of special reports. All these lead to better decisions.
5. Reduce procurement time.
6. Lesser shortage of material
7. Reduction in material cost.
8. Prevention of excess loss of materials.
9. Strict and efficient control of materials.
10. Increase in labour utilization.
Types of materials
Materials used in factories can be divided into the following classes:
1. Raw materials: - It comprises such items which must be purchased for converting them into finished goods. Sometimes, the finished product of one factory becomes the raw materials of another factory. Some of the examples of raw materials used in factories are metal bars, leather, cloth, chemicals.
2. Purchased parts: - This constitutes items used in the assembly of the product which are obtained from outside sources. Some examples of purchased parts are bolts, nuts, screws, bearing and gears.
3. Finished product: - Fully completed goods inspected and ready for sale to a customer are known finished product.
4. In-process material: - Materials used in the product upon which work has been performed to change its form, size or physical or chemical characteristics is known as in-process materials.
5. Supplies: - Consumable material used in the manufacturing process, which do not become a part of the product, are known as supplies. Example of supplies are sand paper, oils, cotton waste.
6. Equipment items: - These are expendable parts of machines and other physical facilities. Example fixtures, fittings, values, fuses, lamps.
Functions of Material management
1. Material planning: - It determines the needs of the consumers in advance and makes exact estimator of various materials that are required and the time they are required for production process.
2. Purchasing: - It ensures the interrupted supply of materials to achieve the goal of production. Purchasing of materials should be always done after market research.
3. Inventory control: - It maintains the sufficient inventory level of materials to meet customer needs. It also enables an organization to determine an appropriate inventory level by keeping in mind the carrying inventory cost.
4. Store keeping: - It manages the physical storage of materials, since it is required to store the materials until they are not consumed or sold. It is the responsibility of the materials management to receive, store, move, storage and issue materials until they are not consumed.
5. Stores accounting:- It maintains the record of materials to determine the recorder level. This helps a storekeeper to order the materials when the stock reaches the recorder level.
6. Transportation: - It manages the proper handling and transportation of incoming and outgoing materials.
7. Wastage management: - In minimize the wastage of materials by determining the causes for the rejection of material cost.
Components of integrated Material management
Material planning
Sales forecasting and aggregate planning are the basic inputs for material planning. The different tasks under planning are listed below;
1. Estimating the individual requirement of parts.
2. Preparing material budget.
3. Forecasting the level of inventory.
4. Scheduling the orders.
5. Monitoring the performance in relation to production and sales.
Inventory control
ABC analysis.
Fixing economic order quantity.
Lead time analysis.
Setting safety stock and recorder level.
Purchase management
Evaluating and rating suppliers.
Selection of suppliers.
Finalization of terms of purchase.
Placement of purchase orders.
Follow-up.
Approval of payments to suppliers.
Stores management
Physical control of materials.
Preservation of stores.
Minimization of obsolescence and damage through handling.
Disposal and efficient handling.
Maintenance of stores records.
Proper location and stocking of materials.
Future trends
Many organization in India are switching on to the integrated materials. Management concept because of the many advantages offered by it. However, this has also necessitated professional development of managers so that they can fulfill the requirements of integrated Material management function which demands an ability to bring together conflicting and yet interrelated functions. The economic pressure, such as inflation and credit squeeze will place exacting demands on Materials management in future.
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