Material Management !!

You know that we are living in a

Material world ,which consists of
Only material and energy, having
No beginning as well as end…

Material is Nothing but unity of opposite forces

Struggling every moment for a change and existence!!
Materials Management is not
Rocket Science
It is an art of
Planning
Organizing and
Controlling
Materials activities
with scientific methods
 Functions of Material Management

1. Materials Planning
2. Purchasing
3. In-coming Materials Check
4. Materials Handling and Transportation
5. Storage and Inventory Control
6. Standardization and Cost Reduction
7. Analyzing and reporting
8. Scrap and surplus Disposal
 IDIAN ECONOMY IS LPG ECONOMY
Liberalized Privatized and Globalized.
It means Competitive - Pressure on Margins
It leads to a general trend of downsizing
Automation and cutting cost in many industries…

There is a science for everything and only one

best way of doing things.
So, every management want to
Optimize the utility of resources like
Man, Money Machine and Material
With time and Technology

Though time is also a resource

We can't purchase or store it.
It will be free for usage
But we can’t get back at any cost.
 Since Material is the major Part of the total
Expenses in most of the organizations
It is quiet natural to attack it first..

Moreover If you cut the payroll

cost employee will cry
Profit

But if you cut material cost

Overheads *

Materials

material will not cry…

Labour Interest And it is very difficult to cut

the overheads!
Respect the material !
Once in a hotel, the GM went for a round.
He went to the kitchen then he found some thing wrong.
He dropped one rupee coin in to the floor.
Suddenly 2,3 staff came, one of them taken the coin and
Given it to the GM. But he refused to take back the coin.
The staff insisted “it is one rupee and it is your money, it
should be there in your pocket. It is the right place for it”
GM Replied “Its well and good. Have a look near the
dust bin. There is a spoon, it worth around 80 rupees.
Why don’t you show the same interest keeping that in to
The Right place?”
Anybody will burn a bundle
of Rupees 30000 ?
But a maintenance staff may give a fluctuated Power
Supply to an induction Cook top.
Or
A Production staff, may place the vessel on
The same Induction cook top without water !

But The above three actions are equal…

Yes, Burning of money!!

Handle everything with care

= Since Material is
The major Part of
Our total expenses
It is important to
Manage the same
effectively
Use the materials what is exactly Required.
Squeeze out the
Last drop out of a dried towel
Measure everything even if you through
it in to the river.

MESSURE WHAT IS IMPORTANT

AND NOT WHAT IS CONVENIENT
 P&L Of Vegetable Vendor:
 1 2 3 4……………………………….30 Days
 500 500 500 500………………………Daily purchase
 750 750 750 750………………………Daily sales
 250 250 250 250………………………Daily profit
 Investment: Rs 500
 Income: Rs 750x30= Rs.22500
 Profit: Rs 7500
 Return On Investment= 7500/500 X 100= 1500%
Lesson: Keep the materials moving !!
Increase Velocity of Material Movement !!!
Keep The Working Capital “WORKING”
What is Inventory ?
Inventory is a stock of goods in any form
like raw materials, work in progress or finished goods

Inventory Control
 How to control?
We can’t always control all the thousands of products kept in the store.
We can use selective inventory control methods and analysis

ABC : Always Better Control

HML : High Value, Medium Value, Low Value
SDE : Scarce, Difficult to Obtain, Easy to obtain
SOS : Seasonal, Off-seasonal
VED : Vital, Essential, Desirable
FSN : Fast Moving, Slow- , Non- moving,

In Most of the organization 80% of the consumption value is Represented

only by 15 to 20% of the items, Better to control this A class items first
 A-B-C ANALYSIS
100
90
80 Policies for A Items
Only exact quantities to be procured
70 Have more than one source
Centralize procurement
60 Individual postings , accurate records
Continuous checks, low safety stock
50 Reduce Lead Time: Regular follow up
Very strict consumption control
40
Very accurate requirement forecasting!
30
20
10
0 10 20 30 40 50 60 70 80 90 100
A B C
% of total number of items
PHYSICAL STOCK VERIFICATION

Use duly identified color codes -Search Free

Follow Banking Method in postings
Physical Issues FIFO method.
Costing weighted average Methods.
Verify stock of ten items daily random
Verify stock of ten items fast moving
Verify stock of every item monthly at the end
Important Vs Urgent
If you are not doing some important works
Then all your work will become urgent
Planning is an important thing…..
Forecasting is a difficult art, especially if it
relates to the future ! Perfect forecast is
yet to be born !!”
Mutual Cooperation is must with all the
Internal Departments to forecast
requirements.
Whole is more than the sum of parts!
 SUPPLY CHAIN MANAGEMENT

A supply chain in a manufacturing organization

will comprise of a network of facilities to
 Procure the material from the vendors

 Transform the material to the end product

 Distribute the finished product to the Consumer

Think of a Supply Chain as a relay race with

good speed by each runner and a great
handoff and exchange of the baton
between runners.
 Green Purchasing:
Re-duce, Re-use, Re-cycle !!
*Establish a waste Reduction Programme
*Buy Recycled, Repairable materials
*Buy energy efficient equipment, materials
*Reduce use of Plastics
*Involve Vendors-Is it environmentally sound ?
*Ensure Safety, Health & Environment
* SA-8000-standards for purchasing coming soon
 Standardization
More the suppliers more the variations!
As every supplier has a different process,
Uses different raw materials & machinery,
The products produced will be different.
Two unreliable suppliers are worse than
One Reliable supplier!.
Overcome feeling of insecurity.
Initiate Key Suppliers Account management
Develop the reliable supplier !.
Develop self-certified suppliers to reduce inspection levels.
Reports!
Information should be a Proactive submission
Rather than a reactive explanations !!

Speak in the language of Business..

In terms of money ..

We know all the business managements are

More concern about the Return on investment !!!!
Celebrate the material management day
On April 23 every year

Thank you for

your attention!