Materials planning and control

By Priyanka Deepali Divya Parineeta Naqueeb Sana

What is material planning?

It is the scientific way of determining the requirements of rawmaterials,components,spares,and other items that go into meeting the production needs within economic investment.

Importance of material planning

If the material has to be purchased in a scientific manner. Proper planning helps in purchasing of right qty and quality. Proper material planning leads to optimum use of resources Effective material planning is nescessary for efficent material planning mgmt.

MRP is a tool to deal with these problems. It provides answers for several questions:
What items are required? How many are required? When are they required?

Benefits of material planning

Avoid crisis management. Works proactively. Provides effective steps for manufacturing, purchasing and delivering activities. Helps to know the prices and cost.

Drawbacks of material planning

Can generate output problems. Time consuming and costly.

Factors influencing materials planning

1. 2. 3. 4. Micro factors Seasonality Working capital Dilegation of powers Communication systems 5. Corporate objectives 1. 2. 3. 4. 5. Macro factors Price trends Import policy Credit policy Demand for items Direct and indirect taxes

Bill of material explosion

Bill of material

Sales forecasting Sales forecasting techniques techniques

Sales forecast

Explosion chart

a) Product requirement b) Product mix c) Product structure

Requirement of materials

Delivery of schedules of materials

Problems of material planning

Constraints regarding import policy of government, foreign exchange, credit availibilty. Sales forecast become less reliable

Guidelines to be used effective material planning

plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand Computerisation is very nescessary as it saves time and effort. Cover the lead time anticipated.

Relationship of MP with production programe and sales forecasts

Sales planning Sales forecasting techniques

Materials planning
Bills of materials

Sales forecast

Planning requirements

Sales programes Production planning Production programe

Delivery schedules for material

Explosion chart

Data required for material planning

How much is required at a time. When the quantities are required to meet demand. Shelf life of stored materials. Inventory status records. Bills of materials. Planning Data.

Material budgeting
Schedule showing how much material will be required for production and how much material must be bought to meet this production requirement. The purchase depends on both expected usage of materials and inventory levels.

Purpose of material budget

It helps the material mgmt department to plan its purchases.(long term,short term) It helps in understanding the controllable and uncontrollable elements that cause budget variance. Cash for procuring materials can be clearly projected. (year or month )

Flexible budget
It makes use of supplementary data which adjust variable cost in accordance with the production levels actually experienced.

Benefits of material budgets

Estimation of coming prices Plans for a specific timing of purchases. Inventory investment and associated risk can be reduced. Provides maximum purchasing lead time. Reduction in expediting cost and purchase work load Suppliers relationship can be improved.

Material control
Material control is a systematic control over the purchasing storing and using of material to minimizing the possible cost. In every manufacturing concern materials constitute an important factor of production. It is an important element of cost & covering 60-70 percent of the total cost of the production.

Importance of material control

Regular supply of material No possibility of overstocking and under stocking Minimum Wastage Getting material at reasonable prices

Role of material control manager

Lead the Materials (Purchasing, Warehousing, Dispatch) and Planning Departments Develop and implement supply chain strategies Ensure continuity of material supply Looks after quality or timing issues on orders.

Material control cycle

Material control cycle comprises of all of those procedures which are necessary for the provision of materials for manufacturing process with a minimum investment and at lowest cost possible

Steps of material control cycle

Determining needs Preparing requisitions Receiving purchased material and finished parts Inspecting and delivering the materials Entering receipts in records issuing for production Recording the issue in records Entry of Receiving and issuing transactions

Conclusion
"Manufacturing organizations, whatever their products, face the same daily practical problem - that customers want products to be available in a shorter time than it takes to make them. This means that some level of planning is required." Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost. Making a bad decision in any of these areas will make the company lose money