MATERIALS MANAGEMENT

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.

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

PURPOSE OF MATERIAL MANAGEMENT

To gain economy in purchasing
To satisfy the demand during period of replenishment
To carry reserve stock to avoid stock out
To stabilize fluctuations in consumption
To provide reasonable level of client services

Objective of material management

Primary
Right price
High turnover
Low procurement
& storage cost
Continuity of supply
Consistency in quality
Good supplier
relations
Development of
personnel

Secondary
Forecasting
Inter-departmental
harmony
Product improvement
Standardization
Make or buy decision
New materials & products
Favorable reciprocal
relationships

MATERIALS PLANNING

 Materials planning is the the scientific way

of determining the requirements of raw
materials ,components,spares amd other
items

significance
Over ordering/under ordering
Poor planning for materials leads to
emergency, and increase tranporataion
cost

Benifits of Materials Planning

Avoid last miniute to procure materials
Improve better forecasting
Improve purchase planning

Factors influencing materials

planning

National economy
Price trends
Credit policies
Direct and indirect taxes
International market conditions
Demand for item
Total procurement lead time
Transporatation loses

Rejection rate
Storage capacity
Plant utilization
Seasonal factors
Delegation of power
Location of pant and location of suppliers

Approach to materials planning

Based on short term sales forecast
Bill of material Explosion

Past consumption Analysis

Using previous datas

 Materials Budgeting

 Once the material requirements have

been established the materials budget is
prepared taking into account ..
Estimation of material prices during
coming year and specfic timing of
purchases(quarter/month)

benefits

Schedule of cash requirements

Inventory investment risk can be reduced
Careful selection of qualified suppliers
Supplier relationship can be improved

 Material control

 The function of maintaining contantly

available supply of raw materials,
purchased parts

Material Control Cycle

Determining the material needs
Preparing requisitions for purchased item
Receving purchased material and finished
goods
Inspecting purchased material and
finished goods
Entering receipts in stores record

Stores Management

 Store as building where goods are kept

Function of receving and storing the
material
Store is not meant for stocking purchased
material alone,partly finished
goods,finished goodsand consumables
are also in kept

Functions
Receive raw materials and account for
them
Provide proper storage
To meet the demands of consuming
departments by proper issues
To minimise obsolence,surplus

Stores layout
Nearness to point of use
Good accessability for material handling
equipment
Flexibility for future expansion
Efficient utilization of floor and height
Clear identification
Install good lighting to prevent theft
Permit first in first out

 Maintain house keeping

Phyical appearance

Storage system
Fixed Location
Particular type goods have a position in the
store assigned to them exclusive only
On the basis of
supplier
similarity of item
size and frequnecy of use
joint issue of items

 Random location
Can be stored any storage position
Zone location
_particular product group are kept in given area
comb type layout
tree type layout

Stock verification
Low point inventory
- when the stock is lowest
- minimize the time
Continuous inventory
-52 equal groups ans assign one of them to
be physically counted each week
- planned and worked without shutdown
- detecting and eliminating the causes weekly

 Fixed inventory
Shutting down
Seasonal business

Advantage of classification and

codification
Systematic grouping of similar items for
correct identification
Avoid duplicate stock such as different
name,brand name and part number
Arrange bin cards and records in store in
the same uniform manner
Usuage of long descriptions is simplified

Principles of classification
Basis of classification should remain
unchanged
Classification must cover entire items and
allow reasonable scope for extension
Easily adopted fot non specialist

methods

Raw material
Component
Spare parts
Tools
Packing materials
Finished goods
Hardware
Motors