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Material management is an approach for planning, organizing, and controlling all those activities principally concerned
with the flow of materials into an organisation.Materials Management thus can be defined as that function of business
that is responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an
optimum manner so as to provide service to the customer, at a pre-decided level at a minimum cost.
The scope of Materials Management varies greatly from company to company and may include material planning and
control, production planning, Purchasing, inventory control, in-plant materials movement, and waste management.It is a
business function for planning, purchasing, moving, storing material in a optimum way which help organisation to
minimise the various costs like inventory, purchasing, material handling and distribution costs.
From the management point of view , the key objectives of MM are :
To buy at the lowest price , consistent with desired quality and service
To maintain a high inventory turnover , by reducing excess storage , carrying costs and inventory losses
occurring due to deteriorations , obsolescence and pilferage
To maintain continuity of supply , preventing interruption of the flow of materials and services to users
To maintain the specified material quality level and a consistency of quality which permits efficient and effective
operation
To develop reliable alternate sources of supply to promote a competitive atmosphere in performance and
pricing
To minimize the overall cost of acquisition by improving the efficiency of operations and procedure
To hire, develop, motivate and train personnel and to provide a reservoir of talent
To develop and maintain good supplier relationships in order to create a supplier attitude and desire furnish the
organisation with new ideas , products, and better prices and service
To maintain good records and controls that provide an audit trail and ensure efficiency and honesty
IMPORTANCE
The importance of material management may be summarized as follows:
1. The material cost content of total cost is kept at a reasonable level. Scientific purchasing helps in acquiring
materials at reasonable prices. Proper storing of materials also helps in reducing their wastages. These factors
help in controlling cost content of products.
2. The cost of indirect materials is kept under check. Sometimes cost of indirect materials also increases total
cost of production because there is no proper control over such materials.
3. The equipment is properly utilized because there are no break downs due to late supply of materials.
4. The loss of direct labour is avoided.
5. The wastages of materials at the stage of storage as well as their movement is kept under control.
6. The supply of materials is prompt and late delivery instances are only few.
7. The investments on materials are kept under control as under and over stocking is avoided.
8. Congestion in the stores and at different stages of manufacturing is avoided.
Non-production materials like office supplies, perishable tools and maintenance, repair and
operating supplies are maintained as per the needs of the business. These stores may not be
required daily but their availability in stores is essential. The non-availability of such stores
may lead to stoppage of work.
4. Transportation:
The transporting of materials from suppliers is an important function of materials
management. The traffic department is responsible for arranging transportation service. The
vehicles may be purchased for the business or these may be chartered from outside. It all
depends upon the quantity and frequency of buying materials. The purpose is to arrange
cheap and quick transport facilities for incoming materials.
5. Materials Handling:
It is concerned with the movement of materials within a manufacturing establishment and the
cost of handling materials is kept under control. It is also seen that there are no wastages or
losses of materials during their movement. Special equipments may be acquired for material
handling.
6. Receiving:
The receiving department is responsible for the unloading of materials, counting the units,
determining their quality and sending them to stores etc. The purchasing department is also
informed about the receipt of various materials.
IMPORTANCE1. Inventory Problem - It helps in solving problems related to reducing inventories in the context of reducing
uncertainties in demand and supply. It helps in projection of demand. Thegap between demand and supply is
very crucial for any business hence effective materials management is very important.
2. Pilferage Issues of proper planningregarding avoidance of pilferage are also solved by effective materials
management,
3. Improving Materials Productivity Problems regarding standardization and reduction methodologies for
improving productivity are also solved by effective materials management,
4. Waste Management - Effective materials management also helps in developing policies and procedure for
Advantages of Standardization
All the sections of company will be benefited from standardization as mentioned below.
Fewer specifications, drawings and part list have to prepared and issued.
Better quality products of proven design at reasonable cost leads to greater sales volume.
Benefits to Production Planning DepartmentScope for improved methods, processes and layouts.
Opportunities for more efficient tool design.
Better resource allocation.
Reduction in pre-production activities.
Benefits to Production Control Department
Holding of stock of standard items leads to less paper work and fewer requisitions and orders.
Because of large purchase quantities involved, favorable purchase contracts can be made.
Operators become familiar with the work and produce jobs of consistent quality.
Other Benefits
Work study section is benefited with efficient break down of operations and effective work
measurement.
More time is available to the supervisors to make useful records and preserve statistics.
Disadvantages of Standardization
Reduction in choice because of reduced variety and consequently loss of business or customer.
Standard once set, resist change and thus standardization may become an obstacle to progress.
It becomes very difficult to introduce new models because of less flexible production facilities and due to high
cost of specialized production equipment.
SIMPLIFICATION
The concept of simplification is closely related to standardization. Simplification is the process of reducing the variety of
products manufactured. Simplification is concerned with the reduction of product range, assemblies, parts, materials
and design.
Advantages of Simplification
Following are the advantages of simplification:
Simplification involves fewer, parts, varieties and changes in products; this reduces manufacturing operations
and risk of obsolescence.
VALUE ANALYSIS
Value engineering or value analysis had its birth during the World War II Lawrence D. Miles was responsible for
developing the technique and naming it. Value analysis is defined as an organized creative approach which has its
objective, the efficient identification of unnecessary cost-cost which provides neither quality nor use nor life nor
appearance nor customer features.
Value analysis focuses engineering, manufacturing and purchasing attention to one objective- equivalent performance
at a lower cost.
Value analysis is concerned with the costs added due to inefficient or unnecessary specifications and features. It makes
its contribution in the last stage of product cycle, namely, the maturity stage. At this stage, research and development
no longer make positive contributions in terms of improving the efficiency of the functions of the product or adding new
functions to it.
Value is not inherent in a product, it is a relative term, and value can change with time and place. It can be measured
only by comparison with other products which perform the same function. Value is the relationship between what
someone wants and what he is willing to pay for it. In fact, the heart of value analysis technique is the functional
approach. It relates to cost of function whereas others relate cost to product. It is denoted by the ratio between
function and cost.
STORE MANAGMENT
Raw material consumes maximum amount of the investmentin a company. And highest amount of cost reduction can
be donein this area only. Hence stores play a major role as far a companyis concerned. And if this raw materials are not
stored efficientlythey will get deteriorate and there by causing big loss to thecompany.Hence in order to study stores in
detail we thought of takingstores management as our topic.
Introduction:
Stores management is part of the overall function of materialsmanagement. In order, therefore, to understand the
function of theformer it is desirable to have a clear understanding of whatmaterials management stands for. Beginning
with the termmanagement is important to examine its definition and objectives.
The very essence of Materials Management gathers its relevance from Stores , a place that keeps the materials in a way
that the materials are well accounted for and are maintained safe.A typical Stores has a process and a space within, to
receive the incoming materials (Receiving Bay), keep them for as long as they are required for use (Custody) and then to
move them out of stores for use (Issue). In a manufacturing firm this process forms a cycle to maintain and run the
activities of Stores.
The basic responsibilities of stores are to act as custodian and controlling agent for parts, supplies, and materials, and to
provide service to users of those goods. Well-designed systems provide flexibility to absorb the shock demand
variation,and enable purchasing to plan ahead, practice forward buying, and so forth.
Thus ,the terms Stores, Storehouse, or warehouse all of them refer to a building or room or place where materials are
kept.
An organization usually has different types of stores like which it refers by different names on the basis of material
nature such as:
Yard Store
organization. Depending on the agreement, a contractor may either acquire on-site inventories or just manage them.
In some cases, supply contractors have branches built next door to industrial plants, for the sole purpose of supplying all
needs of the plant. In some cases, the two facilities are separated by a common wall and supplies are issued through an
opening in the wall. This is an emerging trend for MRO and office supply goods.
OBJECTIVES
To ensure uninterrupted supply of materials without delay to various users of the organization.
1. To ensure uninterrupted supply of materials and stores without delay to various production and service departments
of the organisation.
2. To prevent overstocking and understocking of materials,
3. To protect materials from pilferage, theft fire and other risks.
4. To minimise the storage costs.
5. To ensure proper and continuous control over materials.
6. To ensure most effective utilisation of available storage space and workers engaged in the process of storekeeping.
FUNCTIONS OF STORE MANAGEMNT
1. Issuing purchase requisitions to Purchase Department as and when necessity for materials in stores arises.
2. Receiving purchased materials from the purchase department and to confirm their quality and quantity with the
purchase order.
3. Storing and preserving materials at proper and convenient places so that items could be easily located.
4. Storing the materials in such a manner so as to minimise the occurrence of risks and to prevent losses due to
Store personnel are responsible for carrying out the following functions.
Ensuring all storage and material handling facilities are in proper working order
Ensuring that rules and regulations relating to physical custody and preservation of materials are followed
store design
Principles of building design
The primary importance is given to the inward &outward flows of goods & vehicles in an orderly fashion.
Working areas, including goods inward & outward ,maintenance areas & packing areas should be grouped
asclosely together ,that would reduce the costs
The height of the building from floor to ceiling must beenough to permit maximum loading & tacking level of
materials.
Main gangways should run the length of buildings &across in short ones
Gangways must be wide enough for two large vehiclesor mechanical equipments likely to pass each other
without collision
Subsidiary gangways should run of the main gangways but not necessarily at right angles