What is material of Management

 

What is material of Management

Material management is an art and science, which deals with people and product based on market

strategy or it is a scientific technique with planning, directing, controlling and co-ordination of all those activities concerned with material and inventory requirements, from the point of their inception to their introduction into manufacturing process.

Various materials used as inputs, such as raw materials, consumables & spares, are required to be purchased and made available to the users as & when needed to ensure uninterrupted production.

 Definition & Scope of Materials Management

Materials Management is an organizational concept whose primary objective is to integrate and manage the sourcing, flow, and control of materials using a total systems perspective across multiple function reports to a different executive, which can result in each function or activity pursuing conflicting organizational goals and objectives

The scope of Materials Management varies greatly from company to company, It is a business function for planning, purchasing, moving, storing material in an optimum way which help organization to minimize the various costs like inventory, purchasing, material handling and distribution costs.

Materials Management can be defined as that function of business that is responsible for the coordination of material planning, sourcing, purchasing, in-plant materials movement, storing and controlling materials in an optimum manner to provide service to the customer, at a pre-decided level at a minimum cost.

 

Objective of material management are

Primary objective	Secondary  objective
Right price High turnover Low procurement and less storage cost Continuity supply Consistency in quality Good supplier relations Training and development for personnel History ,procedure and ERP system	Forecasting Inter –departmental harmony Product improvement Standardization Decision  making for buying New materials and product Favorable reciprocal relation ship

 

The success of any manufacturing activity is largely dependent on the procurement of raw materials or spares of right quality, in the right quantities, from right source, at the right time and at right price popularly known as five ‘R’s’ of the art of efficient purchasing.

• The right quality
• The right quantity
• The right time
• The right source
• The right price

RIGHT QUALITY

Right quality implies that quality should be available, measurable and understandable as far as practicable. In order to determine the quality of a product sampling schemes will be useful. The right quality is determined by the cost of materials and the technical characteristics as suited to the specific requirements. The quality particulars are normally obtained from the indents. Since the objective of purchasing is to ensure continuity of supply to the user departments, the time at which the material is provided to the user department assumes great importance.

RIGHT QUANTITY

The right quantity is the most important parameter in buying. Concepts, such as, economic order quantity, economic purchase quantity, fixed period and fixed quantity systems, will serve as broad guidelines. But the buyer has to use his knowledge, experience and common sense to determine the quantity after considering factors such as price structure, discounts, availability of the item, favorable reciprocal relations, and make or buy consideration.

RIGHT TIME

For determining the right time, the purchase manager should have lead time information for all products and analyze its components for reducing the same. Lead time is the total time elapsed between the recognition of the need of an item till the item arrives and is provided for use. This covers the entire duration of the materials cycle and consists of pre-contractual administrative lead time, manufacturing and transporting lead time and inspection lead time. Since the inventory increases with higher lead time, it is desirable to analyze each component of the lead time so as to reduce the first and third components which are controllable. While determining the purchases, the buyer has to consider emergency situations like floods, strikes, etc. He should have ‘contingency plans’ when force major clauses become operative, for instance, the material is not available due to strike, lock-out, floods, and earthquakes.

RIGHT PRICE

It is the primary concern of any manufacturing organization to get an item at the right price. But right price need not be the lowest price. It is very difficult to determine the right price; general guidance can be had from the cost structure of the product. The ‘tender system’ of buying is normally used in public sector organizations but the objective should be to identify the lowest ‘responsible’ bidder and not the lowest bidder. The technique of ‘learning curve’ also helps the purchase agent to determine the price of items with high labor content. The price can be kept low by proper planning and not by rush buying. Price negotiation also helps to determine the right prices.

RIGHT SOURCE

The source from which the material is procured should be dependable and capable of supplying items of uniform quality. The buyer has to decide which item should be directly obtained from the manufacturer. Source selection, source development and vendor rating play an important role in buyer-seller relationships. In emergencies, open market purchases and bazaar purchases are restored to

 

 To be continued …. In my new book LEADING MATERIALS MANAGEMENT

Author

ABDUL GAFFOOR

B-TECH MECHANICAL

MBA (project management) CSWIP certified