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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.
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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
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The fundamental objectives of the Materials
Management function ,often called the famous 5 Rs of
Materials Management, are acquisition of materials and
services :
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of the right quality
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in the right quantity
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at the right time
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from the right source
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at the right price
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From the management point of view ,
the key objectives of MM are :
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- 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 procedures
- 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 achieve a high
degree of cooperation and coordination with user
departments
- To maintain good
records and controls that provide an audit trail and
ensure efficiency and honesty
- To participate in
Make or Buy decisions
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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.
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The broad Materials function has the following as identified
and
interlinked sub functions:
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Materials
planning and control: Materials required for any operation
are based on the sales forecasts and production plans.
Planning and control is done for the materials taking into
account the materials not available for the operation and
those in hand or in pipe line.
This involves estimating
the individual requirements of parts, preparing materials
budget, forecasting the levels of inventories, scheduling
the orders and
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monitoring the performance in relation to
production and sales.
Purchasing: Basically, the job of a materials
manager is to provide , to the user departments
right material at the right time in right
quantity of
right quality at right price from the right
source.
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To meet
these objectives the activities undertaken include
selection of sources of supply, finalisation of terms of purchase, placement
of purchase orders, follow up, maintenance of relations with
vendors, approval of payments to vendors, evaluating, rating and
developing vendors.
Stores : Once the material is delivered , its physical control ,
preservation , minimisation of obsolescence and damage through
timely disposal and efficient handling, maintenance of records,
proper locations and stocking is done in Stores.
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Inventory control : One of the powerful ways of controlling
the materials is through Inventory control.
It
covers aspects such as setting inventory levels,
doing various analyses such as ABC , XYZ etc
,fixing economic
order quantities (EOQ), setting
safety stock levels, lead time analysis and reporting.
Materials Management's scope:
The scope is vast.
Its sub
functions include Materials planning
and control, Purchasing,
Stores and Inventory Management besides others.
Basically, under its scope are :
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emphasis on the acquisition aspect
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inventory control and stores management
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material logistics, movement control and
handling aspect
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purchasing, supply , transportation ,
materials handling etc
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supply management or logistics management
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all the interrelated activities concerned
with materials
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Materials management can thus also be defined as
a joint action of various materials activities
directed towards a common goal and that is to
achieve an integrated management approach to
planning, acquiring, processing and distributing
production materials from the raw material state
to the finished product state.
In its process of managing , materials management
has such sub fields as inventory management ,
value analysis, receiving, stores and management
of obsolete , slow moving and non moving items.
The various activities represent these four
functions:
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Planning and control
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Purchasing
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Value analysis and
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Physical distribution
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