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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

To develop reliable alternate sources of supply to promote a competitive atmosphere in performance and

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 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.

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.

Functions of Material Management:

Material management covers all aspects of material costs, supply and utilization. The
functional areas involved in material management usually include purchasing, production
control, shipping, receiving and stores.
The following functions are assigned for material management:
1. Production and Material Control:
Production manager prepares schedules of production to be carried in future. The
requirements of parts and materials are determined as per production schedules. Production
schedules are prepared on the basis of orders received or anticipated demand for goods. It is
ensured that every type or part of material is made available so that production is carried on
2. Purchasing:
Purchasing department is authorized to make buying arrangements on the basis of requisitions
issued by other departments. This department keeps contracts with suppliers and collects
quotations etc. at regular intervals. The effort by this department is to purchase proper quality
goods at reasonable prices. Purchasing is a managerial activity that goes beyond the simple act
of buying and includes the planning and policy activities covering a wide range of related and
complementary activities.
3. Non-Production Stores:

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
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
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

managing waste materials.

Issues of proper planing of store or warehouse are also important part of effective management and it
involves store layout. Hence for solving above problems an integrated approach of material management
must be applied properly.
Standardization means producing maximum variety of products from the minimum variety of materials, parts,
tools and processes. It is the process of establishing standards or units of measure by which extent, quality,
quantity, value, performance etc., may be compared and measured.

Advantages of Standardization
All the sections of company will be benefited from standardization as mentioned below.

Benefits to Design Department

Fewer specifications, drawings and part list have to prepared and issued.

More time is available to develop new design or to improve established design.

Better resource allocation.

Less qualified personnel can handle routine design work.

Benefits to Manufacturing Department

Lower unit cost.

Better quality products.

Better methods and tooling.

Increased interchangeability of parts.

Better utilization of manpower and equipment.

Accurate delivery dates.

Better services of production control, stock control, purchasing, etc.

More effective training.

Benefits to Marketing Department

Better quality products of proven design at reasonable cost leads to greater sales volume.

Increased margin of profit.

Better product delivery.

Easy availability of sales part.

Less sales pressure of after-sales services.

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

Well proven design and methods improve planning and control.

Accurate delivery promises.

Fewer delays arise from waiting for materials, tools, etc.

Follow-up of small batches consumes less time.

Benefits to Purchase and Stock Control Department

Holding of stock of standard items leads to less paper work and fewer requisitions and orders.

Storage and part location can be improved.

Newer techniques can be used for better control of stocks.

Because of large purchase quantities involved, favorable purchase contracts can be made.

Benefits to Quality Control Department

Better inspection and quality control is possible.

Quality standards can be defined more clearly.

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

Costing can obtain better control by installing standard costing.

More time is available to the supervisors to make useful records and preserve statistics.

Reduced reductions and scrap.

Helps supervisors to run his department efficiently and effectively.

Disadvantages of Standardization

Following are the 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 tends to favor only large companies.

It becomes very difficult to introduce new models because of less flexible production facilities and due to high
cost of specialized production equipment.

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.

Simplification reduces variety; volume of remaining products may be increased.

Simplification provides quick delivery and better after-sales services.

Simplification reduces inventory and thus results in better inventory control.

Simplification lowers the production costs.

Simplification reduces price of a product.

Simplification improves product quality.

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.
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.
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
An organization usually has different types of stores like which it refers by different names on the basis of material
nature such as:

Raw Materials Store

Processed or Semi-Finishing Materials Store

Finished Goods Store

Yard Store

Different types of Stores on the basis of storage nature are :

A) Closed stores Closed systems are utilized when close control and accounting for inventories are desirable. In such
cases, storage area are kept locked and entry is limited to stores employees, or to others only on an authorized basis.
Goods enter inventory through a formal receiving process and leave through an authorized requisition or bill of
materials. Closed systems typically include industrial or business stores operations, and involve repair parts,
consumables, tools, and materials or components for assembly where ongoing control and accuracy is essential.
B) Open stores There are instances where the cost of closely controlling inventories outweighs expected losses in an
uncontrolled environment. In such cases, inventory storage areas may be left open or kept close to the point of use for
efficient user access. Such inventories are available for use as needed, with emphasis on expediting production, or
operations rather than on security.
C) Random access In random access systems, goods are stored without regard for commodity groupings. Instead,
goods are stored in the next or nearest available space of suitable size. However, it is good planning to select from
available storage spaces with consideration for the anticipated frequency of issue. Locating items in random access
storage usually requires a computerized system. Random access systems tend to be used in conjunction with a closed
stores system.
D) Automated warehouse A large variety of automatic storage and retrieval systems (ASRS) are being used today. ASRS
systems have the capability of bringing goods from storage or placing goods into storage upon computer entry of the
item identification and/or storage location. Such systems may range in size from small rooms to whole warehouses, and
may handle items ranging form small parts in tote pans to large materials on pallets.
E) Contractor operated system, or integrated supplier systems Where business volume is sufficiently large, suppliers
may operate a firm's supply or inventory storage facility using supplier personnel, under contract with the using

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.

An efficient stores management has normally the following main objectives.

To ensure uninterrupted supply of materials without delay to various users of the organization.

To prevent overstocking and under stocking of the materials

To ensure safe handling of materials and prevent their damage.

To protect materials from pilferage, theft, fire and other risks

To minimize the cost of storage

To ensure proper and continuous control over the materials.

To ensure most effective utilization of available storage space

To optimize the efficiency of the personnel engaged in the store

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.
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

defective storage handling.

5. Issuing materials to various departments against material requisition slips duly authorized by the respective
departmental heads.
6. Undertaking a proper system of inventory control, taking up physical inventory of all stores at periodical intervals and
also to maintain proper records of inventory.
7. Providing full information about the availability of materials and goods etc., whenever so necessary by maintaining
proper stores records with the help of bin cards and stores ledger etc.
Functions of a store

Store personnel are responsible for carrying out the following functions.

Receipt of incoming materials

Supervision of unloading of materials and tallying of materials

Checking for damages or shortages and preparation of the report

Filling of goods inward, day book, or daily collection register

Completion of vendors consignment note (challan)

Making arrangement for inspection and getting the inspection completed

Preparation of goods receipt note (GRN)

Preparation of goods rejection memo (in case of rejection of materials)

Sending of materials to the respective stores

Sending of the relevant documents to the respective departments

Ensuring all storage and material handling facilities are in proper working order

Ensuring good housekeeping and cleanliness in the storage space

Checking, counting and tallying of materials before issue

Making prompt entries in Bin card or stock card

Ensuring correct documentation of material receipts and material issues

Ensuring safe and proper handling of materials so as not to damage them

Ensuring proper record keeping and correct accounting of materials

Ensuring regular stock verification

Ensuring that rules and regulations relating to physical custody and preservation of materials are followed

Ensuring safety of materials and personnel

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

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

Door should be wide & high enough

Proper lightning must be provided.

Fire precautions need to be carefully considered & provide fire exits

Floor thick ness & strength must be specified &checked.