Material Management !!

You know that we are living in a Material world ,which consists of Only material
and energy, having No beginning as well as end…
Material is Nothing but unity of opposite forces Struggling every moment for a c
hange and existence!!
Materials Management is not Rocket Science
It is an art of Planning Organizing and Controlling Materials activities with sc
ientific methods
Functions of Material Management
1. 2. 3. 4. 5.
6.
7. 8.
Materials Planning Purchasing In-coming Materials Check Materials Handling and T
ransportation Storage and Inventory Control Standardization and Cost Reduction A
nalyzing and reporting Scrap and surplus Disposal
IDIAN ECONOMY IS LPG ECONOMY Liberalized Privatized and Globalized. It means Com
petitive - Pressure on Margins It leads to a general trend of downsizing Automat
ion and cutting cost in many industries…
There is a science for everything and only one best way of doing things.
So, every management want to Optimize the utility of resources like Man, Money M
achine and Material With time and Technology
Though time is also a resource We can't purchase or store it. It will be free fo
r usage But we can’t get back at any cost.
Since Material is the major Part of the total Expenses in most of the organizati
ons It is quiet natural to attack it first..
Moreover If you cut the payroll cost employee will cry
Profit Overheads * Materials
But if you cut material cost material will not cry… And it is very difficult to cu
t the overheads!
Labour
Interest
Respect the material !
Once in a hotel, the GM went for a round. He went to the kitchen then he found s
ome thing wrong. He dropped one rupee coin in to the floor. Suddenly 2,3 staff c
ame, one of them taken the coin and Given it to the GM. But he refused to take b
ack the coin. The staff insisted “it is one rupee and it is your money, it should
be there in your pocket. It is the right place for it” GM Replied “Its well and good
. Have a look near the dust bin. There is a spoon, it worth around 80 rupees. Wh
y don’t you show the same interest keeping that in to The Right place?”
Anybody will burn a bundle of Rupees 30000 ?
But a maintenance staff may give a fluctuated Power Supply to an induction Cook
top. Or A Production staff, may place the vessel on The same Induction cook top
without water !
But The above three actions are equal… Yes, Burning of money!!
Handle everything with care
Since Material is The major Part of Our total expenses It is important to Manage
the same effectively
=
Use the materials what is exactly Required.
Squeeze out the Last drop out of a dried towel Measure everything even if you th
rough it in to the river.
MESSURE WHAT IS IMPORTANT AND NOT WHAT IS CONVENIENT
1 2 3 4……………………………….30 Days 500 500 500 500………………………Daily purchase 750 750 750 750………………………
Income: Rs 750x30= Rs.22500 Profit: Rs 7500 Return On Investment= 7500/500 X 10
0= 1500%
P&L Of Vegetable Vendor:
Lesson: Keep the materials moving !!
Increase Velocity of Material Movement !!!
Keep The Working Capital “WORKING”
What is Inventory ?
Inventory is a stock of goods in any form
like raw materials, work in progress or finished goods
Inventory Control
How to control?
We can’t always control all the thousands of products kept in the store. We can us
e selective inventory control methods and analysis
ABC HML SDE SOS VED FSN
: : : : : :
Always Better Control High Value, Medium Value, Low Value Scarce, Difficult to O
btain, Easy to obtain Seasonal, Off-seasonal Vital, Essential, Desirable Fast Mo
ving, Slow- , Non- moving,
In Most of the organization 80% of the consumption value is Represented only by
15 to 20% of the items, Better to control this A class items first
100 90
80
A-B-C ANALYSIS
Policies for A Items Only exact quantities to be procured Have more than one sou
rce Centralize procurement Individual postings , accurate records Continuous che
cks, low safety stock Reduce Lead Time: Regular follow up Very strict consumptio
n control Very accurate requirement forecasting!
70 60
50
40 30
20 10 0 A
10
20 B
70 80 C % of total number of items
30
40
50
60
90
100
PHYSICAL STOCK VERIFICATION
Use duly identified color codes -Search Free Follow Banking Method in postings P
hysical Issues FIFO method. Costing weighted average Methods. Verify stock of te
n items daily random Verify stock of ten items fast moving Verify stock of every
item monthly at the end
Important Vs Urgent
If you are not doing some important works Then all your work will become urgent
Planning is an important thing….. Forecasting is a difficult art, especially if it
relates to the future ! Perfect forecast is yet to be born !!” Mutual Cooperation
is must with all the Internal Departments to forecast requirements. Whole is mo
re than the sum of parts!
SUPPLY CHAIN MANAGEMENT
A supply chain in a manufacturing organization will comprise of a network of fac
ilities to Procure the material from the vendors Transform the material to the e
nd product Distribute the finished product to the Consumer
Think of a Supply Chain as a relay race with good speed by each runner and a gre
at handoff and exchange of the baton between runners.
Green Purchasing:
Re-duce, Re-use, Re-cycle !! *Establish a waste Reduction Programme *Buy Recycle
d, Repairable materials *Buy energy efficient equipment, materials *Reduce use o
f Plastics *Involve Vendors-Is it environmentally sound ? *Ensure Safety, Health
& Environment * SA-8000-standards for purchasing coming soon
Standardization
More the suppliers more the variations! As every supplier has a different proces
s, Uses different raw materials & machinery, The products produced will be diffe
rent. Two unreliable suppliers are worse than One Reliable supplier!. Overcome f
eeling of insecurity. Initiate Key Suppliers Account management Develop the reli
able supplier !. Develop self-certified suppliers to reduce inspection levels.
Reports!
Information should be a Proactive submission Rather than a reactive explanations
!! Speak in the language of Business.. In terms of money ..
We know all the business managements are More concern about the Return on invest
ment !!!!
Celebrate the material management day On April 23 every year
Thank you for your attention!