Material Management

Chapter 5
 Material Management

 Is a total concept having its definite organization to

plan and control all types of materials, its supply, its
flow from raw stage to finish stage.

 It can be defined as the function of the business that

is responsible for coordination of planning,
sourcing, purchasing, moving and storing materials
Sub-function:
1. Materials planning and control – materials required for any
operations are based on the sales forecast and production
plans.
2. Purchasing – the job of a material manager is to provide to
the user departments right material at the right time in right
quality at right price from the right source.
3. Stores
4. Inventory Control – one of the powerful ways of controlling
the materials
Scope of Materials Management
Material management strives to ensure that the material
cost component of the total cost be the least.

In order to achieve this, the control is exercised in the ff.

fields:

 Materials Planning

 Purchasing

 Store Keeping

 Inventory Control
 Receiving, Inspection and Dispatching

 Value Analysis, Standardization and Variety

Reduction

 Materials Handling and Traffic

 Disposal of Scrap and Surplus, Material

Preservation
Purchasing Department – buys materials based on the
purchase requisition from user departments and store
departments and annual production plan.

4 Basic Purchasing Activities

1. Selecting suppliers, negotiating and issuing purchase
order
2. Expediting delivery from suppliers
3. Acting as a liaison between suppliers and other
company departments
4. Looking for new products, materials and supplier that
can contribute to company objectiveness
Stock Level
 Production parts and materials are checked
against blueprints and specifications. Non
production are also reviewed. Once it is as per
the specification given the goods will be accepted.

Cost
 Material handling section is responsible for the
transport of materials to various departments.
5 Basic Traffic Activities
1. Selecting common or charter carriers and routing for
dispatch/shipments as required.
2. Tracing in-bound shipments of materials
3. Auditing invoices from carriers and filing claims for
refunds or excess charges or for damage shipments
when required
4. Developing techniques to reduce transportation cost
5. Packaging of finished products, labeling, and loading of
end product in the trades. Finally, the disposal of scraps
and surplus must be done periodically to release the
capital locked in those items.
Non-Production Stores
 Maintains physical stocks of non-production items to
be drawn on as needed for operations or maintenance.
 Manages inventories of non-production materials and
prepares purchase requisition for needed materials
when stocks from to the re-order point.
 Keeps record and maintains control.
Integrated Concept
Material managers are responsible to exercise control
and coordinated with an overview that ensures
proper balance of conflicting objectives of the
individual function

Advantages of Integrated Material Management

 Better Accountability
 Better Coordination
 Better Performance
 Adaptability to EDP
 Miscellaneous Advantage
 Integrated Waste
Management
 Is a systematic approach that uses multiple methods
to control and dispose of waste. The goal is to divert
as much solid waste as possible, and to minimize
other methods such as incineration that harm the
environment.

Reduce Reuse

Recycle
Benefits of Integrated Waste Management
 Greater service coordination of procurement and
waste management among local government
departments and agencies can lead to more
efficient service delivery and cost savings.
 MSW is a “clean” waste stream that requires less
procuring
 Revenue for local governments from the sale of
recyclable materials in the commodities market.
 Strengthening and expansion of both local and
national economies.
 Conservation of energy and natural resources,
reduction of greenhouse gas emissions and
reduction in landfills and incineration disposal.
 Growing the market for more environmentally
responsible products
Comprehensive Waste Stream Analysis
Waste characterization/waste stream analysis
are methods used to determine the types of materials
being dispatched in a waste stream and in what
proportion.
 Comprehensive waste stream answers for
central question about Municipal Solid Waste (MSW)
programs:

 What is in your community’s waste stream?

 What are the sources of each waste type?

 How much total waste is being generated

 Where is diverted waste sent?

Extended Producer Responsibility Policies
Based on the idea that “the polluter pays.” EPR
Policies are designed to share the cost of a product’s
environmentally sustainable disposal with
manufacturers and/or consumers.

This can be achieved by integrating

environmental costs into the final product price, or
holding manufacturers liable for end-of-life costs
associated with reuse, recycling, and disposal.
Selection of Suppliers
 Sources of Suppliers
• Specialized trade directories.
• Assistance of professional bodies or consultant.
• The buyer’s guide or purchase handbook.
• The manufacturer’s or distributor’s catalogue
• Advertisements in dailies
• Advertisement in specialized trade journals
• Trade fair exhibitions
 Development of Approved List of Suppliers

 Evaluation and Selection of the Supplier

 Cost Factors

 Delivery

 Design and Specification Factors

 Legal Factors

 Vendor Rating