CHAPTER 4

MATERIALS
MANAGEMENT
 Introduction and
Meaning
MATERIAL MANAGEMENT
is a function, which aims for integrated towards
the management of materials in an industrial
undertaking.
Objective:
 cost reduction
 efficient handling of materials at all stages and
in all section of the undertaking.
 SCOPE OR FUNCTIONS OF
MATERIAL MANAGEMENT
Material Planning and Control
Purchasing
Stores Management
Inventory Control and Management
Standardization
Simplifications
Value Analysis
Ergonomics
Just in Time (JIT)
 Material Planning and Control
Material Planning
is a scientific technique of determining
in advance the requirements of raw
materials. Ancillary parts and
components, spares. Etc. as directed by
production program.
It is the sub-system in the overall
planning.
 Factors Influence the Activity of
Material Planning
a. Macro factors
price, trends, business cycles Govt,
import policy.
b. Micro factors
utilization, rejection rates, lead times,
inventory levels, working capital,
delegation of powers and communication.
PURCHASING
Important function of materials
management.
Means buying of equipment,
materials, tools, part, etc required
for industry.
Importance function varies nature and
size of industry
Small industry
this function performed by works
manager
Large manufacturing
this function dine by separate
department.
 Objectives of Purchasing
1. To avail the materials, suppliers and
equipment at the minimum possible
costs.
2. To ensure the continuous flow of
production.
3. To increase the asset turnover.
4. To develop an alternative source of
supply.
5. To establish and maintain the good
relations with the suppliers.
6. To achieve maximum integration
with other department of the
company.
7. To train and develop the personnel.
8. Efficient record keeping and
management reporting.
Parameters of Purchasing
or ten ‘R’s
1. Right Price
Negotiation, Learning Curves
2. Right Quality
Rejections and Specifications
3. Right Time
Reorder Point, Lead Time, Analysis
4. Right Source
Vendor Rating, Purchases
5. Right Quantity
Economic purchase quantity (EOQ)
Inventory models
6. Right attitude
Strengths, Weaknesses, Opportunities,
Threat (SWOT Analysis)
7. Right Contracts
Legal Aspects, Modes
8. Right Material
Value Analysis, Standardization
9. Right Transportation
Coat Analysis, Transportation and Logistics
10. Right Place Delivery
Price, Communication
Purchasing Procedure
1. Recognition of the end
Purchase Requisition Form
2. The selection of supplier
All possible sources and short listing
sources.
Bidder.
3. Placing the order
Purchase order.
4. Follow up the order
Supplier may be contact through personal
letter, phone, telegram, or even personal visit.
5. Receiving and Inspection of the Materials
Quantity are verified and tallied with the
purchase order.
6. Payment of the invoice
Invoice is checked before it is approved for
the payment.
7. Maintenance of the records
most of purchases are repeat orders
hence hence the past records serve
as a good guide for the future action.
8. Maintenance of Vendor Relations.
Good relations develop mutual trust
and confidence in the course of the
time which is beneficial to both parties.
 STORES
MANAGEMENT

Functions of Stores

1.To receive raw materials, components,

tools, equipment’s and other items and
account for them.

2.To provide adequate and proper

storage and preservation to the various
items.
3. Tomeet the demands of the
consuming departments by proper
issues and account for the consumption.
4.To minimise obsolence, surplus and
scrap through proper codification,
preservation and handling.
5. To highlight stock accumulation,
discrepancies and abnormal
consumption and effect control
measures.
6.To ensure good house keeping
so that material handling, material
preservation, stocking, receipt and
issue can be done adequately.
7. To assist in verification and
provide supporting information for
effective purchase action.
Codification
A process of representing each item by a
number, the digit of which indicates the
group, the sub group, the type and the
dimension of the item.
It enables systematic grouping of similar
items and avoids confusion caused by long
description ,
It serve as starting point of simplification and
standardization.
INVENTORY CONTROL
MANAGEMENT

INVENTORY refers to the materials stock.

The idle resources of an enterprise.

Represent those items which are either

stocked for sale or they are in the process of
manufacturing or they are in the form of
materials, which are yet to be utilised.
 Reasons for keeping inventories

1. To stabilise production.
2. To take advantage of prices
discounts.
3. To meet the demand during the
replenishment period.
4. To prevent loss of orders (sales).
5. To keep pace with changing market
condition.
Inventory Control
Planned approach determining what to
order, when to order and how much to
order and how much stock so that costs
associated with buying and storing optimal
without interrupting production and sales.

Deals with 2 problems

When should an order be placed? (order
Level)
How much should be ordered? (order
quantity)
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, may
be compared and measured.
SIMPLIFICATION

The process of reducing the

variety of products
manufactured. Simplification is
concerned with the reduction of
product range, assemblies,
parts, materials and design.
Value Analysis

VALUE analysis 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 appearance customer features.

Focuses in Engineering, manufacturing, and

purchasing attention to one objective
equivalent performance at a lower cost.
ERGONOMICS (HUMAN
ENGINEERING

Ergonomics- Greek words Ergo means Laws.

Study of the man in relation to his work.

In USA it is called human engineering or

human factor engineering.

Concerned with man machine system.

Objectives of human engineering
1. Toenhance the efficiency and
effectiveness with which the activities(work)
is carried out so as to increase the
convenience of use, reduced errors and
increase in productivity.
2. To enhance certain desirable human
values including safety reduced stress and
fatigue and improved quality of work.
JUST-IN-TIME(JIT)
MANUFACTURING

A philosophy rather than a technique.

By eliminating all waste and seeking

continuous improvement, it aims at
creating manufacturing system that is
response to the market needs.
According to Voss, JIT is
Production methodology which aims to
improve overall productivity through
elimination of waste and which leads
to improved quality .