IMPORTANCE OF MATERIAL MANAGEMENT IN ORGANIZATION

MATERIAL MANAGEMENT
Materials management is the branch of logistics that controls the transmission of physical materials through the value chain. It covers: Acquisition of spare parts and replacements Quality control of purchasing and ordering such parts Standards involved in ordering, shipping, and warehousing the said parts

IMPORTANCE OF MATERIAL MANAGEMENT

It is important to obtain efficiency of operations through integration of material acquisition material movement material storage

STRATEGIC OBJECTIVES
Lower costs Disperse manufacturing activities to efficient global locations Increase productivity Using Total Quality Management (W. Edward Demming)

cont.

STRATEGIC OBJECTIVES
Accommodate demands for local responsiveness

decentralize production
Respond quickly to shifts on customer demand

time-based competition extremely important

FACTORS INFLUENCING MANUFACTURING PROCESS

Country factors Technological factors Product factors Locating manufacturing facilities

COUNTRY FACTORS
Optimum economic, political, and cultural conditions Externalities Skilled labor pools Supporting industries Formal and informal trade barriers Exchange rate

TECHNOLOGICAL FACTORS
Fixed costs Minimum efficient scale Flexible manufacturing reduce setup times for complex equipment increase machine utilization improve quality control Flexible machine cells to perform a variety of operations

PRODUCT FACTORS
Two product features affect location decisions: Value to weight ratio. Product serves universal needs Two basic strategies Concentrating in a centralized location and serving the world market Decentralizing them in various regional or national locations close to major markets when opposite conditions exist

LOCATING MANUFACTURING FACILITIES

Fixed costs are substantial Minimum efficient scale is high Flexible manufacturing technologies available Fixed costs are low Minimum efficient scale is low Flexible manufacturing technologies unavailable Trade barriers and transportation costs remain major impediments

PROCUREMENT
Procurement method is the way of ordering material. Some of the new developments in this area include:
 Electronic Ordering  Stockless Purchasing  Standardization, and  Just in Time Purchasing.

ELECTRONIC ORDERING
Electronic Ordering Reduce Paper Transactions. Paper Transactions Include Purchase Order, Receiving Document, Authorization To Pay, Etc. Transactions Between Firms Are Increasingly Done Via Electronic Data Interchange (EDI). EDI Is A Standardized Data Transmittal Format For Computerized Communications Between Organizations.

STOCKLESS PURCHASING
This Means That The Supplier Maintains The Inventory For The Purchaser. Here, The Cost Of Stocking Inventory Has Been Temporarily Transferred From The Purchaser To The Supplier.

STANDARDIZATION
Rather Than Obtaining A Variety Of Components Similar In Labeling, Coloring, Packaging, Etc. The Purchasing Agent Should Try To Have Those Components Standardized. For Every Component That Is Standardized, There Is One Less Invoice, One Less Item To Be Inventoried, Etc.

JUST IN TIME PURCHASING

Just In Time (Jit) Purchasing Is Directed Toward The Reduction Of Waste (That Is Present At Incoming Inspection, Excess Inventory and Poor Quality) And Delay.

THANK YOU