Material, Purchase and Store Management
Definition, Function & Objective of Material Management
Some Definitions of Materials Management:
(i) ‘Materials Management’ is a term used
to connote “controlling the kind, amount, location, movement and timing of
various commodities used in production by industrial enterprises”.
(ii) Materials
Management is the planning, directing, controlling and coordinating those
activities which are concerned with materials and inventory requirements, from
the point of their inception to their introduction into the manufacturing
process.
It begins with the determination of
materials quality and quantity and ends with its issuance to production to meet
customer’s demand as per schedule and at the lowest cost.
(iii) Materials Management is a basic
function of the business that adds value directly to the product itself
(iv) Materials Management embraces all
activities concerned with materials except those directly concerned with
designing or manufacturing the product.
(v) Materials Management deals with
controlling and regulating the flow of material in relation to changes in
variables like demand, prices, availability, quality, delivery schedules etc.
Thus, material management is an important
function of an organisation covering various aspects of input process, i.e., it
deals with raw materials, procurement of machines and other equipment’s
necessary for the production process and spare parts for the maintenance of the
plant. Thus, in a production process materials management can be considered as a
preliminary to transformation process.
It involves planning and programming for
the procurement of material and capital goods of desired quality and
specification at reasonable price and at the required time.
It is also concerned with market
exploration for the items to be purchased to have up to date information,
stores and stock control, inspection of the material received in the
enterprise, transportation and material handling operations related to
materials and many other functions. In the words of Bethel, “Its responsibility
end when the correct finished product in proper condition and quantity passes
to the consumer.”
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.
1. Low Price
2. Regular Supply of commodity
3. Continuity in quality
4. Efficient handling of materials
5. Supplier relationship
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 smoothly.
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 equipment’s may be acquired
for material handling.
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.
Objectives
of Materials Management:
Materials management contributes to survival
and profits of an enterprise by providing adequate supply of materials at the
lowest possible costs.
5R’s
in Material Management
1. At the Right price
2. Of the Right quality
3. In the Right quantity
4. At the Right time
5. From the Right source
The fundamental objectives of materials
management activities can be:
(i) Material Selection:
Correct specification of material and
components is determined. Also, the material requirement in agreement with
sales programme are assessed. This can be done by analysing the requisition
order of the buying department. With this standardisation one may have lower
cost and the task of procurement, replacement etc. may be easier.
(ii) Low operating costs:
It should endeavour to keep the operating
costs low and increase the profits without making any concessions in quality.
(iii) Receiving and controlling material
safely and in good condition.
(iv) Issue material upon receipt of
appropriate authority.
(v) Identification of surplus stocks and
taking appropriate measures to produce it.
The outcome of all these objectives can be
listed as given below:
(i) Regular uninterrupted supply of
raw-materials to ensure continuity of production.
(ii) By providing economy in purchasing
and minimising waste it leads to higher productivity.
(iii) To minimise storage and stock
control costs.
(iv) By minimising cost of production to
increase profits.
(v) To purchase items of best quality at the most competitive price.
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