Materials management is a process, through which a firm or company is supplied with goods and

services which it requires for succeeding in its goals of buying, movement of materials and
storing. Putting in the simplest term’s materials management is about moving the materials
within an organization. What do “materials” mean? Materials can basically be defined as those
objects or things that are to be moved in order to produce goods. Material is one of the 5M’s that
a manager has at his command, the other being Men, Machine, Methods and Money. Materials
could be in the form of raw materials, paperwork, messages or information etc. So, materials can
be both tangible and intangible. You see the newspaper boy delivering the newspaper to your
doorstep every day or the milkman delivering the milk packets to you. These are tangible
materials. There is also some material moved when you watch a movie on your television or
when you receive a phone call. These are the intangible materials that are moved. So, materials
management is an important function of every business. The better is the materials management
in a company the better is the health of that company.
The parameters related to materials management are as follows:

 Planning
 Storing
 Procuring
 Furnishing the appropriate material of true quality
 Coordinating production activities
 Scheduling production activities

Many industries buy the materials and do the following activities with them in a step by step
manner:

 Transport materials into a plant

 Transform materials into parts
 Gather parts into furnish goods
 Sell products or goods to customers
 Transport products to customers

Materials management does the following activities for the materials requirements:

 Planning
 Inventory planning
 Purchasing
 Storage
 Inventory control
 Supply of materials
 Transportation of materials
 Handling of materials

About twenty-five years ago, there wasn’t a strong competition in market and materials
management was not a vital part of an organization. At present, it is a vital activity of
management in production. Important functions of materials management are planning,
purchasing and controlling. The enhanced productivity is its aim and is used to perform the
following:

 To decrease the cost

 To enhance profitability
 In production streamline
 In proper utilization of materials
 In transportation
 In distribution

Definition: materials management is defined as a concept in an organization which plans and

control distinct materials, their supply, their flow from the stage of raw materials to the stage of
finished goods and handover goods to customers as per the needs of customers in right time.

 This complete process involves the functions right from planning to marketing and
material management is responsible for all these activities.

History of Materials Management:

Materials management became a vital function of management and the department of materials
management was started at the time of World War I in the United States of America. The
advancement of principles of scientific management in the 20th century by F.W. Taylor
decreased the cost of production and proper utilization of materials was enhanced. Charles
baggage was known as “materials man” because of his book on an economy of manufacturing
and machinery which explains about the functions of purchasing. Between the years 1970 and
1999 materials management enhanced a lot.
Objectives of Materials Management:
The objectives of materials management are of two types and those are as follows:

 Primary objectives and

 Secondary objectives

1. Primary objectives: the primary objectives are as below:

 Planning about efficient materials

 Buying
 Receiving and procuring
 Storing of materials
 Inventory control
 Supply of materials
 Distribution of materials
 Assurance of quality
 Having a good supplier and customer relationship
 Enhanced departmental efficiency
 2. Secondary objectives: there are many secondary objectives and few of them are as
below:

 To make decisions
 Scheduling of efficient production
 Make specifications of materials
 Make standardization of materials
 Assisting in design of product
 Assisting in development of product
 Quality control on purchased materials
 Handling of materials
 Availing value analysis
 Availing value engineering
 Advancing skills of workers in materials management
 Easy flow of materials in organization
 Easy flow of materials out of organization

Apart from these objectives, there few other important objectives in a firm and those are as
follows:

 Enhancing sales via sales promotion

 Maximization of benefit
 Enhancement in service of customers
 Globalization of the sales of product
 Meeting the transformations in technology
 Having a good employer and employee relationship
 Decrease in manufacture cost and other costs
 Objectives of social

Functions of Materials Management:

The functions of materials management are as follows:

 Primary functions
 Secondary functions

1. Primary functions: primary functions of materials management are as follows:

 Materials requirement planning i.e. MRP

 Purchasing
 Inventory planning and control
 Ascertaining and Maintaining the Flow and Supply of Materials
 Quality Control of Materials
 Departmental Efficiency
 2. Secondary functions: secondary functions of materials management are as below:

Standardization and Simplification

 Design and Development of the Product

 Make and Buy Decisions
 Coding and Classification of Materials
 Forecasting and Planning

The Structure of the Organization with Materials Management as a Separate Function:

A structure of the organization with materials management as a separate function is explained
with the aid of a diagram and it is as below:

Fig1: Structure of Organization with Materials Management as a Separate Function

The Structure of Materials Management’s Department in an Organization:
Department of materials management is required in a firm or organization to control and
coordinate various activities of materials management and its structure is as below:

Fig2: Organization of Materials Management Department

Types of Materials:
There are three distinct types of materials and those are:

 Purchased materials
 Finished goods
 Work in process materials

 
OBJECTIVES AND ADVANTAGES OF MATERIALS MANAGEMENT IN AN
ORGANIZATION
Materials Management has several core objectives and many secondary objectives. The core
objectives of material management are:
· Proper, cost effective material procurement.
· Proper storage of materials so as to minimize wastages and material hold ups.
· Making available the material TIMELY.
A good material management system will keep up to data records of all the information
generated in it, preferably using a computer-based system.
In addition to these primary objectives a materials management system indirectly fulfills many
secondary objectives also. These secondary objectives are normally related to the functions of a
material management system. Some of these secondary objectives are:
· Identifying new or better sources of supply
· Development and sustenance of relationships with the vendors
· Creating a standardized quality of the products
· Performing the value analysis of inventory. This can be related to the cost of materials.
· Creating a smooth flow of materials and information among the various sections of materials
management system.
The material management system works under the broad basic objectives of an organization that
is “maximum profit with sustained growth and research, satisfied customers and staff of the
organization”. The material management supports this objective by providing support through:
· Continuity of supply by maintaining a uniform flow of materials,
· Reducing the costs of materials purchased and handling by using scientific techniques and
electronic tools. The use of scientific tools and techniques for materials and information
management,
· Minimizing holdups of working capital and performing effective inventory control,
· Releasing working capital by ensuring effective control over inventories,
· Providing high quality at the lowest price, and
· Development of better relationships with customers and suppliers.