Alangilan Campus

College of Industrial Technology

Narrative Report on
Operation Management

In Partial Fulfillment of the Requirements for

PM 103 – Production and Operations Management

Submitted to:
Narcisa C. Asilo, MBA
Instructor

By:
Renz Nicco D. Flores
Erickson C. Magpantay
Alfredo Jose Maranan
Julio Daniel I. Mendoza
Leonardo C. Silvestre
AETC 2201

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College of Industrial Technology

MATERIAL MANAGEMENT

I. Introduction
Materials management refers to the process of planning, organizing, and
controlling the flow of materials within an organization. It involves the acquisition,
storage, distribution, and utilization of materials to ensure efficient and cost-effective
operations.

The primary goal of materials management is to ensure that the right materials
are available in the right quantity, at the right time, and in the right place. It involves
various activities, including Demand forecasting it is predicting the future demand for
materials based on historical data, market trends, and customer orders.Procurement:
Identifying and selecting suppliers, negotiating contracts, and purchasing materials
required for production or operations.Inventory management: Determining optimal
inventory levels to avoid stockouts or excess inventory. This includes tracking stock
levels, conducting periodic stock counts, and implementing inventory control
measures.Warehousing: Managing storage facilities to ensure proper handling,
organization, and protection of materials. This involves inventory placement, layout
optimization, and implementing safety measures.Transportation and logistics: Planning
and coordinating the movement of materials from suppliers to the organization and from
the organization to customers. This includes selecting appropriate transportation
modes, managing shipping documentation, and optimizing delivery schedules. Material
handling: Efficiently and safely moving materials within the organization's facilities. This
involves selecting appropriate handling equipment, designing material flow systems,
and implementing proper storage and retrieval methods. Supplier relationship
management: Establishing and maintaining strong relationships with suppliers to ensure
timely delivery, quality assurance, and cost optimization. Disposal and recycling:
Properly managing the disposal and recycling of materials to minimize waste and
environmental impact.

Material planning, also known as materials planning or material requirement

planning (MRP), is a crucial aspect of supply chain management that focuses on
determining the quantity and timing of materials needed for production or operations. It
involves forecasting demand, calculating inventory requirements, and coordinating
procurement activities to ensure a smooth flow of materials throughout the production
process.

Purchasing is a fundamental component of materials management and supply

chain management. It involves the acquisition of goods, materials, or services from

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College of Industrial Technology

external suppliers to meet the organization's needs. Purchasing encompasses various
activities, including Identifying requirements its determining the specific goods,
materials, or services needed by the organization. This involves understanding the
needs of different departments, evaluating specifications, and considering factors such
as quality, quantity, price, and delivery requirements. Supplier selection, Identifying and
evaluating potential suppliers who can meet the organization's requirements. This
involves conducting supplier assessments, considering factors such as supplier
capabilities, reputation, financial stability, quality assurance processes, and compliance
with relevant regulations. Request for Quotation (RFQ) or Request for Proposal (RFP):
Issuing RFQs or RFPs to potential suppliers, providing them with the necessary details
about the organization's requirements. Suppliers submit their quotes or proposals in
response, including pricing, terms, and any additional information requested.
Negotiation, Engaging in negotiations with suppliers to finalize terms and conditions,
including pricing, payment terms, delivery schedules, warranties, and any other relevant
contractual agreements. The goal is to reach mutually beneficial agreements that meet
the organization's needs while ensuring competitive pricing and favorable terms.

Parameters of purchasing refer to the key factors and considerations that guide
the purchasing process within an organization. These parameters help establish the
framework for making procurement decisions and ensure that purchasing activities align
with the organization's goals and objectives. Some common parameters of purchasing
includes Quality The quality parameter refers to the requirement of procuring goods or
services that meet specified quality standards. Organizations often define quality criteria
and expectations to ensure that purchased items perform their intended functions
effectively and reliably. Price is a crucial parameter that involves evaluating the cost of
goods or services. Purchasing departments aim to obtain the best value for money by
seeking competitive pricing, negotiating favorable terms, and analyzing cost-
effectiveness. Delivery parameters relate to the timeliness and reliability of supplier
deliveries. Organizations establish delivery requirements based on their production
schedules, customer demands, and internal processes to ensure that goods or services
are received when needed.Supplier Performance is the assessing and managing
supplier performance is an essential parameter. Organizations evaluate suppliers based
on factors such as reliability, responsiveness, quality consistency, adherence to delivery
schedules, and their ability to meet contractual obligations. Sustainability and Ethical
Considerations: Increasingly, organizations are incorporating sustainability and ethical
considerations into their purchasing parameters. This includes evaluating suppliers
based on their environmental practices, social responsibility, ethical sourcing, and
compliance with relevant regulations. Risk Management Parameters related to risk
management involve evaluating and mitigating potential risks associated with the
procurement process. This includes assessing supplier stability, financial health, legal
compliance, and implementing appropriate risk mitigation strategies.

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College of Industrial Technology

II. Objectives
Goals for Material Requirements Planning to guarantee that supplies of raw
materials for manufacturing and products for customer distribution are easily accessible.
to maintain the lowest amounts of completed goods and raw resources in stock. to plan
production, delivery windows, and purchasing operations.

When it comes to the MRP inventory management system, there are three
primary objectives that the software seeks to provide.

1.To ensure that raw materials are readily available for production and products
are readily available for delivery to consumers.
2.To sustain the lowest raw materials and finished product levels in store.
3.To organize manufacturing, delivery schedules, and purchasing activities.
4.Ensuring Adequate Supply: The primary objective of material management is to
ensure the availability of materials in the right quantity, at the right time, and in the right
place. This involves accurately forecasting demand, maintaining optimal inventory
levels, and efficiently managing the replenishment process to avoid stockouts and
production delays.
5.Minimizing Inventory Costs: Material management aims to strike a balance
between having enough inventory to meet demand and minimizing carrying costs. By
implementing effective inventory control measures, organizations can reduce costs
associated with holding excess inventory, such as storage, insurance, and
obsolescence, while avoiding stockouts and associated costs.
6.Optimal Resource Utilization: Efficient material management helps optimize the
utilization of resources within an organization. By closely monitoring inventory levels,
organizations can identify opportunities to reduce waste, eliminate redundancies, and
streamline processes, resulting in improved operational efficiency and cost savings.
7.Improving Cash Flow: Effective material management contributes to improved
cash flow management. By minimizing inventory holding costs and optimizing inventory
turnover, organizations can free up working capital and allocate resources to other
areas of the business, such as investments, marketing, or research and development.
8.Enhancing Customer Service: Material management plays a vital role in
meeting customer demands and providing satisfactory service levels. By having the
right materials available when needed, organizations can fulfill customer orders
promptly, minimize order lead times, and improve customer satisfaction and loyalty.
9.Managing Supply Chain Risks: Material management helps mitigate risks
associated with the supply chain. By closely monitoring inventory levels, organizations

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 Alangilan Campus

College of Industrial Technology

can identify potential disruptions or bottlenecks, implement risk mitigation strategies,
and establish alternative sourcing options to ensure a resilient and reliable supply chain.
10.Continuous Improvement: Material management objectives include fostering a
culture of continuous improvement within the organization. By analyzing data,
monitoring performance metrics, and identifying areas for enhancement, organizations
can implement process improvements, adopt new technologies, and enhance supply
chain practices over time.
11.Supporting Strategic Goals: Material management aligns with an
organization's strategic goals and objectives. By effectively managing materials,
organizations can support strategic initiatives such as cost reduction, product
innovation, market expansion, sustainability, or lean manufacturing practices.

Overall, the objectives of material management focus on optimizing inventory

levels, reducing costs, improving operational efficiency, meeting customer demands,
mitigating risks, and supporting the organization's strategic goals. By achieving these
objectives, organizations can enhance their competitive position, profitability, and
overall performance.

III. Highlights of the Topic

Material management refers to the systematic planning, organizing, and
controlling of the flow of materials within an organization. It involves the acquisition,
storage, distribution, and utilization of materials to ensure efficient operations and
maximize productivity.

IV. Conclusions
In conclusion, material management plays a crucial role in ensuring the efficient
flow of materials throughout the supply chain. By effectively managing the planning,
procurement, inventory, and distribution of materials, organizations can achieve several
key benefits.

First, material management helps organizations meet customer demands by

accurately forecasting and fulfilling material requirements, thereby enhancing customer
satisfaction and loyalty. It enables organizations to optimize inventory levels, striking a
balance between avoiding stockouts and minimizing carrying costs, leading to improved
cash flow and resource utilization.

Hence, material management contributes to cost savings through efficient

procurement practices, negotiation with suppliers, and effective inventory control. It

Golden Country Homes, Alangilan, Batangas City +63 43 425 - 0139 loc. 2103

www.batstate-u.edu.ph cit.alangilan@g.batstate-u.edu.ph
 Alangilan Campus

College of Industrial Technology

supports risk mitigation by identifying and addressing potential supply chain disruptions
and fostering strong relationships with suppliers.

Material management also aligns with an organization's strategic goals,

supporting initiatives such as cost reduction, operational excellence, sustainability, and
innovation. By adopting technology, implementing process improvements, and
continuously monitoring performance, organizations can enhance their overall supply
chain operations and achieve better outcomes.

In summary, effective material management enables organizations to streamline

their supply chain processes, enhance customer service, reduce costs, manage risks,
and support strategic objectives. It is a critical function that contributes to operational
efficiency, profitability, and competitive advantage in today's dynamic business
enviromental.

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www.batstate-u.edu.ph cit.alangilan@g.batstate-u.edu.ph