CONSTRUCTION MANAGEMENT INSTITUTE

Training
on
Material Management
for
Addis Ababa City Roads Authority
Presenter: Alemgena A. Araya (PhD) November, 2022

Every one self introduction

´ Name?

´ BSc/MSc background, what field? Where? etc.

´ Major previous work experience/years?

´ Sector - Roads? Buildings? water resources? etc.
´ Industry - Contractor, consultant, municipality, road authority, academia/
research etc.

´ Current Position?
´ Role in the road/pavement management?
´ your vision/ambition for your organization/department?
´ Major challenges in your organization/department and possible solution?

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 MATERIAL MANAGEMENT
(PAVEMENT)

OUTLINE

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 Introduction
to
Material Management

Material Management

´ Materials management is important as most road

construction spend more than 60% of the money they take
in, on materials.

´ That means materials soak up a substantial portion of the

capital invested in the industry.

´ Adequate materials management and control because

even small assessments in materials can provide the
production very effectively, thus quality product increases

´ Material management involves controlling the type, amount,

location, movement, timing of the production/ purchase of
various materials, etc.

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 ‘Material Management’ Definition

´ It is concerned with planning, directing/organizing

controlling and coordinating of the activities which
are concerned with materials and inventory
requirement (the flow of materials) from their initial
production through internal operations to the service
point through distribution.

´ It starts with the inspection of materials quality and

quantity and ends with its issuance to production to
meet customer’s demand (project need) as per the
schedule and at the lowest possible cost.

Aim of Material Management

To get

´ The Right quality

´ Right quantity of supplies

´ At the Right time

´ At the Right place

´ For the Right cost

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 Purpose of Material Management

´ To gain economy in production/purchasing

´ To carry reserve stock to avoid stock out

´ To stabilize fluctuations in consumption

´ To provide reasonable level of client services

´ To satisfy the demand during period of

replenishment

Function of Material Management

´ Material planning

´ Production/purchasing materials

´ Storage and administration

´ Inventory control

´ Standardization, simplification and value-analysis

´ Transportation and material handling

´ Disposal and disposal management

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 Objective of Material Management

Primary Secondary
•Consistency in quality •Forecasting
•Continuity of supply/ •Inter-departmental
production harmony
•Good supplier relations •Product improvement
•Right cost •Standardization
•Development of personnel •Make or buy decision
•Good information system •New materials & products
•Favorable reciprocal
relationships

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Four basic needs of Material

management
To have adequate materials on hand when
needed

With the lowest possible cost, consistent with

quality and value requirement for production/
purchases materials

To minimize the inventory/investigation

investment

To operate efficiently

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 Basic principles of material management
1. Planning principle
Material management should be the result of a deliberate
plan where the needs, performance objectives and
functional specification of the proposed methods are
completely defined at the outset.
A plan is a prescribed course of action that is defined in advance of
implementation.

2. Standardization principles
Material handling methods, equipment, controls and
application should be standardized within the limits of
achieving overall performance objectives and without and
throughput. anticipation of changing future requirements
Standardization means less variety and customization in the methods
and equipment employed

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Basic principles of material management

3. System principles
Material movement and storage activities should be fully
integrated to form a coordinated, operational system which
spans receiving, inspection, storage, production, unitizing,
order selection, shipping, transportation and the handling of
returns
A System is a collection of interacting and/or interdependent entities
that form a unified whole

4. Work principle
Material management/handling work should be minimized
without sacrificing productivity or the level of service
required of the operation.
The measure of work is material handling flow (volume, weight or count
per unit of time) multiplied by the distance moved.

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 Basic principles of material management

5. Ergonomic principles
Human capabilities and limitations must be recognized and
respected in the design of material handling tasks and
equipment to ensure safe and effective operations
Ergonomics is the science that seeks to adapt work or working
conditions to suit the abilities of the worker

6. Automation principle
Material management operations should be mechanized
and/or automated where feasible to improve operational
efficiency, increase responsiveness, improve consistency
and predictability.

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Basic principles of material management

7. Environmental principles
Environmental impact and energy consumption should be
considered as criteria when designing or selecting
alternative equipment and material handling systems
Environmental consciousness stems from a desire not to waste natural
resources and to predict and eliminate the possible negative effects of
our daily actions on the environment

8. Life Cycle Cost principle

A thorough economic analysis should account for the entire
life cycle of all material handling equipment and resulting
systems.
Life cycle costs include all cash flows that will occur between the time
the first dollar is spent to plan or procure a new piece of production, or
to put in place a new method, until that method and/or equipment is
totally replaced.

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 Elements of material management

´Demand estimation

´Identify the needed items

´Determine from the trends in consumption

´Review with resource constraints

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Procurement

´Procurement is one of the key for Material

Management

´Demand estimation

´Identify the needed items

´Determine from the trends in consumption

´Review with resource constraints

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 Procurement cycle

´Review selection
´Determine needed quantities
´Reconcile needs & funds
´Choose procurement method
´Select suppliers
´Specify contract terms
´Monitor order status
´Receipt & inspection

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Objectives of procurement system

´Acquire needed supplies/products as

inexpensively as possible
´Obtain high quality supplies/products

´Assure prompt & dependable

delivery/product

´Distribute the procurement workload to

avoid period of idleness & overwork

´Optimize inventory management through

scientific procurement procedures

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 Points to remember while purchasing
´ Proper specification
´ Invite quotations from reputed firms
´ Comparison of offers based on basic price, freight &
insurance, taxes and levies
´ Quantity & payment discounts
´ Payment terms
´ Delivery period, guarantee
´ Vendor reputation
´ (reliability, technical capabilities, Convenience,
Availability, after-sales service, sales assistance)
´ Short listing for better negotiation terms
´ Seek order acknowledgement

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Inventory Control and

Analysis

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 Inventory/ investigation control

´It means producing/stocking adequate

amount and kind of stores, so that the
materials are available whenever required
and wherever required.

´Scientific inventory control results in optimal

balance

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Functions of inventory control

´To provide maximum supply service

/production, consistent with maximum
efficiency & optimum investment

´To provide cushion between forecasted &

actual demand for a material

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 Economic order /product/ of quantity
EOQ = Average Periodic Consumption X Lead Time
[per period] + Buffer Stock – Stock on hand

ECONOMIC ORDER OF
QUANTITY(EOQ)

PURCHASING CARRYING
COST COST

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Various Analysis

ABC Always Better Control

VED Vital Essential Desirable

SDE Scarce Difficult Easily available

FSN Fast moving Slow moving Non-moving

HML Highest Medium Low

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 ABC Analysis (Always Better Control)
This is based on cost criteria

´It helps to exercise selective control when

confronted with large number of items it
rationalizes the number of orders/ amount of
products, number of items & reduce the
inventory.
´About 10 % of materials consume 70 % of resources

´About 20 % of materials consume 20 % of resources

´About 70 % of materials consume 10 % of resources

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‘A’ ITEMS ‘C’ ITEMS

´Small in number, but ´Larger in number, but
consume large amount of consume lesser amount of
resources. resources

Must have: Must have:

§ Tight control
§ Rigid estimate of requirements
§ Strict & closer watch
§ Low safety stocks
§ Managed by top
management
§ Ordinary control measures
§ Purchase based on usage
estimates
§ High safety stocks
ABC analysis does not stress on
items those are less costly but
may be vital

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 ANNUAL COST CUMMULATIVE
ITEM % ITEM COST %
ABC [Rs.] COST [Rs.]
1 90000 90000
10 % 70 %
A 2 50000 140000
3 20000 160000
N 4 7500 167500
20 % 20 %
A 5 7500 175000
6 5000 180000
L
7 4500 184500
Y 8 4000 188500

S 9 2750 191250
10 1750 193000
I 11 1500 194500

S 12 1500 196000
13 500 196500 10 %
70 %
14 500 197000
15 500 197500
WORK 16 500 198000
SHEET 17 500 198500
18 500 199000
19 500 199500
20 500 200000

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‘B’ ITEMS
´Intermediate
Must have:
§ Moderate control
§ Purchase based on rigid requirements
§ Reasonably strict watch & control
§ Moderate safety stocks
§ Managed by middle level management

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 VED Analysis
Based on Critical value and shortage
cost of an item
V E D ITEM COST
´ It a subjective analysis
A AV AE AD CATEGORY 1 10 70%

Vital B BV BE BD CATEGORY 2 20 20%

´ Shortage cannot be tolerated
C CV CE CD CATEGORY 3 70 10%

Essential CATEGORY 1 - NEEDS CLOSE

´ Shortage can be tolerated for a short MONITORING & CONTROL
period
CATEGORY 2 - MODERATE CONTROL.
Desirable
´ Shortage will not adversely affect, but CATEGORY 3 - ORDINARY CONTROL
may be using more resources. This must
be strictly Scrutinized

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FSN Analysis
´ Based on utilization
Fast moving
SDE Analysis Slow moving
´ Based on availability Non-moving
Non-moving items must be periodically
Scarce reviewed to prevent malfunction &
obsolescence
Manage by top level
management
HML Analysis
Maintain big safety stocks
´ Based on cost per unit
Difficult Highest
Maintain sufficient stocks Medium
Low
Easily available
This is used to keep control over
Minimum safety stocks consumption at departmental level for
deciding the frequency of verification

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 PROCURMENT OF EQUIPMENT
Points to be noted before purchase of an
equipment:
´Latest technology
´Availability of maintenance & repair facility, with
minimum down time
´Post warranty repair at reasonable cost
´Upgradeability
´Reputed manufacturer
´Availability of consumables
´Low operating costs
´Installation and calibration
´Proper installation as per guidelines
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History Sheet of Equipment

•Name of equipment •After sales arrangement

•Code number
•Date of purchase
•Name of supplier
•Name of manufacturer
•Date of installation
•Place of installation
•Date of commissioning
•Environmental control
•Spare parts inventory
•Techn. Manual /circuit diagrams
/literatures
•Guarantee period
•Warranty period
•Life of equipment
•Down time / up time
•Cost of maintenance
•Unserviceable date
•Date of condemnation
/disposal
•Date of replacement

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 Conclusion

´ Material management is an important management tool

which will be very useful in getting the right quality & right quantity
of product/supplies at right time, having good inventory control &
adopting sound methods of disposal will improve the efficiency of
the product & also make the working atmosphere healthy any
type of organization, whether it is Private, Government, Small
organization, Big organization and Household.

´ Even a common person must know the basics of material

management so that he can get the best of the available
resources and make it a habit to adopt the principles of material
management in all our daily activities

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Inspection and quality

control

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 Inspection and quality control
´ Inspection and quality control are the most important process
in order to make a high-quality product.

´ Inspection and quality control ensures the standard quality by

checking the product during production at different stages.
If the product is not able to meet the desired quality, the product will reject and
there will no further process on that product. It saves unnecessary processing
costs on rejected parts.

´ Inspection is important to maintain a certain quality during the

manufacturing of a product.

´ Quality control is a process by which customer /owner ensures

receive product free from defects

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Inspection
Definition
After manufacturing, the product is required to perform
certain functions. The process of checking whether the
product does so or not is called Inspection.
´Inspection compares the qualities of the product with
a standard product during manufacturing.

´Inspection is a process of checking the acceptability

of a manufactured product

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 Objectives of Inspection
´Inspection separates defective components from the
non-defective component so that adequate quality
can be maintained.
´Inspection locates defects in process or raw material
which otherwise causes problems at the final stage.
´It prevents further working on spoiled or under
standard products. It helps the product to be more
economical.
´Inspection detects the weak position and trouble in
the weak position by checking the design/ Spec.

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What is Quality control

´Quality control is a process through which a
production system ensures that standard product
quality is maintained or improved according to
customers’ needs/ specification.
´It incorporates the testing of units and determines if
the product is within the specification for the final
production.
´The role of testing is to determine there is any need for
correction in the process, so that product can meet
the customer's desire/ specification.

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 What is Quality control
"quality" and "control”
´Quality is a relative term, and it is explained by
comparing it with a standard product.
For example, gear used in sugarcane juice extracting machine isn't as
correct, finished as gear used in an engine transmission system. So, a
component is said to be good quality if the component works well for
which it is meant.

´Control is a system for determining - what to inspect,

how to inspect, how often to inspect.
It also finds out the causes for producing a poor product, and suggest the
corrective action

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Quality control

An important aspect of quality control is the

establishment of well defines controls.

Limiting the chances of error and reduce the

production/ manufacturing cost by generating more
quality standard.

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 Basic fundamentals of Statistical Quality Control

´It called statistical quality control (S.Q.C.) if statistical

techniques are applied to control the quality or to
solve quality control problems.
´Statistical quality control makes inspection less costly
and more reliable than other techniques.
´It controls the quality of products to conclude
whether the quality of each product is as per laid
quality standard/ specification or not.

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Basic fundamentals of Statistical Quality Control

´The S.Q.C. technique collects, analyses the data, and

permits more fundamental control over the product
quality.
´It scientifically fixes the process tolerance.
´The fundamental of statistical quality control is based
on the probability theory.
´The chance of the sample to represent the entire
batch is developed from the theory of probability

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 Statistical Quality Control uses 3 scientific techniques,
namely

Sampling Inspection
• Instead of inspecting all components, some sample of the
component can be inspected. This process is call sampling
inspection. Chances of error in sampling inspection are high.
• On the other hand, if a random sample is selected from a lot
and relying on the probability theory is assumed to represent
the lot. So, there are much savings in the cost of the
inspection.
• In certain cases (example: most construction products, tensile
and fatigue testing, the chemical composition of an alloy,
etc.) sampling inspection is the only method of inspection.

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Statistical Quality Control uses 3 scientific techniques,

namely

Analysis of the data

• The results of the inspection are then analyzed
by determining by mean, range, standard
division and the control limits for predetermine
level of confidence.
• Statistical Quality Control (S.Q.C.) also decides
the size of the sample and describe the
sample reliability.

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 Statistical Quality Control uses 3 scientific techniques,
namely

Control charting
• As control limits are plotted, and individual observations
marked on a graph paper it takes the shape of a control
chart.
• Control charting continuously monitors processes and
production and informs if any process or product is getting
out of adjustment.

vThus, Inspection and quality control are the most

important department/team in any production/
material management

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What is the role of inspection in quality control?

´It's very important for every organization that the
quality of the products is maintained when they are
delivered to the consumers/owners since the product
quality is the topmost parameter for the success of
any organization/project.

´However, during the production employees do

mistakes some time. This leads to destabilization of the
process and results of that low-quality product can be
produced.
´Hence inspection and quality checking become
mandatory to ensure Specification /customer
satisfaction.

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 What is the role of inspection in quality control?
´Inspection and testing are the processes of controlling
products quality by comparing it with the standards
and specifications

´During the inspection process, they focus on

appearance, construction, and function/service of
the product

´Inspection is one of the operational parts of quality

control

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QA is not equal to QC
´Inspection and testing are the processes of controlling
products quality by comparing it with the standards
and specifications

´During the inspection process, they focus on

appearance, construction, and function/service of
the product

´Inspection is one of the operational parts of quality

control

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 QA and QC in road/
pavement materials

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QA is Not Equal to QC
´ According to to FHWA guidance, quality assurance, or QA, is
the program or system that leads to acceptance of a product.

´ Quality control, or QC, is just one aspect of a QA program –

and it is the contractor’s responsibility.

´ Agency’s responsibility is to accept the produc.

´ Important to be using the correct terminology and to be sure

you are referring to the correct item when these terms are
used

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 Risk
´ The probability or chance of making the wrong decision.

´ Also called statistical risk.

´ In all specification types, a decision must be made regarding

compliance with the specifications, which involves risks.
There are two types of risk:
§ The seller's (contractor) risk, α, is the
risk of rejecting "good" material
§ The buyer's (agency) risk, β, is the risk
of accepting "bad" material
One of the greatest advantages of a QA
specification is that, when properly
developed, the risks can be quantified.

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Normal Probability Distribution

´ From extensive research,

measurements that
occur in highway
construction, and in
nature in general,
distribute themselves
about some average
value with the majority of
the measurements
grouped near the mean
and with progressively
fewer results recorded as
one proceeds away
from the mean.

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 Standard Normal Distribution

´ Do you know of any

pavement materials that
have a mean of zero
and a standard
deviation of one?

´ There is likely not one, so

what is the usefulness of
a distribution such as
this?

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Areas Between, 1, 2, and 3, z values

´ The percentage of the

area under the standard
normal distribution is
between Z = – 1.0 and Z = +1.0
= 68.26%, rounded to 68%

between Z = –2.0 and Z = +2.0

= 95.44%, rounded to 95%

between Z = –3.0 and Z = +3.0

= 99.74%, rounded to 99.7%

´What does a Z=3 indicate?

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 Distribution od Sample means

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Precision an Accuracy

´Ideally, we would like for a production or

measurement process to be both accurate and precise

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 Precision an Accuracy
´ When the aggregate is
quarried, there is
inherent variability in the
rock in-place
´ When the aggregate is
crushed, another source
of variability is
introduced
´ This also occurs when it is
stockpiled, when it is
hauled to the job site,
and when it is placed
´ Lastly, when it is sampled
and tested, two more
sources of variability are
introduced

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Independent sample vs Split samples

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 Independent sample vs Split samples

So it is important to know what type of sample is being analyzed

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