One of the five Ms of an industrial organization

Occupy significant place among Ms of an industrial

enterprise

REASONS:
1) The amount spend on materials is increasing in
relation to the expenditure on other outputs.
2) Materials offer considerable scope for reducing cost
and improving profit.


3) Materials forms an important form of current
assets in any organization.

4)Materials add value to a product.

5)Quality of the finished product depends on
quality of materials used.
Material management involves organizing and
coordinating all management functions that are
responsible for every aspects of materials, storage
and transformation.

It is defined as the process by which an
organization is supplied with goods and services
that it needs to achieve its objectives.
Material management begins with the supplier
and ends when the material is either consumed or
incorporated into some product.

The executives engaged in materials management
are concerned with three basic activities:
Buying
Storage of material
Movement
o Low prices

o High inventory turnover

o Low cost acquisition and possession

o Continuity of quality

o Consistency of quality
Reciprocal relations

New materials and products

Economic make-or- buy

Standardization

Product improvement



Interdepartmental harmony

Forecasts

Acquisition
Lower prices for materials and equipment

Faster inventory and turnover

Continuity of supply

Reduced lead time

Reduced transportation cost
Less duplication of efforts

Elimination of buck-passing

Reduced material obsolescence

Better interdepartmental cooperation

Personnel development

Material Management Information System


Material management information system is a
system which provide information on online
about the materials . It helps in decision
making , rapid access of information and
detect errors about the materials.

MMIS is provide online
information about


Stock level of raw material
Work-in-progress
Finished goods
Stores and spares
Material management organization

Material management organization is an important
area of management like production, marketing,
finance, and human resource management.


In organizations where the cost of materials is high
material management is considered not as a sub
function but as a major function like production
department.

In small or medium organizations material
management is considered as a sub function of
production management.

MATERIAL MANAGEMENT
ORGANIZATION


CEO/
MD
Manage
r
(purchas
e)
Manager
(Stores)
Manager
Material
s,
Planning
and
control
Manager
(Materials
Handling)
Manager
(Shipping
and
traffic)
Material planning is the scientific way of
determining the requirements of raw
materials , components , spares and
other items that go into meeting the
production needs within economic
investment policies.
Lack of proper materials planning
and coordination.
Poor planning for materials .
Materials planning activity raises the
level of the buyer from a mere order
placer to a purchase executive or
manager.
Materials planning aims at
motivating people and saves as an
effective control device.
Efficiency in materials management
function cannot be visualized
without a sensible or effective
materials planning function.


It tries to avoid the practice of crisis
management of struggling in the last
minute to procure materials to meet the
production requirements.

It helps to get things done efficiently and
effectively.
It provides step for effective
materials budgeting , follow-up of
suppliers to procure materials in
time.

Purchase planning enable the buyer
to know not only the price of the
materials but also their cost.
The factors influencing material
planning process are classified as:
Macro factors:- price trends,
business cycle, import policy of the
government, credit policy etc.
Micro factors:- corporate objectives,
working capital, seasonality,
delegation of powers,
communication systems.
All material planning flow from
preliminary master production
schedule.Requirement of various
materials are worked out by exploding
the master production schedule for the
planning period through the planning
horizon.This technique is BILL OF
MATERIAL EXPLOSION.


It is a document which shows for
given product ,the list of materials
required, unit consumption and
location code.

PAST
CONSUMPTION
ANALYSIS

It is used for items that are
consumed on a continuous basis.

Sales forecasts becomes less
reliable.
Import policy of government,credit
availability.

Anticipate lead time.
Proper study of external environment.
When MP extends beyond 1 year it
becomes unrealistic.
Computerized planning and
information system.
Cover longest lead time.
Demand fluctuation should be taken care off.
Computerization of MP.
Computerization of MP results in saving time and
effort apart from obtaining accurate forecast.
Planning periods are considered within the year,
MP will be more reliable. Quarterly planning are
more popular than monthly.
the process of preparing materials
budget or purchase budget in terms of quantity
and money value of materials to be procured for
a given period of time.
Materials budgeting is
Process of Preparing Material Budgets
Requirement of materials
Inventory of
materials on hand
Amount of materials to
be purchased
Forecast of prices
and rates
Inventory
norms and
targets
Purchase budget or
materials budget
Actual purchases
Variance report for
control
Main Purposes served by materials budgeting
The availability of financial resources can be
known exactly.

The comparison of budgeted price of materials
and actual price can be done.

The cash requirements for procuring materials
can be projected.


Benefits of Material Budgets
It helps financial department to draw up
realistic schedule of cash requirements.

Inventory investment and its associated risks
can be reduced.

Materials budget provide maximum
purchasing lead time.

Supplier relationships can be improved.

Material control

Function of maintaining constantly,
availability of all kinds of materials.

It is the systematic control over the
purchasing, storing and using of
materials so as to have the minimum
possible cost of material.



Importance of material control

To provides raw materials and parts in proper
quantities.
To ensures the flow of materials. (arrived at
plant when they are needed).
Procurement of raw materials and purchased
parts and supplying these to production.
To meet the needs of production.
Material control are classified
into :

Raw materials
Component parts
Supplies or indirect items
Work in process
Finished products
Material control cycle

Comprises of all procedures which are
necessary for the provision of materials
for the manufacturing process with a
minimum investment and lowest
possible costs.

Steps:

Determining material needs.
Preparing for the requests made.
Receiving purchase materials into the plant.
Inspecting the purchased material & parts
made.
Delivering all parts & materials into stores.
Issuing materials for production & assembly.
Recording & entering all receipts in store
records.