Material management

 Introduction to Integrated Concept

 For running any industry or business, we need a number of resources.

These resources are popularly known as 5 M's of any Industrial activity
i.e.
 Men,
 Machines,
 Materials,
 Money and
 Management.
Objectives Of Materials :

MANAGMENT
 The objectives of integrated materials management can be classified in
two categories ;
 Primary and
 Secondary.
Functions of material management
 Decide on the purchase of materials
 Ensure the centralization of power
 Coordinate all functions of the departments
 Ensure quick and accurate decision-making
 Administer data analysis by Electronic Data Processing (EDP) and use
of computing technology
 Emphasize on the opportunity for growth
Objectives of MM:
Purchasing :

Pay low price for the best value obtained

Negotiation
Vendor selection
Right quality at right time

Storage :
Minimizing transportation and handling costs
adequate and proper storage and preservation of materials
store as per requirement

Movement :
distribution of finished goods to customer
disposal of raw material
 
 Primary Objectives
 Following may be identified as primary objectives which are to be
achieved.
(a) To purchase the required materials at minimum possible prices by
following the prescribed purchase policies and encouraging healthy
competition.
(b) To achieve high inventory turnover i.e. to meet materials
requirement of the organization by keeping low average stocks so that
the capital locked up in materials is turned over a large no of times.
(c) To incur minimum possible expenditure on administrative and
other allied activities related to purchase of materials and also to keep
the materials in stock till they are finally delivered to the users.
(d) To ensure that continuity of supply of materials to the users is
maintained by avoiding out of stock situation.
Secondary Objectives :
(a) To assist technical/design department in developing new materials
and products which may be more profitable to the organization.
(b) To make economic 'make or buy' decisions.
(c) To ensure standardization of materials
(d) To contribute in the product improvement.
(e) To contribute in the development of inter departmental harmony.
(f) To follow scientific methods of forecasting prices and future
consumption of materials.
Secondary Objectives (contd.)
(e) To supply materials of consistent quality i.e. of quality which
meets user specification and is fit for service.
(f) To keep the wage bill of the department low by ensuring proper
distribution of work among staff and not employing surplus staff.
(g) To maintain good relationship with the suppliers of materials
and also develop new suppliers for the products for which reliable
suppliers do not exist.
(h) To ensure training and development of personnel employed in
the department so that good industrial relations are maintained.
(I) To maintain proper and up-to-date records of all stores
transactions and purchases
Integrated Materials Management
 Various functions served by materials management include the material
planning, purchasing, receiving, stores, inventory control, scrap and surplus
disposal. All these functions can have separate working norms including the
one for  performance.
 Material management is an approach for planning, organizing, and controlling
all those activities principally concerned with the flow of materials into an
organization.
 The fundamental objectives of the Materials Management function ,often
called the famous 5 Rs of Materials Management, are acquisition of
materials and services  :
 right quality
  in the right quantity
  at the right time
  from the right source
  at the right price
the key objectives of MM are :
To buy at the lowest price , consistent with desired quality and service
 
To maintain a high inventory turnover , by reducing excess storage , carrying costs and
inventory losses occurring due to deteriorations , obsolescence  and pilferage
 
To maintain continuity of supply , preventing interruption of the flow of materials and
services to users
 
To maintain the specified material quality level and a consistency of quality which permits
efficient and effective operation
 
To develop reliable alternate sources of supply to promote a competitive atmosphere in
performance and pricing
 
To minimize the overall cost of acquisition by improving the efficiency of operations and
procedures
 
the key objectives of MM(contd.)
 
To hire, develop, motivate and train personnel and to provide a reservoir of talent
 
To develop and maintain good supplier relationships in order to create a supplier
attitude and desire furnish the organization with new ideas , products, and better
prices and service
 
To achieve a high degree of cooperation and coordination with user departments
 
To maintain good records and controls that provide an audit trail and ensure
efficiency and honesty
 
To participate in Make or Buy decisions
Materials Management's scope:
 emphasis on  the accomplishment aspect
 inventory control and stores management
 material logistics, movement control and handling feature
 purchasing, supply , transportation , materials handling etc
 supply management or logistics management
 all the interrelated activities concerned with materials
organizational control

The process of establishing and maintaining authority

 over and throughout an enterprise. The
organizational control process within a larger business
 typically requires the use of systems that assist a 
manager in analyzing considerable amounts of data
 about how the business and its employees are
functioning in order to make appropriate 
administrative decisions.
Organizational Control Objectives

The six major purposes of controls are as follows:

Controls make plans effective. Managers need to measure progress, offer feedback, and direct their
teams if they want to succeed.
Controls make sure that organizational activities are consistent. Policies and procedures help
ensure that efforts are integrated.

Controls make organizations effective. Organizations need controls in place if they want to achieve
and accomplish their objectives.

Controls make organizations efficient. Efficiency probably depends more on controls than any
other management function.

Controls provide feedback on project status. Not only do they measure progress, but controls also
provide feedback to participants as well. Feedback influences behavior and is an essential ingredient in
the control process.

Controls aid in decision making. The ultimate purpose of controls is to help managers make better
decisions. Controls make managers aware of problems and give them information that is necessary for
decision making's
Definition of codification-
 Codification is an act of arranging in a systematic order. In law, codification is a
process of precisely formulating a statement. Codification of law refers to the
continuous systematic organization of laws, rules and regulations that govern a
country or area; Codification is a time-consuming process and is done by most
government.
Objective of codification
 1) Bringing all similar items together.
2) To enable putting up of any future item in its proper place.
3) To classify an item according to its characteristics
4) To give a unique code number to each item to avoid duplication and confusion.
5) To reveal excessive variety and promote standardization and variety reduction.
6) To establish a common language for the identification of an item.
7) To fix essential parameters for specifying an item.
8) To specify item as per national and international standards.
9) To enable computerized data processing and analysis .
Important codification system-
{1}.Kodak System: It is developed by Eastman Kodak Co of N Y USA. It is a
system of 10 digits numeric code with 100 major classifications and each class
divided into 10 such classes. The classification is based on procurement
consideration.
{2}.The Brisch Classification: The codes in Brisch Classification are wholly
composed of numbers, are of constant length and generally contain six to eight
digits. The first digit covers a broad classification of all the materials into 10
main classes and the value ranges from Zero to Nine and indicate the classes
concerned. For example, in an engineering organization,
Barcode-
 a machine-readable code in the form of numbers and a pattern of parallel
lines of varying widths, printed on a commodity and used especially for
stock control.
 "the scanner at the checkout would pick up the different bar codes on the
packets and charge the correct amount"
 Bar coading are patterns of alternating wide and narrow black and white
line and white spaces number and that are seen on everyday product of
super market. Barcode also called a price scanner or point-of sale(pos).
Structure of barcoad-
·  Quiet Zone –bar coad scan-ability, preceding the Start Character of a The
minimum required space for bar symbol. The quiet zone should be free from any
printing and be the same colour and reflectance as the background of bar code
symbol.
structure
 Start Code –Indicates the start of the barcode. These are special bar code characters &
the signify the start of data to the scanner/reader.  
      .  Data –The actual data the barcode stores.
   Check Digit –Check digit (not always present) is a mathematical sum that is used to
verify the accuracy of the other elements of the barcode. It is the extra digit added at
the end of a bar code to allow the scanner to confirm that it read the bar code correctly.
  Stop Code – Indicates the stopping point of the barcode. These characters signify the
end of data to the scanner/reader.
   Trailing Quiet Zone – Another clear space with no printing following the Stop
Character.
  
Objectives Of Barcodes
 The barcode is ubiquitous in the home, found on nearly every device or product.
Businesses and organizations often use barcodes to organize and manage
people, equipment and schedules.
 Identification
 The main usage of a barcode is to identify an item. An object is labeled with a
barcode that has a unique string of numbers and characters. Using barcodes in
tandem with a computer makes the items recognizable in a database. Someone
with access to the database can also modify the information used to identify the
item according to any changes to the product.
Objectives Of Barcodes(cond)
Security
 Barcodes can help secure businesses and important office buildings by having
barcodes on employee and visitor ID cards. Based on security clearance, a person
can gain access to certain areas by swiping the card's barcode on a door's scanner. In
the event of a theft, supplies, equipment and evidence can also be tracked by using
barcodes. Computers with tracking software can trace the real time location of a
stolen product's barcode.
 Objectives Of Barcodes (cond)
 Law Enforcement
 The police also use barcodes for efficiency. Using barcodes and in car computers for tickets
and fines eliminates time-consuming data entry when an officer returns to his station. .
Barcodes are also placed on police ID cards to gain access to holding areas, equipment rooms
and other areas. Also, an investigator can track useful pieces of evidence by applying a unique
barcode to each item.
 Medical
 Hospitals and clinics use barcodes to aid in the proper clinical treatment of their patients. They
are used to track each patient's medical records, including her history of hospital visits,
medication, diseases and disabilities. Barcodes also track patient prescriptions, identify blood
and fluid bags, and provide accurate data entry for a variety of hospital functions.
 Grocery Store
 Nearly every item in a grocery store contains a barcode affixed on it somewhere.
Barcodes inform the store of the amount of inventory in stock of a specific item, as
well as price, and manufacturer. They help guard against shoplifting and price
swapping of items. Grocery stores also use barcodes to scan work orders and enter
in their completed shift electronically
Standardization-
Standardization is the process of stabilizing basic specification
for a set of commonly used characteristic o f size, shape and
performance for product.
1.to bring to or make of an established standard size, weight,
quality, strength, or the like: to standardize manufactured parts
established.
2.to compare with or test by a standard.
3.to choose or establish a standard for.
Objectives Of Standardization
 Standardization activity includes defining performances of products, processes and
services, so intervening in all the “life” phases of a product, from its design to its
use and tertiary activities. Moreover, standardization also involves establishing
product safety characteristics, so as to protect people coming in contact with it.
Quality and safety are therefore two very important aspects that guide the
standardization activity. Other important objectives of standardization include:
 Facilitating technical communication through the unification of symbols, codes and
interfaces
 Increasing the cost-effectiveness of production and use by defining and unifying
products and processes, performances and final inspection/testing modalities
 Promoting safety and environment protection
 Acting in the general interests of consumers and community.
Principles Of Standardization
Five principles characterize the
standardization process:
CONSENSUS- standards must be approved with the agreement of all the stakeholders.
DEMOCRATIC LEGITIMACY  all interested parties have right to participate in the
elaboration of standards and, above all, anybody can formulate observations during the
period preceding the final approval.
TRANSPARENCY the standardization body indicates the fundamental stages of the
approval process of a standardization project, making the latter publicly available.
VOLUNTARIES  standards are mere reference, nobody is obliged to follow them. Their
application is only discretionary except in cases concerning with the safety of people.
COHERENCE  standards should not contradict each other.
Benefits Of Standardization-

Standards contribute to the overall quality and safety of a product or service. They assure
compatibility and interchangeability, reduce unnecessary variety and increase the cost-
effectiveness of processes and procedures. Standards help to protect the health of human
beings, animals and the general environment. They create transparency in technical and
technological issues by offering a common terminology. In areas of very rapid
technological development standards may provide a basis for the assessment of potential
future risks. Finally, the harmonization of standards is a substantial step towards the free
international movement of goods.