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MATERIAL MANAGEMENT I Materials-Management (6. Element of Material…
MATERIAL MANAGEMENT I
1. Definition of Material Management
A function of business that is responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide service to the customer, at a pre-decided level at a minimum cost.
2. Aims of Material Management
5 R's of Material management - Acquisition of materials and services:
of the right quality
in the right quantity
at the right time
from the right source
at the right price
3. Purpose of Material management:
To gain economy in purchasing,
To satisfy the demand during period of replenishment,
To carry reserve stock to avoid stock out,
To stabilize fluctuations in consumption
To provide reasonable level of client services
4. Function of Material Management
Production & material control
Purchasing
Store management
Material handling
6. Element of Material Management
Demand Estimation
Estimating demand based on time series analysis of part while anticipating the future.
Predictable & uncertain
Procurement
Tender Buying
Open tender
Restricted tender
Negotiated tender
Direct procurement
Receipt & Inspection
At the point of delivery, check each item physically & count against suppliers
Procedure
unload & check product
unpack & inspecting product
goods received notes
delivery of material to proper stocking location
Issue & use
Issue should be made after receiving written indents
Distribution system can be either by direct supply or through a sub store
Push method (allocative system
Pull method (requisition system
Maintenance & Repair
Record for its maintenance should be kept
(warranty period & servicing or repair done)
expenditure incurred on repair
purchase cost & detail of purchase procedure
essential to recommend for condemnation
Condemnation & disposal
Condemnation
non-functional & beyond economical repair
non-functional & obsolete
functional but hazardous
functional but obsolete
functional but no longer required
Disposal
By auction
Local destruction
Return to vendor if he willing to accept
sell to scrap dealer
Storage
different types of goods should be located seperate
(normal goods will not locate at the same place with dangerous goods)
principle FIFO & LIFO applied
5. Objective of Material Management
Primary objectives
To purchase quality goods at minimum cost
To exercise control over materials
To maintain the continuity of production & sales by regular supply of materials
To maintain standards of quality
To establish good relationships with the suppliers
To maintain the efficiency of materials department
Secondary objectives
To participate in make or buy decision process
To recommend use of substitute materials
To be helpful in new product development
To be helpful in standardization of products manufactured
