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Materials management is a core supply chain function and includes supply chain planning and supply chain execution capabilities. Specifically, materials management is the capability firms use to plan total material requirements. The material requirements are communicated to procurement and other functions for sourcing.
Materials management is defined as “the function responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a pre-decided service to the customer at a minimum cost”.From the definition, it is clear that the scope of materials management is vast.
Functions of Material Management
Material management is the process of planning, organizing, and controlling the flow of materials from the acquisition of raw materials to the delivery of finished products. The primary function of material management is to ensure that the right materials are available at the right time, in the right quantities, and at the right cost. This involves activities such as material planning and control, purchasing, stores management, inventory control, standardization, simplification, value analysis, ergonomics, and just-in-time (JIT) techniques to minimize waste and maximize efficiency. The ultimate goal is to ensure that materials are effectively utilized and managed to support the production process and achieve organizational objectives.
The functions of materials management can be categorized in the following ways:
Material Planning and Control
Material planning and control is the process of determining the necessary materials and quantities needed to meet production requirements. It involves forecasting demand, determining inventory levels, and creating production schedules to ensure that materials are available when needed. Material planning and control is essential for ensuring that the right materials are available at the right time and in the right quantities to support production and minimize waste.
Purchasing
Purchasing is the process of acquiring goods and services from external suppliers. The purchasing function is responsible for identifying potential suppliers, negotiating prices and terms, placing orders, and ensuring that deliveries are made on time and in accordance with specifications. Effective purchasing is critical for ensuring that materials are acquired at the lowest possible cost while maintaining quality standards.
Stores Management
Stores management involves the physical management of inventory, including the receipt, storage, and issue of materials. The stores function is responsible for ensuring that materials are stored in the correct location, are easily accessible when needed, and are protected from damage or theft. Good stores management is essential for ensuring that materials are available when needed and that inventory levels are kept under control.
Inventory Control or Management
Inventory control or management is the process of managing the levels of inventory within an organization. It involves monitoring inventory levels, forecasting demand, and adjusting inventory levels to meet production requirements while minimizing waste. Effective inventory control is critical for ensuring that materials are available when needed, while minimizing the costs associated with carrying excess inventory.
Standardization
Standardization involves the development and implementation of standard processes and procedures for the acquisition, use, and disposal of materials. Standardization ensures that materials are used in a consistent and efficient manner, minimizing waste and reducing costs. Standardization can also simplify the purchasing process and reduce the time and effort required to manage inventory.
Simplification
Simplification involves the simplification of processes and procedures for the acquisition, use, and disposal of materials. Simplification aims to streamline processes and reduce the time and effort required to manage inventory. By simplifying processes, organizations can reduce costs and improve efficiency.
Value Analysis
Value analysis involves the evaluation of materials, products, and processes to identify opportunities to reduce costs and improve performance. Value analysis can involve analyzing the design and performance of materials, evaluating alternative materials or suppliers, and identifying opportunities for process improvements. Effective value analysis can result in significant cost savings and improvements in efficiency.
Ergonomics
Ergonomics involves the design of work processes and systems to optimize the interaction between workers and materials. Ergonomics aims to minimize the risk of injury or strain to workers and improve efficiency by designing work processes that are comfortable, safe, and efficient. Effective ergonomics can improve worker productivity, reduce absenteeism, and minimize the risk of workplace injuries.
Just-in-Time (JIT)
Just-in-time (JIT) is a production strategy that involves the delivery of materials and products at the exact time they are needed. JIT aims to reduce inventory levels and minimize waste by ensuring that materials and products are only produced or delivered when they are needed. JIT requires close coordination between suppliers and production facilities and can result in significant improvements in efficiency and cost savings.
Nature and Scope of Material Management
Scope of materials management
1. Materials planning and control
Based on the sales forecast and production plans, materials planning and control is done. This involves estimating the individual requirements of parts, preparing materials budget, forecasting the levels of inventories, scheduling the orders and monitoring the performance in relation to production and sales.
2. Purchasing
This includes the selection of sources of supply finalization in terms of purchase, placement of purchase orders, follow-up, maintenance of smooth relations with suppliers, approval of payments to suppliers, evaluating and rating suppliers.
3. Stores management or management
This involves physical control of materials, preservation of stores, minimization of obsolescence and damage through timely disposal and efficient handling, maintenance of store records, proper location and stocking. A store is also responsible for the physical verification of stocks and reconciling them with book figures. A store plays a vital role in the operations of a company.
4. Inventory control or management
Inventory generally refers to the materials in stock. It is also called the idle resource of an enterprise. Inventories represent those items, which are either stocked for sale or they are in the process of manufacturing or they are in the form of materials, which are yet to be utilized. The interval between receiving the purchased parts and transforming them into final products varies from industries to industries depending upon the cycle time of manufacture. It is, therefore, necessary to hold inventories of various kinds to act as a buffer between supply and demand for the efficient operation of the system. Thus, effective control on inventory is a must for the smooth and efficient running of the production cycle with the least interruptions.
5. Other related activities
Example: Specifications of an axle block are Inside Dia. = 2 ± 0.1 cm, Outside Dia. = 4 ± 0.2 cm and Length = 10 ± 0.5 cm.
3S Meaning
- Standardization: Standardization means producing a maximum variety of products from the minimum variety of materials, parts, tools, and processes. It is the process of establishing standards or units of measure by which extent, quality, quantity, value, performance, etc. may be compared and measured.
- Simplification: The concept of simplification is closely related to standardization. Simplification is the process of reducing the variety of products manufactured. Simplification is concerned with the reduction of product range, assemblies, parts, materials, and design.
- Specifications: It refers to a precise statement that formalizes the requirements of the customer. It may relate to a product, process or service.
- Value analysis: Value analysis is concerned with the costs added due to inefficient or unnecessary specifications and features. It makes its contribution to the last stage of the product cycle, namely, the maturity stage. At this stage research and development no longer make positive contributions in terms of improving the efficiency of the functions of the product or adding new functions to it.
- Ergonomics (Human Engineering): The human factors or human engineering is concerned with the man-machine system. Ergonomics is “the design of human tasks, man-machine system, and effective accomplishment of the job, including displays for presenting information to human sensors, controls for human operations and complex man-machine systems.” Each of the above functions is dealt with in detail.