MATERIAL MANAGEMENT PROJECT-2

1. MATERIAL MANAGEMENT
Material Management is an important element in any project s management since it involves issues related to buying, storing, billing and usage of materials. The basic elements of material management are shown as follows:

MATERIAL MANAGEMENT

Stores Procurement Receiving

Purchase Accounts Transportation

1. 1

PURCHASE AND MATERIAL REQUISITION

1.1.1 PURCHASING AND STORES ORGANIZATION

The organization on the project site is by function. Here, the materials management department is structured on the basis of functions such as stores, procurement, transport, purchase etc. as shown in the figure below: STORE & PURCHASE I/C (Mr.L.RAMESH)

STORE OFFICER (Mr.PREM CHAND SHARMA)

STORE OFFICER (KRISHNA RAO) DATA ENTRY OPERATOR 1. A.BHATTACHARYA

STORE CLERK 1. S.BHATTACHARJEE 2. LALAN KUMAR 3. RAMAKRISHNA (Cement Godown) 4. RAVINDRA RAUL 5. SUSHIL KM. SHARMA

HELPERS 1.DINESH 2.GANESH RAM 3.MANAAL

The Stores and Purchasing organizations are kept under the same department so as to reduce the interdepartmental issues and procedures and to have an efficient management system for materials.

KUSHAL JAIN | MATERIAL MANAGEMENT

1

MATERIAL MANAGEMENT PROJECT-2
Project execution requires use of construction materials of natural origin and manufactured items materials for use in permanent/temporary works which should conform to the contract specifications in both the cases. The steps that will be adopted for control of these materials are taken for each of the above aspects of materal management such as purchase, procurement, receiving and stores. The procedure for material procurement will be as per the flow chart.
1.1.2 MATERIAL REQUISITION

The material requisition is made as per the demand of materials generated on site. The process is as follows:

KUSHAL JAIN | MATERIAL MANAGEMENT

2

MATERIAL MANAGEMENT PROJECT-2
The purchase procedure after the material request generation at store is as follows:

ERP (Enterprise Resource Planning) is software used at Afcons which connects the people of the organization and the entire working is co-ordinated through it. The material requisition posted on it is sent to various sites and Delhi Regional Office and the regional office decides the source for material supply. For local purchase, the vendors are supposed to be from the approved vendor list of the client (CPWD approved vendor list).
1.1.3 SELECTION OF SUPPLIER AND ISSUE OF PURCHASE ORDER

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W. in this case C. such as aggregates etc.D: KUSHAL JAIN | MATERIAL MANAGEMENT 4 ..MATERIAL MANAGEMENT PROJECT-2 natural origin. the process is as follows: The following list provides a list of manufacturers as approved by the Client.P.

Contract documents Minutes of kick off meeting 2 Planning Engineer Construction program and delivery schedule Data Sheet 3 Receive data sheet/ brochures from HO/ Region and submit to customer for approval if required contractually Inform customer approval status to HO/Region if any Receive Purchase order (duplicate copy) and check the adequacies.4.MATERIAL MANAGEMENT PROJECT-2 1.1.2 Purchasing Process The responsibility matrix for purchasing procedures along with necessary documents is as follows: Sr. The purchase process is initiated as and when there is a material requirement 1.1.1. delivery status dates and inform deviations if any to HO/ Region for action Planning Engineer 4 Project In charge Planning Engineer Purchase Order copy Notes 5 KUSHAL JAIN | MATERIAL MANAGEMENT 5 .1 Tools for Purchasing The various tools required for purchasing are as follows: y Market Research y Price Charts y Codification y Funds Flow y Management Policies 1. Also it is necessary to avoid any wastages etc. Region and site Send detailed construction program indicating delivery schedules to HO/ Regions Planning Engineer Drawings/Specifications.4. No.4 PURCHASING OF MATERIALS   There should be timely purchase of materials to avoid any disruption to the project schedule. A 1 Procedure Description Responsibility Reference Document Output Record Supply items procured from HO/ Region Receive kick off meeting minutes on procurement strategy on items to be procured from HO.

MATERIAL MANAGEMENT PROJECT-2 6 Follow up with purchase department in case of delay Receive materials and check inspection report. MTC and physical condition of materials and inform concerned personnel of the deviations/ damages if any 7 Follow corrective action if needed Project In charge Project In charge Notes B 1 Construction materials procured from HO/ Region Follow step A1 Planning Engineer Planning Engineer Drawings/ Specs 2 ACE provisions and list of approved vendors (contractually agreed) to Purchase department for HO/ Regional Procurement Raise purchase requisition for materials indicating approved vendors agreed in contract. inspection and acceptance criteria. delivery schedule and requirements of MS Forward to Materials Department through SPM though purchase 3 Planning Engineer Drawings/ Specs Purchase Request 4 Receive material and check the conditions along with C engineer Construction materials procured from site KUSHAL JAIN | MATERIAL MANAGEMENT  5 Follow up with purchase department in case of delay   Project In charge/ Store keeper Store keeper ACE Purchase Request List Inspection Plan Testing 6 . specification of the product.

inspection and acceptance criteria. quantity. delivery schedule and requirements of MS and send to Project In charge for approval Approve purchase order and send to stores for procurement Check quality of material at vendor premises or on receipt at site Accept approve material or follow procedure for control of nonconfirming reports Services/ Sub contracts Receive kick off minutes of meeting on strategy on sub contracting to be initiated by HO and RO and site Purchase Order 8 9 10 D 1  Project In charge Store keeper Inspection and testing Purchase Order Project In charge Drawings/ specs/ contract documents Minutes of kick of meeting KUSHAL JAIN | MATERIAL MANAGEMENT 7 .MATERIAL MANAGEMENT PROJECT-2 1 Follow step A1 Planning Engineer Planning Engineer/ Store keeper Project In charge Vendors list 2 Identify vendors for material procurement based on source of supply and capability of supply Prepare comparative statement and select capable vendor 3 Cost comparison statement Note 4 Take rate approval from SPM for material procured from site Raise material request indicating specifications Approve MR and send to stores Project In charge Planning Engineer Project In charge Store keeper Drawings/ Specs 5 Register 6 Register 7 Raise Purchase Order on the approved vendors with detailed specification of the product.

MATERIAL MANAGEMENT PROJECT-2 2 Obtain item rate approval from PM Project In charge Sector Project Manager/ Project In charge Project In charge Project In charge Purchase Order Comparative statement Approval notes 3 Identify potential agencies based on previous performance and assessment 4 Screen the subcontractors based on Technical/ financial competence Obtain quotes from above parties and negotiate 5 6 Place order on the party offering best Project In technical and commercial terms after charge obtaining approval from appropriate authority Evaluate the subcontractors periodically Update master list of specialized contractors/ sub contractors Project In charge Project In charge 7 8 KUSHAL JAIN | MATERIAL MANAGEMENT 8 .

KUSHAL JAIN | MATERIAL MANAGEMENT 9 . From Mumbai Head Office The procedure involved in and after the receipt of materials is as follows: Materials are checked by the Stores Department and the A/ C in-charge.MATERIAL MANAGEMENT PROJECT-2 1. from Delhi Regional Office 3. Separate details for storage of materials shall be discussed later. from vendor 2. 2 MATERIAL RECEIVING The materials can be received from the following sources: 1.

1 FLOWCHART EXPLANATION 1.Item wise o Receipt History of Vendor. sub store. Client. Client.MATERIAL MANAGEMENT PROJECT-2 1. Adjustment entries should be passed in case of errors in recording the receipts in the computer. rejected.2. o Receipt from sub-contactor o Receipt from Client o Receipt of Construction Assets.2. Branch . . cement etc.1. Contractor. tools.surplus.1. The system provides various reports based on "receipt of materials" o Materials Received On Cash Purchase Basis o Material Received From Contractors o Material Received Form Client o Material Received From HCC Branches o Material Returned Back by Site (Works Return) o Material Returned by Employees (Tools) o Receipts Of Explosives o Receipt History of Item(s) o Receipt History of Vendor. Daily Receipt Report for each category shall be printed. Other reports may be furnished to Head Office as when needed.1 Material Receipt Note y A Material Receipt Note (MRN) shall be prepared on receipt of the material. Branch . In each cased second copy of AMRN will be forwarded to Accounts Department and third copy will remain as Store copy. A password system for authority to pass on adjustment entry will be provided. The In-charge (Stores) shall inform these KUSHAL JAIN | MATERIAL MANAGEMENT 10 " ! .e. client). in turn they will raise the bill mentioning the MRN no. Hard copy of these daily print outs shall be bound kept as "Receipt Registers". receipt will be taken into computer separately like General store. At the end of each day. Receipt will be taken into computer in a separate module. Contractor. The purpose is to ensure that there are no errors in receipt record and that it is correct. y y y y y 1. o Receipt of capital items. The MRN for receipts from branches will be prepared in three copies. Each entry shall be verified against the respective document again.2. may be sent to Procurement Department weekly. One copy will be sent to the branch sending the material The MRN for receipts of Capital items should also be prepared in three copies.2 Inspection y The inspection authorities shall be informed for necessary inspection for all material by Inward Section. spares etc. sub contractor. Only In-charge stores can pass an adjustment entry. The inspection authorities shall endorse the quality inspection remarks on the MRN or in the Challan copy or by a separate Inspection report. The MRN should distinguish the following receipts: o Receipt from vendor o Receipt from branch ( transfer of material whether from another site or Central stores) o Receipts from within the site ( i. One copy should be sent to the Equipment division at Head office. )For purchase through vendor one copy of MRN may be given to vendor.Date wise Receipt report for major items such as steel. The Receipt information shall be updated in the computer system for generating the MRN for qty received vis-a-vis quantity mentioned in the Challan. rate etc.

Customer (Client). qty. insurance. record shall be available both in mechanical Section as well as in Stores. Rejected Material All rejected Materials shall be kept separately duly identified by Material Tag -Red Colour. Purpose for sending the item out. Eg. 1. Inspection must be completed within seven days of receipt of the material. Apart from material code. value etc following information shall be clearly mentioned on the delivery Challan. equipments. MATERIAL INSPECTING AUTHORITIES MATERIALS INSPECTING AUTHORITIES Plant Machinery spares related Project mechanical engineer or any person authorized by him Electrical materials Project electrical engineer or any person authorized by him In-charge ( uality Assurance and Control) or any person General stores materials authorized by him Building material Construction In-charge ( uality Assurance and Control) or any person chemicals authorized by him y y Accepted Material: The inspected and accepted material shall be handed over to the Main Store duly acknowledged on Challan by person In-charge of stores for storage and preservation purpose. Expected date by which the item is supposed to be returned (if applicable) In case it is not a sale transaction. Customer (Client).MATERIAL MANAGEMENT PROJECT-2 details to Vendors. These shall be tagged by Material Tag having Yellow colour for accepted material. He may be rotated every fortnight or as may be decided by the In-charge Stores. Corporate Office. inter-branch transfer etc. If the material is found to be defective after it is issued then a Rejection slip should be prepared by the returning department. it shall be clearly mentioned NOT FOR SALE and value indicated is inclusive of sales tax. Treatment To Rejected Material: Materials found defective at inspection stage shall be returned to the suppliers against Rejection Challan. Sending Branch as the case may be. if any stock-material is found to be defective later on.1. full description. as the case may be. plant machinery etc) going out of HCC site shall be accompanied by a Delivery Challan issued by stores. : Repairs. Subcontractors.1. Weigh Bridge shall be calibrated once in a year.2. rejection. issue entry shall be made to take the qty out from the stock and then material shall be returned to the vendor against Rejection Challan. For rejected materials Rejection Challan shall be prepared while returning them to Vendors. which will be generated from computer. KUSHAL JAIN | MATERIAL MANAGEMENT 11 y y y $ $ # # # .3 Weighment y The weighment will be verified by stores personnel through computer aided weighbridge.2. y 1. Subcontractors etc. The name of the Stores personnel supervising the weighment will be mentioned on the Material Receipt Note (MRN) / Weightment slip.4 Sending the Materials Out Of Site y Any item (materials. The Stores should account for the return on the basis of the Rejection slip. However.

5 Issue of Material to Subcontractor y Any subcontractor whom the material will be issued would request Project Manager in writing mentioning name Specimen Signature of their authorized representative who will draw the material from stores. y At the end of the day. 1. then appropriate work-return entry shall be made and then only issue shall be shown so as to have complete record of issues in the computer system. clearance from equipment division at Head office has to be obtained. Separate issue registers shall be generated from computer for materials issued to Contractors. shall be settled forthwith. If any material is required to be issued to the sub-contractor directly from the site. has o be obtained. A report is to be prepared and sent by Stores to Accounts department at Head office through site accounts at the yearend.2.1. For equipment spares.O. y Tools issued to employees shall be entered in "Personal Tool Register" (PTR). works returns etc.6 Inter-branch transfer of material Branch Transfer of any material can be made as per request of receiving branch. Daily Issue Report shall be printed from the computer separately as per the type of issue) and after checking the same will be filed separately to generate a Issue Registers.2. if any. In case of tools misplaced by employee 100% debit will be made for new one. Gate pass is also needed for security purpose Separate registers are to be maintained for all issues made from stores and necessary follow up is to be carried out for materials sent out for repairs. whereas for broken tools 50% will be ' % & KUSHAL JAIN | MATERIAL MANAGEMENT 12 . Computer system is so designed that it will take care of all options and stock valuation is not affected.1. Every dispatch is to be entered in this register and as and when the materials are received the same is to be entered and necessary follow-up is to be carried out for unreturned materials. disposal order. y Issues shall be valued by Weighted Average method by computerized stores accounting system. approval from construction asset In-charge from H. Branch Transfer Challan may be generated by computer for that particular item.As per Work Order  Chargeable basis. In turn Project Manager will inform stores mentioning the name of the sub-contractors authorized representative. Section In-charge/ Engineers who are authorized by Project Manager will give issue indent to stores requesting for issue of material to a particular subcontractor mentioning free or chargeable basis.1.7 Records to be up-dated while issuing materials y Bin cards y Computer System for issue information ( ty. y In case of chargeable rate they may be of following two types:  Fixed Rate  System Rate + Service Charges as mentioned in Work Order or as decided by Project Manager. cost center code etc) y Every branch will have their Computer System installed and hence stocks shall be updated simultaneously for quantity as well as value. In case of construction asset. authority letter for transfer etc.MATERIAL MANAGEMENT PROJECT-2 y y y Cross reference of relevant work order.2. Sub-contractors shall be asked to certify the materials drawn by them from stores on monthly basis. This shall be tallied with the issue record and differences. rate. y The following cases may arise:  Free basis . 1. 1.

While issuing the materials Bin Card balance (and also the balance shown by the computer) shall be verified with physical balance where items are stored in small quantity. return to client stock). This is necessary since Computer System shall not allow any backdated entries once adjustment is passed. ‡ The pending indent is filed separately. The registers shall be bound periodically say monthly/quarterly/half yearly depending upon the volume of issues. It is necessary to run these reports periodically ensure proper reconciliation to have adequate control over materials.MATERIAL MANAGEMENT PROJECT-2 y y debited on that particular employee. It is necessary to check entries pertaining to Daily Receipts Issues everyday. In case of variance.2. requisition duly approved by Project Manager shall be taken. it shall be made before entering next day's records. Separate register is maintained giving details about adjustment entries made for issues. Separate register shall also be maintained after taking printouts for items issued to sub-contractors. Separate "Scrap Register" shall be maintained. Tools issued to employees (employee-wise). reconciliation of explosives. ‡ The indent is prepared in a given standard format which is also Given to the stores. y y y It is essential that data entry in Computer System is always up-to-date. Computer System shall be updated for showing issue for the purpose of scrap disposal. issues. Indent of Material Register Issue Record Certificate for issue for various Security gate inward/ outward Receipt of Material Receipt of Steel KUSHAL JAIN | MATERIAL MANAGEMENT 13 ( ( ( ( ( Receipt of . In case any materials from the inventory are to be scrapped. Such corrected report (DRR DIR) shall be preserved as MR / MI registers. adjustment entry shall be made and then alone next day's entry work should be started. ‡ The store keeper takes up the follow up for the item intended with the purchase department or the supplier. The computer system has been provided with facility to do reconciliation of client materials (receipt. Discrepancy Report shall be made Bin card as well as computer shall be updated by passing a suitable adjustment entry. checked by the team leader and approved by the project in-charge. 1.2 INDENT OF MATERIAL ‡ The indent of material are prepared by site engineer. If any mistake is found. Issue slips also shall be properly bound and preserved as a record. materials issued to contractors (contractor-wise). If any transaction entry is missing.

2. ‡ Steel receipt document is checked by project in charge regularly. 1. his designation and the date of the issue. name of person issued. 1. The register is maintained by gate keeper. ‡ The steel received from client/supplier should be weighed at another weigh bridge other than specified in the challan. ‡ When the material is received following actions should be initiated. no.2. ‡ For this a certificate is given while issuing each register mentioning the register name. ‡ The difference in challan weight and the actual weight should invariably be recorded and the client s driver s signature should be obtained.2.4 CERTIFICATE OF ISSUE FOR VARIOUS REGISTERS ‡ Issuance of letters should be only done through a system to avoid the chances of manipulation of registers. Whenever any register is issued or returned it is recorded in this register. ‡ The store keeper in consultation with engineers should know well in advance the location for loading and unloading of material at specified place only. ) KUSHAL JAIN | MATERIAL MANAGEMENT 14 . ‡ The store keeper issues material receipt slip mentioning all details including actual measurement. ‡ Availability of manufacturers test certificate should be recorded and checked in consultation with the C engineer. kapchi. metal brick the store keeper should physically measure the quantities.7 RECEIPT OF STEEL ‡ The steel is unloaded preferably in the steel yard or at a place in consultation with the project in charge. wastage and pilferage. ‡ This certificate id printed or stamped on the first page of the register.5 SECURITY GATE INWARD/OUTWARD REGISTER ‡ ‡ ‡ ‡ As far as possible only 1 gate entry should be preferred.2. 1. 1. ‡ This certificate is essential for the authenticity of the registers. Person who has been issued this register is responsible for maintaining the record and safe custody of the register. ‡ The measurement quantity is cross checked on the site by site engineers on regular basis. ‡ The material should be stacked to avoid breakage. material inward and outward register.6 RECEIPT OF MATERIAL ‡ The purchase order should be filed in pending purchase order file. All incoming and outgoing materials are recorded in separate registers ie. page no.2. ‡ If the material is a building material like sand. grit. This is essential for the verification of the responsible person. Security register is s standard form maintained at every site.MATERIAL MANAGEMENT PROJECT-2 1. ‡ Only one receipt book should be used for the issuing receipt.3 REGISTER ISSUE OF MATERIAL ‡ ‡ ‡ ‡ This records the details of all issued register.

8. 1.N. 9. test Receive test reports. 6. 3. Stores Incharge 10. ‡ Visual inspection is carried out in consultation with the A/ C department whenever required.MATERIAL MANAGEMENT PROJECT-2 1. inform stores in writing. if within specifications. Activity Estimate material quantities with reference to drawings and specifications Prepare requirement plan Float enquiries enclosing specifications Collect samples. Segregate this material Rejected Material to be highlighted in front of location by flags and removed to locations out of bounds for staff or labour If source fails consistently discard source ualify another source Personnel Planning Engineer Remarks 2. approve for usage If routine tests not conforming. Project Manager Planning Engineer Project Manager 1. receive materials sample.2. ‡ PROCEDURE FOR CONTROL OF MATERIALS The responsibility matrix for control of materials is as follows: S.1 PROCEDURE FOR IDENTIFICATION AND TRACEABILITY For identification of materials and traceability. Planning Engineer Purchase Officer/ Purchase Engineer A/ C Incharge Client s Engineers Purchase Officer/ Stores Incharge Stores Incharge A/ C Incharge 7. 5.8 RECEIPT OF CEMENT ‡ The cement supplied by client /supplier shall be physically verified for quantities.3. brand type and batch. test independently Approve source Place order. 11. ‡ The cement bag weight is verified on sample basis. the following methods and records are maintained: IDENTIFICATION Material Description Method TRACEABILITY Record Responsibility 15 KUSHAL JAIN | MATERIAL MANAGEMENT 0 0 Recording in formats 1 1 1 1 Source approved by consultants if required Stores to stack untested material at locations designated for the purpose Material Engineer to inform stores on standard formats 1 . 4.

MATERIAL MANAGEMENT PROJECT-2 Cement Structural Steel Re-bars Consumables Electrical Items Board Board Board Board Gratings Board Tag/ case marking Tag/ case marking Material Receipt Note/ Manufacturers Test Certificate Material Receipt Note/ Manufacturers Test Certificate Material Receipt Note/ Manufacturers Test Certificate Material Receipt Note Material Receipt Note Material Receipt Note Material Receipt Note Stores In Charge Stores In Charge Stores In Charge Stores In Charge Stores In Charge Stores In Charge Stores In Charge Tools and spares 2 Pipes. Fittings KUSHAL JAIN | MATERIAL MANAGEMENT 16 .

No.3 MATERIAL ISSUE VOUCHER (MIV) Job No: 3555 Date: Activity: To stores: Please issue the following material S. 3 ISSUE OF MATERIALS 1.3.MATERIAL MANAGEMENT PROJECT-2 1. Description Material Code No. Cost code/ Equip code Quantity UOM Required Issued Remarks KUSHAL JAIN | MATERIAL MANAGEMENT 17 .

According to the lead time of various materials it is forecasted when a material should be ordered so that the construction process is not hampered. It is important to know the total quantities and phase wise requirement of critical materials likely to affect the progress of work so that the planning for procurement of the same can be done in a systematic manner. size and quantum of key and critical materials right at the start of the project with the data /drawings available. The monthly requirement of materials was worked out at the beginning of the project. The planning would include preparation of schedules indicating approximately the total quantity of all essential materials such as aggregates. Constantly monitor procurement function such that no item is procured in excess of requirement and the material cost is within control. taking to consideration the lead-time and stock level. price escalation. Factors like monsoon. In any project execution. o Item wise / system wise requirement of formwork required for scaffolding and shuttering purpose. bricks. it is important to identify the type. o Section wise requirement of timber plywood. y y y y y The procedure for preparation of the schedule is as follows: Compute material requirements month wise for each item as per breakup of the quantities Sum up requirement of the same material under different items of work under individual material heads and finalize the schedule. The schedule can thus: o o y y o o Ensure availability of these items as per requirement to suit construction programmed. to be procured. Prepare a separate list for the following items: o Diameter wise requirement of reinforcement steel. union budget etc. This is done by the Planning Department on site as per the construction schedule prepared. o Materials required as erection aids. 4 PLANNING OF THE MATERIALS Planning of materials involves identification and estimation of materials. KUSHAL JAIN | MATERIAL MANAGEMENT 3 4 18 . timber. o Section wise requirement of structural steel. nature. must be kept in view. Give sufficient time to arrange for inputs from sites / region / H offices for items like structural steel. Ensure sufficient lead-time for procurement of materials at best possible prices / terms and avoid emergency purchases.MATERIAL MANAGEMENT PROJECT-2 Indented By: _______ Stores In charge: _______ Issued By: _______ Received By: _______ 1. formwork materials. structural / reinforcement steel. scaffolding and shuttering materials etc. y Planning involves forecasting the materials that would be required. roofing sheets etc.

‡ Material requirements will include provision for wastage. 1. compute quantities and place order / requisition for the same. 5 VENDOR MANAGEMENT 1. allowance for under weighment in cement. This states that the Purchasing authority shall strive to maintain the quality supplies from reliable sources only.1 STEPS FOR PREPARATION OF SCHEDULE Preparation of Schedule Ensure availability of items Constant Monitor Procure Function Ensuring sufficient lead time Sufficient time to arrange for input from offices Preparation of separate list for special items Requirements for reinforcing steel Requirements for structural steel Requirements for timber and plywood Requirements for erection aids ‡ For materials required in enabling works like formwork for concrete.5. work out construction methods first. erection of structural steel. rolling margin in reinforcement and structural steel. To exercise control over sources of Purchase.4.1 PROCEDURE There is a detailed procedure prescribed by the Company for vendor management.MATERIAL MANAGEMENT PROJECT-2 1. the purchasing authority shall follow the Procedure as below: Preliminary work for vendor registration Assessment of Vendors and their registration and selection Performance evaluation of registered Vendors Initiate action in case of unsatisfactory performance KUSHAL JAIN | MATERIAL MANAGEMENT 19 . precast concrete items.

Vendor is a manufacturer of the commodity himself.1 Preliminary Work: y Vendor registration form shall be issued by the Purchase Department at Site to the vendors seeking registration with the company. The Site should follow the preliminary work for vendor registration.5. Standard Registration Form Suppliers suggested by any of the AFCONS sites or by experienced senior level personnel through e-mail. y Vendors are expected to submit the forms duly filled. assessment of his manufacturing facilities. Credit period allowed by the vendor as compared to the industry norms. Vendor is an authorized Agent / Distributor / Stockist / Dealer of manufacture. 1.3. Any other valid reasons. JV consortium Partner. assessment and evaluation for all items where the annual purchase value is likely to be over Rs 1. IOM or free style note. Business Magazines. Yellow Pages. Newspapers. Based on evaluation of supplies made. clients or competitors. Vendor is a monopoly supplier. E-mail. Supplier is an approved vendor of the client. Preliminary assessment of any Vendor's capability shall be recorded in the prescribed format within 15 days from the date of submission of the registration form.000 or as informed by Head office. Based on client s list and reputation enjoyed in the industry.MATERIAL MANAGEMENT PROJECT-2 1.5.000 the system should give details of variation in rates of purchase as compared to the last purchase. signed and stamped back to the issuing authority within 30 days from the date of collection of the registration form. Order executed successfully by unregistered suppliers under urgent situation.2 Assessment for Vendor Registration: y The Procurement Manager and Project Manager at the site shall assess the vendors capabilities for registration based on the information available with the procurement department at site in any of the following forms: Profile of the Supplier Catalogue / Literature of the supplier Information from the internet. Trainings.00. Seminars. Vendor is registered Based on the site assessment i.e. For items below Rs 1.3 VENDOR REGISTRATION y y y The site follows the Vendor Registration Procedure as given in ISO 9001. 1.3.5.2 GUIDELINES FOR SELECTION OF VENDOR y y y y y y y Vendor is already registered agency in other unit of Afcons where ISO programme has been implemented.5. 1. Nearness of vendor s place of business to the branches of the company. Technical Exhibitions. KUSHAL JAIN | MATERIAL MANAGEMENT 20 y .00. Workshops.

Cancelled (CN) The status mentioned above shall be updated as and when need arises. the vendor's registration status shall be identified in Approved Vendors List (AVL) as follows: For vendors chosen by the client: Status . Depending upon the needs of the parent unit. quantity of accepted materials and actual delivery at site.5. Status . quality and delivery of each lot shall be compared with corresponding purchase order.5 EVALUATION CRITERIA AND TECHNIQUE The evaluation Technique followed is the Weighted Point Method. 1.5. Delivery Schedule and price as per the norms given in Data Sheet. Delays in replacement of rejections should be specified.charge on monthly basis.Waiting (W) For registered vendors: Status . Delays in providing After Sales Service should be specified. Average period taken to replace Rejections. but as a routine site will send an evaluation on monthly basis. Each consignment from each Vendor shall be evaluated on the basis of uality. i.5.1 Evaluation Criteria Quality Delivery Price Service. mentioning receipt details. These Reports should be prepared and sent to the procurement department (Head Office) by the Stores-in.MATERIAL MANAGEMENT PROJECT-2 y Based on the recommendations of the Vendor Assessment. Their relative weights can be expressed in numerical terms so that a composite performance index can be determined and supplier can be compared. 1. which was delivered later than the scheduled time. y 1. four evaluation factors are identified.5. Total quantity ordered and details of quantity. After registration.by Client (CL) For new vendors to whom the trial order is not placed or the trial order is placed but the confirmation about the acceptance of quality of material supplied by them is not yet received. following data should be included for each vendor: y y y y y Total quantity ordered and details of Acceptance/ Rejections against the order / quantity. Cooperation and others Total The detailed breakup of the evaluation criteria is as follows: 5 70 30 20 30 150 KUSHAL JAIN | MATERIAL MANAGEMENT 21 .e. For the purpose of performance evaluation of the vendor.Confirmed (C) For disqualified Vendors: Status . Vendor's Performance Evaluation shall be based on monthly evaluation from stores at site.4 PERFORMANCE EVALUATION OF VENDORS All the Vendors shall undergo performance evaluation at least once in six months. For performance evaluation. Average period taken to provide After Sales Service. result shall be conveyed to the awarded vendor by a letter duly signed by the Project Manager.

Prompt after sales services 6. 3. No. 60 Lowest price / actual price 40/40 = 100 40/50 = 80 40/60 = 67 Thus. Prompt replacement of rejections 5. A 100 90 B 60 80 C 50 70 Quality Rating 64 48 42 On schedule 80 90 100 Vendor A B C Average price / unit Rs. 6. 4. No. Factors for Assessment uality Delivery Schedule Price Prompt replacement of Rejections Prompt after Sales Services Co-operation from Vendors Weightage 30 20 10 10 10 Method of Award Total uality Accepted during evaluation period x 70 uality supplied on schedule x 30 Total uality scheduled during evaluation period Lowest Tender price x 20 ualitative Factors of Assessment ualitative Factors of Assessment ualitative Factors of Assessment 1. 5.5. 50 Rs. Vendor A would be selected 1. 70 1.5.5.2 Minimum Marks to be scored for passing Sr. uality alone 2.5.6 VENDOR GRADING Vendor Grading should be done and on the basis of the grade points given to the respective vendors they should be classified as follows: Grade Points Classification 125-150 Excellent 80-125 Good KUSHAL JAIN | MATERIAL MANAGEMENT 22 6 6 6 6 6 6 6 6 Minimum Marks 50 10 10 5 5 5 85 Delivery rating 16 18 20 Service Service Rating 21 12 30 Fair Poor Good Price Rating 20 16 14 Total Rating 121 94 106 . Price alone 4.MATERIAL MANAGEMENT PROJECT-2 Sr. Criteria 1. Co-operation from vendors Aggregate 1.5. 2. Delivery alone 3. 40 Rs.3 Composite Rating Schedule Vendor Total % shipment accepted recd.

This information is required for updating the vendor database Filled in applications with enclosures should be sent to the The Purchase Dept AFCONS ECC Construction Company Limited.5. Vendor A would be graded as Good Satisfactory Un-satisfactory 1. order copies.7 VENDOR EVALUATION PROCESS AT A GLANCE Project Manager Engineer A/ C Obtain company profiles of Vendors/Contractors F A Pre-qualify Vendor/Contractor Maintain Databank Category wise/ Discipline wise/ Size wise Evaluate the existing Databank periodically at six months intervals Revise/ Update Databank 1. income tax registration are mandatory. Manufacturers. The availability of spares / trained service personnel/ warranty terms etc.8 DOCUMENTS REQUIRED FROM NEW VENDOR y y A new Vendor is required to submit the following details: Certificates for ISO Certification Certificate for ISI Certification Details like sales tax registration.5. Indian representatives of Foreign principals for machinery/ Computers and peripherals/ Office automation equipment must give full details of service facility available in India. must also be mentioned.MATERIAL MANAGEMENT PROJECT-2 55-80 00-55 Thus. KUSHAL JAIN | MATERIAL MANAGEMENT 7 Evaluate Capacity Capability of Vendors/ Contractors 7 7 Pre.qualification Evaluation of Vendors Contractors 8 8 7 23 . Any change of in the status above mentioned information should be communicated within one week. Manufacturers / Authorized dealers/ Indian agents of Foreign Principals must attach relevant catalogues/ technical literature for the Products listed. All vendors should attach relevant certificates. proof of registration with major customers etc. Indian agents. along with the application. excise registration.

cleanliness and maintenance Poor/ Good/ Very Good order d. What other work is in progress? Yes/ No g. To whom does the head of C report? i. Check floor space available against that stated in Same/Different questionnaire form b. No. of people full time on inspection j. General level of precision and finish of work in progress Poor/ Good/ Very good compared to what his machines can achieve h. Are S C methods used? If so what is the sampling plan f. What is present per cent rejection Yes/ No Yes/ No Bought/ borrowed Yes/ No Yes/ No Yes/ No Yes/ No Trained/ Untrained (5/5-10) 10 years 4. etc. Age of the plant 5 to 10/15/more old/ modernized/ new and modernized e. Is there space for expansion? Yes/ No 2.E/ Other qualification c.MATERIAL MANAGEMENT PROJECT-2 1. Are job orders followed up? Yes/ No j. Financial Resources a. Is incoming materials inspected and evaluated? h. Can design assistance be given by the vendor? Yes/ No e. What is the approximate value of work in progress? Rs 9 9 KUSHAL JAIN | MATERIAL MANAGEMENT 24 .5. Production and Technical Competence a.9 PARAMETERS OF VENDOR EVALUATION 1. of technically qualified engineers/ Staff and level of E. Quality control and Inspection of Facilities a. What material handling equipment is used? Crane/ Hoist/ Fork lift/ Other c. Are gauges bought or borrowed e. Is any basic research being done? Yes/ No f. trade apprenticeship. Level of Housekeeping. No. Are gauges and instruments used for quality control and inspection? c. Building and General Impression of Good Maintenance a. Is there a regular quality control dept/ section? Yes/ No b. Check list of machines attached to the questionnaire Same/ Different (Why?) form b. Is care and maintenance of plant a planned programme? Yes/ No f. Are there regular contracts for raw materials? Yes/ No k.E/ I. No. of Skilled workers and type of training i. Are gauges and instruments calibrated and corrected d.e. Limitations of work due to this size or capacity of the Yes/ No tools and machine? 3. Are records kept of the results of instrument checks and production inspection? g. Does the presence of clever methods and set ups show Yes/ No adaptability in the type of working being done? g. Is any production planning method used? Yes/ No i.E/ M. d.

What is the approximate value of raw materials and finished goods? c. Has vendor any raw materials license or allocation? If so how much of which material(s) and from which source? d. IS so. uantity performance of delivery of a few typical cases Entire job/ further sub contract Poor/ Good/ Very good Poor/ Good/ Very good h. Obtain reference from other companies if large order is to be given 6. Names of associate companies Yes/ No 5. How would you rate the morale of the total Poor/ High/ Very high organization? b. What work was done for these companies? c. Conclusion Should this vendor be added to our list of approved Yes/ No suppliers? @ KUSHAL JAIN | MATERIAL MANAGEMENT 25 .MATERIAL MANAGEMENT PROJECT-2 b. Other Companies Supplied to a. Timing performance of delivery of a few typical cases g. General Observations a. How long has vendor been supplying to these companies? d. Check names mentioned in the questionnaire from Same/ Different b. Does he have any future plans for expansion/ Yes/ No diversification? g. What were last year s approximate profits (gross)? Rs Yes/ No Rs Yes/ No f. list names of parties work sub contracted to: f. How would you rate the progressiveness and Poor/ Good/ Very good competence of vendor s management? 7. Does vendor do entire job or does he further sub contract? e. What is the approximate annual turnover of sales? e.

g. a codification system should be evolved with the following objectives: ‡ Accurate and Logical Identification: A separate code is allotted to each of the items available in the storehouse indicating the size. price. pipe fittings. Purpose served by codification Proper identification Accounting and control There are number of methods of building of coding system. This helps in reducing waste of time. 1.2 REQUIREMENT FOR CODIFICATION A stock code to group and identify items with similar physical characteristics in a logical pattern permits simple and precise material identification as an aid to production. ‡ Efficient Purchasing: The filling up of purchase requisition and preparation of purchase orders are simplified by the use of codes. ‡ Efficient Recording and Accounting: Codes lead to effective stock control. ‡ Prevention of Duplication: All items are separately codified and are arranged in a logical order. there can be no duplication in placing the orders and no piling up of the materials will take place in the storehouse.6.6. special characteristics. starting with a class designation for like items keyed to major commodity group. efficient recording and result-yielding accounting. quality. The digit will indicate group. this reduces the number of varieties to the minimum.6. fastener.MATERIAL MANAGEMENT PROJECT-2 1. sanitorial supplies and so on. grouping of identical items is done and it enables the stores to examine the entire range of items.3 OBJECTIVES OF CODIFICATION In order to identify the items correctly and logically for processing the transactions and to facilitate each location in stores. purchasing and accounting.1 INTRODUCTION Since the number of items of stores run into large numbers. stores. followed by a single digit to denote subclass. which easily indicate the materials required. Since each item has a different code number and various items are kept in different bins at different places. The codification of materials in such a way helps in quick identification of the material. Codification is a process representing each item by number. In fact elaborate coding will provide the information regarding details descriptions of the materials very easily. type and dimension of the item. 6 MATERIAL CODIFICATION 1. using a common language is a must. First two digits will be sufficient for this purpose. ‡ Standardization and Reduction in Varieties: For codification. KUSHAL JAIN | MATERIAL MANAGEMENT 26 . usability. This stock code should be kept as short as possible. sub-group. Chances of mistakes are minimized. a proper method of identifying them. electrical hardware. It facilitates the elimination of those varieties in place of which other varieties of the like quality can be used. but method should be: o Simple o Capable of being understood by all o Each code should uniquely represent one item 1. Buying instructions to the suppliers become easy and quick if there is proper understanding of codification by the supplier. e. specification etc.

Item is identified in first four digits and the rest five digits are for specific identification.6 METHODS OF CODIFICATION Alpha-Numerical 1. vii. Uniqueness: Each code must be a unique representation for the item it identifies. Proper Choice of the Coding Symbols: While a code may have numbers.4 CODIFICATION . It should be as simple. 2nd Digit specifies major group in that class. Easy Computerization: Small size computers such as personal computers are finding their wide applications in materials management.5 REQUIREMENTS OF MATERIAL CODIFICATION Material Codification it is required for the following reasons: y For Proper Identification Of Item By All Departments y To Avoid Use Of Long Description Of Item y To Avoid Duplicate Stocks Under Different Description y To Enable Reduction In Varieties And Sizes y To Arrange Bin Cards.6.6. Flexibility: The code design should be flexible to accommodate changes without disturbing existing codes. v. 1. The following considerations must be kept in mind when designing codes.). ii. iii. which may facilitate their placement and location. an inventory item number or employee identification code must identify one and only one inventory item or employee. We are familiar with the library coding system in which codes do never get disturbed by addition of new books and all books to come in future are easily accommodated by the existing code structure. Easy Understandability: The code structure must be easily understood by various users. i. practical and meaningful as possible. For example. In Uniform Manner y To Ensure Receipt Issue Document Are Posted In Appropriate Records 1. Layout of codes: The layout of codes should be equal in length. and A/C Records Etc. KUSHAL JAIN | MATERIAL MANAGEMENT 27 A Codification of materials Numerical Colour codification . 1.FEATURES There could be many possible arrangements of coding symbols (numbers. vi. This implies that the codes should consist minimum possible number of digits. certain precautions should be taken in selection of the symbols. Stock Control Cards. Brevity: The codification system should avoid long and unwieldy description. etc. alphabets or a mixture of both. Indexing and Inspection: The materials in the store have to be kept in an order. alphabets. Codes longer than four alphabetic or five numeric characters should be divided into smaller segments for human judgments.7 MATERIAL CODE STRUCTURE y y o o Head Office (Mumbai)¶s material code is a 9-digit all numeral one. 1st Digit specifies the class.6.6.MATERIAL MANAGEMENT PROJECT-2 ‡ ‡ Easy Locating. which can be used to design a code. Logical: The coding system should be logically fit for the needs of the users and the methods of data processing employed. iv.

7. 16 18 Reserved For Future Needs 1. APOLLO.7. 1. EWL. 14.3 Class 2: Small Tools y There is no major group in this class . Chemicals. Etc (Oils.7. y There is only sequential codification for all type of small tools.) Reserved For Future Needs 1. V Belts Etc.MATERIAL MANAGEMENT PROJECT-2 3rd & 4th Digits specify minor group within the respective major group.6. Etc.4 Class 3: Consumables Class & Major Group (1st & 2nd Digits) 31 32 33 34 35 36 37 38 39 30 Description Chemical.2 Class 1: Heavy Tools & Tackles (Nc Items) Class & Major Group (1st & 2nd Digits) Description 10 11 Equipments 12 Electrical Items 15 Form Work (DOKA System) 17 OTHER SYSTEMS (ACROW. y For example measuring tape. drill bits lab items.1 Classification Of Items o Items are classified as follows: FIRST DIGIT CLASS 0 Capital Items 1 Heavy Tools Tackles 2 Small Tools 3 Consumables 4 Reserved for Future Use 5 Electrical Main Items 6 Construction Materials 7 Special / One-Time Items 8 Reserved For Future Use 9 Spares (P M) 1.) Common Spares (Bearings. Etc. Tyres.) 19 Temporary Structure 13. Gases. Admixtures.6. etc.7.6.7. ) Electrical Items Pipe Fittings Hardwares (All Metals Included) Welding Electrodes Cutting Tools Abrasives Others (Wire Ropes.6.  1.5 Class 6: Construction Materials KUSHAL JAIN | MATERIAL MANAGEMENT 28 B B B B .6. Paints. Packing Materials. Stationery Etc.

8th & 9th digits specify the serial no. billed materials.MATERIAL OUT 1. 67. transportation. Cement Etc. Reconciliation forms are as follows: 1.) Ferrous Items Non-Ferrous Items Timber And Plywood Reserved For Future Needs          Spare item code is 9 digit alpha numeric code. The equipment is identified in the first five digit and the rest four is the sl. and poor workmanship etc. It helps to identify the wastage out of the unaccountable consumption of the material during activities. Consumption. 66. The reconciliation form is as follows: Sl.2 RECONCILATION FORM FOR THE SUB STORE The sub store at site maintains Reconcilation forms for all materials in the following format to keep stock of materials received.1 RECONCILATION FORM FOR THE MAIN STORE The main store maintains the following Reconcilation form for all materials to keep stock of the material quantities issued and available: MATERIAL IN MATERIAL OUT Purchased Quantity Quantity To Site Store From Other Site Quantity Quantity To Other Site BALANCE QUANTITY = MATERIAL IN .6. It is the record keeping of the materials at site. reinforcement etc. No. test samples.7.Cement.6 Codification of Spare Parts MATERIAL CODE 3 4 06 5 12 20 LENGTH : DIA : METAL : MINOR GROUP : MAJOR GROUP : CLASS : 100 MM 12 MM G. for parts THEREFORE THE DESCRIPTION FOR MATERIAL CODE ³340651220´ IS: ³ HEXAGON BOLT G. wastage in materials and balance stock.7. aggregates. I M12 z 100 ³ 1. It is being prepared for most of the materials. materials issued. 6th. Wastage and balance of the material at the site are accounted in the Reconciliation reports. 7 MATERIAL RECONCILATION Reconciliation is the process to identify the unaccountable use of materials during various construction activities at site. Bricks. sand. Details QUANTITY KUSHAL JAIN | MATERIAL MANAGEMENT 29 C . Of item codification. I HEXAGON BOLTS HARDWARES CONSUMABLES Description Major Items (Aggregates. 7th. 68 69 ILLUSTRATION 1: 1. 63. 4th digit specifies the make of the equipment. The total quantity.7.MATERIAL MANAGEMENT PROJECT-2 Class & Major Group (1st & 2nd Digits) 61 62 64 65 60. 5th digit specifies equipment model.no. 1st digit specifies the material id (spares) 2nd alphabet specifies the equipment category 3rd alphabet specifies equipment name.

5 T 2. 5.5 T KUSHAL JAIN | MATERIAL MANAGEMENT 30 . 3. 6. Material received from Main Store Material Issue Material Balance Material Billed Material Wastage Work in Progress 100 T 75 T 25 T 70 T 2. 4.MATERIAL MANAGEMENT PROJECT-2 1. 2.

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