Objectives of Materials Management:

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.

o Men,
o Machines,
o Materials,
o Money and
o Management.
 All these resources which are basic inputs are important but their
relative importance depends upon the particular type of industry
and also other environmental factors. Earlier, when many modern
machines were not even known, whole activity was around men.
 But now the importance has shifted from men to machines and in
the present environment materials are the life blood of any
industry or business and for their proper running, materials
should be available at proper time in proper quantity at proper
place.

 The objectives of integrated materials management can be

classified in two categories :
 Primary and
 Secondary
 These are discussed below :L

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 for a large number 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.

(e) To supply materials of consistent quality i.e. of quality this 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.

Secondary Objectives:

(a) To assist technical/design department in developing new materials

and products this 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.
To draw stock items from general store depot, requisition form no
s1313/1319 prepared in the following manner.

i) consumers other than workshop six copies

ii) consumers from workshop in five copies.

1st copy - official copy.

2nd-6th copy-

Along with authority letter to be submitted to feed depot for collection of

materials. Then depot makes issue note and make the 2nd copy as their
office copy and then 3rd to 4th goes to depot ledger section (store
account).

5th - 6th copy along with Material to indentor or consumer.

Then the indentor put his sign on 5th and 6th copies. After that 5th copy is
sent to attached divisional account. And 6th copy back to feeding depot as
the verified copy.

Then sent to EDPM (electronic data processing manager) for logging in

computer data.

This above is the procurement process of Stock item.

Explain the differences in the process of procurement of ‘stock’
item and a ‘Non-stock’item.

Ans: Procurement of Stock items –

The stock items are purchased on the basis of either on Annual Indent System or on the
basis of Maximum –minimum Recoupment system. The annual indent system is followed
for market availability stores and for stores which are ordered specifically to manufacture
and supply. The maximum-Minimum Recoupment system is followed for raw materials
required for shop manufactured items. In annual indent system, the purchasing agencies
fix (1) Date of Recoupment to be submitted .(2)Date of Estimate and (3) Contract period
for each trade group or foe each group of items and intimate the same to all concerned
which includes Depots and consumers. Except in emergency up to Rs.5 lakhs, the indents
are sent to the Hd Qr for purchase action. In emergency the JAG Stores officer in division
and in Depot can purchase upto Rs.5 lakhs through EPLT. Rate Contract, Runnig
Contract and AT (fixed quantity contract) may be concluded in procurement of stock
item. Option clause may be incorporated in the contract.

Procurement of Non Stock item ( s 1302 form ):-.

1.The consumer prepare non stock requisition for required non stock item as and
when required vide form no S1302 in two/03 copies.
2. The descriptions, specifications , sources of supply at least three sources other
than PAC item, LPR, Present market rate are to be clearly mentioned. In case of
new items or In case of purchase before 03 years, market survey by obtaining
budgetary quotations is to be done to judge the unit rate.
3. Care should be taken to draw the materials from standard specifications
available in the market which increases competition and reduces the unit cost.
4. Fund certificate should be taken from the Accounts before sending the
requisition to the Feeding depot.
5. The feeding depot or divisional officers initiate purchase action at their end
either through local purchase if the purchase value is within 1 lakh or purchase
through normal tender procedure ( LT or OT) as per SOP AS FOLLOWS.
Upto 3 lakh –AMM,3L-8L-SMMDMM, 8L-45L –JAG and beyond 45 L –TC to
be accepted by CMM at Hd,Qr.
6. The contract is on the basis of fixed ordered quantity. No option clause or Rate
contract or Running contract is followed.
7.The inspection may be RITES or may be by the Consignee.
What is the full form of ‘PAC’ and explain the criteria for
procurement of items of different value on ‘PAC’?

PAC means Proprietary Article Certificate. The Consumer

issues PAC. It is two of types.
 PAC-‘a’ , Where the consumer require a particular
brand or specification, but unable to certify whether
similar brand or specification is available in the market.
In such case ST is invited as per following SOP.
PCMM/COS-upto 15 Lakhs, CMM-Upto 8 lakhs, DyCMM-
Upto 5l, SMM-3L and AMM- upto 1 L

 PAC-‘c’ Where the consumer certifies that no other

brand or specification is available in the market other
than required brand or specification .In such case the
stores officer can go on single tender upto their
purchase power that is AMM-3L, SMM-8L, Dy.CMM-
45L, CMM-5 Cr. PCMM/COS-200 Cr .In case of
purchase value above 25 L , the normal OT value, open
tender notice should be served.
The consumer is required to certify as per SOP as follow.
JS/SS Officer-upto 75000, JAG/SG-upto 3L, SAG-upto 3L-
15L, PHOD-above 15L
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