Controlling Material Flow: Proper Resistor Leads Profitable Entity

The influence of a business to a country’s economy is vital as its achievement can drive
the success of an entire state, in which includes their contributions to the gross domestic product
(GDP), which affects their world standing. Business is the wealth-creating institution of society
as every business operates in order to earn profit so it does exist because the functioning of a
strong economy is essential to the goal of proper allocation of its resources. Businesses are the
key players in preventing economies from becoming halt or stagnant. Economics decides the
availability of resources, production and distribution and as business’ goal is to be profitable,
they must attain all the benefits of the materials used and avoid excess waste by means of
controlling material flow.
Controlling material flow keeps the stock of raw materials within limits to avoid
overstocking or understocking of raw materials, as it ensures proper storage of materials by
providing suitable storage facilities. Knowing proper cost of production leads the business in an
advantageous situation that leads to a profitable entity.
Controlling material flow optimizes the movement of materials and to eliminate
unnecessary action. Determining the quantities of each component for a certain order size and
knowing when to release orders for each component, and to be alerted when items need attention
are some benefits of material requirement planning which uses the master schedule, along with
other applicable information, to plan the supply of materials. It uses a lot of information about
schedules, products and materials which have three main sources, which are: 1.) Master
schedule; and 2.) Bill of materials. The master schedule is used to give the number of every
product to be made in each period and to find the gross requirements, while the bill of materials
is the list of resources needed for every product by translating the net requirements into gross
requirements. By using material requirement planning, an entity can have a lower stock levels,
with savings in capital, space and warehousing with higher stock turnover. It gives customer a
better experience with no delays caused by shortage of materials, it is also reliable for having
faster delivery times. MRP is a dynamic system as it can be used for planning other logistics
activities.
Extending the role of material requirement planning may lead to cheaper and more
convenient time by combining several small orders into one larger one which is called batching.
In here four methods can be used:
1. Lot-for-lot. The simplest of all the methods as it minimizes investment in inventory or
the amount of stock, but can give high ordering, delivery and administration costs. It
will also generate a greater volume of orders than a fixed lot size system
2. Fixed-order quantity. It is a method to fix the quantity for sizing by setting this
method as an order quantity mainly based on the practical value and is fixing the
quantity. It provides coverage for some predetermined number of periods, such as a
truckload, a container load, or an economic order quantity.
3. Periodic orders. It is a process of combining the requirements over some fixed period,
and place regular orders for different quantities. For example, placing a weekly order
 for the number of materials needed in the following week. Working to a regular
timetable is simple and makes ordering routine.
4. Batching rules. Which uses a specific procedure to calculate the best pattern of
orders. Typically, it is looking for the combination of orders that gives the lowest
overall cost. In which in practice, can be quite a difficult scheduling problem.
Organizing materials to arrive just as they are needed are proposed by the system Just-in-
time (JIT). It is a system of lean production which is used in repetitive operations where goods
move through the system and tasks are completed just in time to maintain the schedule. It helps
the success of an entity’s operation as it necessitates a very little inventory but this system needs
a careful planning and much effort to achieve a smoothly functioning system in which all
resources needed for production come together at precisely the right time throughout the process.
Raw materials and purchased parts must arrive when needed, fabricated parts and subassemblies
must be ready when needed for final assembly, and finished goods must be delivered to
customers when needed. Special attention must be given to reducing the risk of disruptions to the
system as well as rapid response to resolving any disruptions that do occur. By coordinating
supply and demand, JIT eliminates stocks of raw materials and work in progress as it gives a
buffer between operations.
JIT involves a change in the way an organization looks at all its operations. It’s a way of
eliminating waste, or a way of enforced problem solving. In this wider sense, JIT sees an
organization as having a series of problems that hinder efficient operations so it uses its
advantage to get the most out of the materials used in production.
Controlling material flow of a business helps along the supply chain as it forces not only
the supplier but also the entity to that an organization works together towards the same goals and
principles attaining an efficient customer response and having a smooth and unrestricted
production. It also gives the economy a quality finished goods or services that uses a quality of
raw materials and expert skills with a reasonable price. It is of vital importance to exercise strict
control and supervision over the purchases, storage and handling of materials to minimize
wastage.