Material Mgnt

• Objectives
• Functions
 Objectives
Primar Obiectives Secondar Obiectives

• Low prices • Reciprocity

• low inventory turnover • New Mat er ials and Product s and

Product Improvement

• Continuity of supply, alternative • Economic Make-or-Buy a

sources, flexible suppliers,
Favorable supplier relations

• Consistency of quality • Inter-departmental Relationships

• Low payroll • Standardization

 SECTIONS IN MM
Material Planning.

Purchase

Inventory Control

Store/Warehouse
Functions involved in
Material Management

PRODUCTION CONTROL

INVENTORY CONTROL

MATERIAL HANDLING
Functions involved in
Material Management
1. Production Control :

The function of production control aims at directing and

regulating the movement of goods through the entire
manufacturing cycle.
Departments involved in this function are :-

Purchasing department

Receiving department

Ra w materials invent ory department.

Production department
Production Control
Purchasing department
To acquire the required mat erials in the right quant ity,
of the right quality, from the right source, at the right
time and at least possible cost .

Centralized purchasing

Decentralized purchasing

° Centraliz ed Purchasing- purchasing depart ment

located at the firm's corporate office makes all
the purchasing decisions.
0
Decentralized Purchasing- individual, local
purchasing depart ment s, such as plant level,
make their own purchasing decisions.
Advantages- Centralization Disadvantages- Centralization

Bulk Quantity Discount High initial investment

Concentrated volume- leveraging
purchase volume
Avoid duplication
Specialization
Lower transportation costs
Uniformity in purchasing policies.
No competition within units
Common supply base
Delay in materials from deliveries.
Not suit able, if branches are locat ed at
dif f erent geographical locat ions.
Materials can not be purchased from
local suppliers.
Def ect ive mat er ials can not be replaced
timely.

Ad vantages• Disad vantages•

Decentraliz ation Decentraliz ation

Closer know ledge of Lose of discount on bulk buying.

requirement s lacks of specialization in
Local sourcing purchasing.
No heavy invest ment is Inappropr iate quant it y procur ed
required Less chances of ef fect ive cont rol.
Quick Order placing Lack of proper coordinat io n
Less bureaucracy among depts.
Production Control
Receiving department

Processes incoming shipments of materials. The tasks

u n p a c k in g in c o m i n g m at e r ia ls c h e c k in g t h e i r q u a n t it y
a n d in s p e c t in g t h e ir q u a lit y a n d ge n e r at in g re c e iv in g
r e p o r t s.
Ra w m a t e r i a l s i nve nt or y de pa r t m e nt

I n v o l v e s r e p a c k a g i n g a n d l a b e l i n g r a w m a t e r i a l s , s t o r i n g raw
m a t e r ia ls saf e ly a n d pr o t e c t in g t h e m f r o m d a m a g e,
u p d at in g re c o rd s of q u a n t it ie s of v a r io u s ra w m at e r ia ls,
a r r a n g in g f o r t h e r e p le n is h m e n t o f st o c k s.

Production department

Objective is to keep the flow of materials continuous during

the process of production.

Monitoring the flow of work -in-process materials,

identifying bottlenecks and minimizing them, computing the
s t o r a g e c a p a c i t y.
Water Tank Analogy
Inventory Level
Supply Rate

Inventory Level
~ ~

Demand Rate
Inventory Control
Types of inventory

Raw Material

Work-in-progress

Finished goods

Disadvantages of High Inventory

Causes operational
problems
High financial
cost .
Risk of
damage
1

Risk of
obsolescence
Material Handling
Managing physical movement of
materials through and out of the firm.
The primary objective of the material
handling is to move materials to required locations
in a timely and cost effective way.

Material handling equipment are of two types:

Fixed path: conveyors, monorail devices

Variable path: Trucks, forklifts, mobile cranes

Thank You