DBM 1213 STORAGE AND LOGISTICS

1. Differentiate material management from logistics management (10 marks)

a) Logistics management mainly focuses on management of functions of flow of goods
and services while material management focuses on management of activities related
to flow of materials.
b) Logistics management deals with integrating flow of information and its management
tools while material management deals with tangible components e.g. inventory.
c) Logistics management main objective is to fulfill order, requirements, delivery
quality and cost requirements while material management main objective is to
continuous chain of components or material for production
d) Logistics management is used in the field of production, procurement, recovery and
recycling logistics while materials management is used in the fields of inventory
management and value analysis
e) Process of logistics management includes planning, implementing and controlling
efficient flow of goods and services while material management includes planning,
organizing and controlling activities that are associated with flow of material within
an organization.
2. Explain the reasons why organizations holds stocks (10 marks)
i) To keep down production costs; since it’s not economically viable for an organization
to produce a few items at a time it’s essential for it to produce more and hold stock
e.g. for milk production.
ii) To accommodate variations in demand; to avoid stock outs some level of safety stock
must be held.
iii) To take advantage of quality discounts; some products re offered at a cheaper unit
cost if they are purchased in bulk
iv) Seasonal production; since agricultural commodities are harvested during certain
seasons but consumption is throughout the year hence there is need for proper storage
such that they can be supplied when required e.g. raw milk during rainy season is
processed in to powdered then used during drought.
v) To enhance quick supply; especially for goods that are consumed throughout the
country, therefore it’s good to stock these goods near places of consumptions e.g.
maize flour.
3. a) Briefly discuss importance of coding in storage (5 marks)
i. Coding prevents duplication of items
ii. Coding ensures accuracy in the description and identification of items
iii. Convenient basis is formed for sorting and recording items
iv. Coding simplifies stock control accounting
v. Coding may be used as storehouse location system
vi. Simplify manual recording
vii. To avoid repetitive use of long description of items
b) Explain the characteristics of coding (5 marks)
i. Uniqueness- Each items should have one code
ii. Distinctiveness- to avoid errors, code representing different items should be
distinctive
iii. Clarity- code should be entirely Alphabetical and Numerical
iv. Brevity- code should be brief but consistent with the requirement
v. Expandable- code should be able to cope with new additional items
vi. Unambiguous- code with similar letters should be avoided
vii. Significant- the code should be something about the coded items
4. Explain the importance of inventory control in management (15 marks)
i) It ensures correct quality of stock required to be always available
ii) Enhances control of stock rotation by enhancing consumption of materials in
accordance to their shelf life
iii) Inventory control ensures distribution of stocks that are available in the
warehouse
iv) Enhance the supply of information for control of production by informing the
organization on the consumption, demand and supply of goods hence informing
what is to be produced
v) Ensures supply of constant flow of materials to the operation.