MMPO-006

Master of Business Administration (MBA)/ Master of Business Administration

(Online) MBA(OL) /Master of Business Administration (Operations
Management) (MBAOM)/ Post Graduate Diploma in Operations Management
(PGDIOM)

ASSIGNMENT
For
July 2023 and January 2024 Sessions

MMPO-006: Materials Management

(Last date of submission for July 2023 session is 31 st October 2023

and for January 2024 session is 30th April, 2024)

School of Management Studies

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
 ASSIGNMENT

Course Code : MMPO-006

Course Title : Materials Management
Assignment Code : MMPO-006/TMA/ JULY/2023
Coverage : All Blocks

Note: Attempt all the questions and submit this assignment to the Coordinator of your
study centre. Last date of submission for July 2023 session is 31st October, 2023 and
for January 2024 session is 30th April 2024.

1. “Materials management contains an integrated process of materials flow, in, through and out
of an organization”. Comment on it and talk about the reasons behind it.

2. Why customer service, packaging and production scheduling are considered to be inter-
functional management activity? How can they be managed effectively within a functionally
organized firm?

3. What is supplier evaluation? Discuss the review process for rating of suppliers. Also, explain
why the relationship between the buyer and seller is of immense importance?

4. “Recent developments in the area of codification include barcodes which help in keeping
count of stocks”. Comment on the statement. Also, explain the steps for devising a barcode
for a business.

5. Explain the concept of Kanban and its usefulness. How does CONWIP differ from Kanban?
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MMPO – 006: Materials Management

Q1-“Materials management contains an integrated process of materials flow, in, through and
out of an organization”. Comment on it and talk about the reasons behind it?
ANS- -
The statement "Materials management contains an integrated process of materials flow, in, through,
and out of an organization" highlights the comprehensive and systematic approach to managing
materials within an organization's supply chain. Materials management involves the efficient and
effective handling of raw materials, components, and finished goods throughout their entire lifecycle
within the organization. Let's comment on this statement and discuss the reasons behind the
integrated approach to materials management:

According to Dutta (1998), “When we say that materials management contains an integrated
process of materials flow, in, through and out of an organization, we give some indication that
materials management has interfaces of two kinds, internal and external”. Let us see what these
interfaces are

Table : Various interfaces of Materials Management

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Q2- Why customer service, packaging and production scheduling are considered to be
interfunctional management activity? How can they be managed effectively within a
functionally organized firm?
ANS- -
Customer service, packaging, and production scheduling are considered interfunctional management
activities because they involve multiple functions or departments within an organization working
together to achieve common objectives. Here's why these activities are interfunctional:
1. Customer Service:
1. Interaction Across Functions: Customer service is not confined to a single
department. It requires collaboration and interaction between various departments,
including sales, marketing, operations, and logistics. For example, customer service
representatives need to communicate with sales to address customer inquiries and
with logistics to ensure on-time deliveries.
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2. Alignment with Sales: Customer service plays a crucial role in supporting sales
efforts by addressing customer needs, resolving issues, and maintaining customer
satisfaction. This alignment between customer service and sales underscores the
interfunctional nature of the activity.
3. Feedback Loop: Customer service often serves as a feedback mechanism by relaying
customer complaints, suggestions, and preferences to other departments. This
feedback loop helps in making necessary improvements in product quality,
packaging, and delivery.
2. Packaging:
1. Cross-Functional Impact: Packaging decisions have ramifications across various
functions. For example, packaging design and material choices must align with
marketing and branding objectives, production capabilities, supply chain logistics,
and sustainability goals.
2. Production and Logistics Integration: Packaging impacts production processes,
transportation costs, and warehouse space utilization. Production and logistics teams
need to coordinate to ensure that packaging materials are available and that packaging
does not hinder the efficiency of operations.
3. Marketing and Branding: Packaging is an integral part of a product's presentation
and branding. It requires collaboration between marketing, design, and production
teams to create packaging that aligns with the brand's identity and resonates with
customers.
3. Production Scheduling:
1. Dependency on Multiple Functions: Production scheduling relies on inputs from
various functions. Sales provides demand forecasts, materials management ensures
the availability of raw materials, maintenance teams contribute to equipment uptime,
and quality control plays a role in setting production schedules.
2. Balancing Priorities: Production schedules must strike a balance between meeting
customer demand, optimizing production capacity, managing labor resources
efficiently, and adhering to quality standards. This requires collaboration between
production, sales, operations, and maintenance.
3. Timely Delivery: The effectiveness of production scheduling impacts the ability to
deliver products on time to customers, which is a key aspect of customer service.
Coordination between production scheduling and customer service is critical to
ensure customer expectations are met.
In summary, customer service, packaging, and production scheduling are interfunctional management
activities because they involve the collaboration and integration of multiple functions within an
organization to deliver products and services efficiently and effectively. These activities transcend
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departmental boundaries and require coordination to ensure that customer needs are met, products are
presented attractively and sustainably, and production processes are optimized for timely delivery and
quality assurance.
Effectively managing customer service, packaging, and production scheduling within a functionally
organized firm requires a coordinated approach that leverages the strengths of each function while
addressing interfunctional challenges. Here are strategies for managing these activities effectively:
1. Clear Communication Channels:
Establish clear communication channels between departments involved in these activities.
Regular meetings, cross-functional teams, and collaborative software tools can facilitate
communication.
2. Cross-Functional Teams:
Create cross-functional teams or committees that include representatives from customer service,
packaging, production scheduling, and other relevant functions. These teams can collaborate on
projects, address challenges, and align strategies.
3. Standardized Processes:
Develop standardized processes and workflows that guide how these interfunctional activities are
carried out. Ensure that all departments understand and follow these processes to maintain consistency
and efficiency.
4. Performance Metrics:
Implement performance metrics that align with interfunctional goals. For customer service,
metrics might include response time and customer satisfaction. Packaging metrics could focus on
material waste reduction, and production scheduling metrics may target on-time delivery.
5. Technology Integration:
Invest in integrated software and technology solutions that enable real-time data sharing and
collaboration between functions. Enterprise Resource Planning (ERP) systems can help streamline
operations and facilitate data flow across departments.
6. Training and Development:
Provide training and development opportunities to employees involved in these activities. Equip
them with the skills and knowledge needed for effective collaboration and problem-solving.
7. Cross-Functional Training:
Consider cross-functional training programs that expose employees to the workings of other
departments. This can foster better understanding and appreciation of each function's role.
8. Cross-Functional Metrics:
Develop metrics that measure the performance of cross-functional teams and collaboration efforts.
Recognize and reward individuals and teams that contribute to interfunctional success.
9. Regular Review and Improvement:
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Conduct regular reviews of interfunctional processes to identify bottlenecks, inefficiencies, and

areas for improvement. Encourage a culture of continuous improvement where employees are
empowered to suggest and implement changes.
10. Leadership Support:
Ensure that organizational leadership supports and champions interfunctional collaboration.
Leaders should set the tone for cross-functional cooperation and provide resources for initiatives that
enhance effectiveness.
11. Conflict Resolution Mechanisms:
Establish clear mechanisms for conflict resolution. Conflicts between departments can arise, and
having a structured process for addressing them can prevent issues from escalating.
12. Customer-Centric Focus:
Maintain a customer-centric focus across all functions involved. Remind employees of the
ultimate goal: meeting customer needs and expectations. This shared purpose can drive alignment.
13. Cross-Functional KPIs:
Consider implementing cross-functional key performance indicators (KPIs) that reflect the
combined impact of these activities on overall business goals. This encourages collaboration and
shared responsibility for outcomes.
In a functionally organized firm, the effective management of customer service, packaging, and
production scheduling requires a commitment to breaking down silos and fostering a culture of
collaboration and continuous improvement. By implementing these strategies, organizations can
leverage the strengths of each function while ensuring that interfunctional challenges are addressed
efficiently, leading to improved overall performance and customer satisfaction.

Q3- What is supplier evaluation? Discuss the review process for rating of suppliers. Also,
explain why the relationship between the buyer and seller is of immense importance?
ANS- -
Supplier evaluation is a systematic process of assessing and measuring the performance, capabilities,
and contributions of suppliers to an organization. It involves the critical examination of various
aspects of supplier performance to ensure that suppliers meet or exceed the organization's
requirements and expectations. The goal of supplier evaluation is to identify areas for improvement,
enhance supplier relationships, and optimize the supply chain. Here's a discussion of the review
process for rating suppliers:

1. Establishing Supplier Evaluation Criteria:

The first step in supplier evaluation is defining the criteria and performance indicators that will be
used to assess suppliers. These criteria can vary depending on the organization's priorities but often
include factors like quality, cost, delivery reliability, responsiveness, innovation, and sustainability.

2. Data Collection:
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Gather data and information related to supplier performance. This data can come from various
sources, including internal records, customer feedback, supplier self-assessments, audits, and site
visits.

3. Performance Measurement:

Measure supplier performance against the established criteria and key performance indicators
(KPIs). Assign numerical scores, ratings, or rankings to each supplier based on their performance in
each category.

4. Risk Assessment:

Evaluate the risk associated with each supplier. Factors to consider may include financial
stability, geopolitical risks, supply chain vulnerabilities, and regulatory compliance. Understanding
supplier risks is crucial for continuity planning.

5. Supplier Audits and Site Visits:

Conduct supplier audits and site visits, especially for critical or high-risk suppliers. These visits
provide firsthand insights into a supplier's operations, quality control processes, and compliance with
contractual requirements.

6. Feedback Collection:

Seek feedback from relevant stakeholders, such as procurement, quality control, production, and
customer service, regarding their experiences with suppliers. Incorporate their input into the
evaluation process.

7. Performance Analysis:

Analyze supplier performance data to identify trends, strengths, weaknesses, and areas for
improvement. Compare current performance with historical data to assess progress.

8. Supplier Rankings and Ratings:

Assign overall rankings or ratings to each supplier based on their performance across all
evaluation criteria. These rankings can help prioritize supplier management efforts.

9. Supplier Meetings and Feedback:

Schedule meetings with suppliers to discuss the evaluation results. Share feedback and collaborate
on improvement plans, if necessary. Open communication fosters stronger supplier relationships.

10. Performance Improvement Plans:

Collaboratively develop improvement plans with underperforming suppliers. Set clear objectives,
timelines, and expectations for improvement. Monitor progress regularly.

11. Supplier Development:

Consider providing training or support to suppliers to help them meet performance expectations.
Supplier development programs can lead to mutually beneficial outcomes.

12. Supplier Segmentation:

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Segment suppliers based on their criticality to the organization and performance levels. High-
performing and strategic suppliers may receive more attention and collaboration.

13. Continuous Monitoring:

Supplier evaluation is an ongoing process. Continuously monitor supplier performance, collect

data, and adjust evaluation criteria as needed to adapt to changing circumstances.

14. Supplier Feedback Mechanism:

Establish a feedback mechanism where suppliers can provide feedback on the organization's
performance as a customer. This two-way communication can lead to mutual improvement.

15. Decision Making:

Use supplier evaluation results to make informed decisions about supplier selection, contract
renewals, and strategic sourcing initiatives. High-performing suppliers may be rewarded with long-
term partnerships.

Supplier evaluation is a multifaceted process that helps organizations maintain and enhance the
quality of their supplier relationships, manage risks, and drive improvements in the supply chain. It is
an integral part of supply chain management, contributing to the overall efficiency and
competitiveness of the organization.

The relationship between a buyer and a seller is of immense importance for several reasons, and it
extends beyond mere transactional interactions. A strong and mutually beneficial buyer-seller
relationship can have a profound impact on the success and sustainability of both parties. Here's
why this relationship is crucial:

Trust and Reliability:

Trust is the foundation of any successful business relationship. Buyers need to trust that sellers
will deliver products or services as promised, and sellers need to trust that buyers will make timely
payments. A strong relationship fosters this trust, making it more likely that both parties will honor
their commitments.

Consistency and Predictability:

Consistency in product quality, delivery times, and pricing is crucial for operational efficiency. A
stable buyer-seller relationship allows both parties to plan and forecast with greater accuracy,
reducing uncertainty in the supply chain.

Cost Reduction:

Long-term relationships often lead to cost reductions. Buyers can negotiate better pricing,
terms, and conditions with suppliers they have a history of working with. Sellers, in turn, can
optimize their production processes to meet the specific needs of loyal customers more efficiently.

Collaboration and Innovation:

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A strong relationship encourages collaboration and the exchange of ideas. Buyers and sellers can
work together to identify opportunities for process improvements, cost savings, and product
innovations. This collaborative approach can lead to competitive advantages for both parties.

Risk Mitigation:

In uncertain economic times or during supply chain disruptions, a strong buyer-seller

relationship can help mitigate risks. Suppliers may prioritize long-term customers during shortages,
and buyers can collaborate with sellers to find alternative solutions in times of crisis.

Customer Satisfaction:

For sellers, satisfied and loyal buyers can lead to repeat business, referrals, and positive word-of-
mouth, which are valuable for long-term growth. Buyers benefit from consistent product quality and
reliable service.

Customization and Tailoring:

Sellers who have a deep understanding of their buyers' needs can tailor their products or
services to meet specific requirements. This customization can lead to greater customer satisfaction
and competitive differentiation.

Supply Chain Resilience:

A stable buyer-seller relationship can contribute to supply chain resilience. Both parties can
collaborate on strategies to address supply chain disruptions, ensuring a more robust and adaptable
supply chain.

Efficient Conflict Resolution:

Inevitably, issues and conflicts may arise in any business relationship. However, a well-
established buyer-seller relationship is more likely to facilitate efficient and amicable conflict
resolution, reducing the potential for disputes to escalate.

Long-Term Perspective:

A strong buyer-seller relationship encourages both parties to take a long-term view of their
interactions. This perspective can lead to strategic partnerships rather than short-term, transactional
exchanges.

Competitive Advantage:

A buyer-seller relationship that results in superior products, service, or cost advantages can
provide a competitive edge in the market. Such advantages can be difficult for competitors to
replicate quickly.

Economic Benefits:

A thriving buyer-seller relationship can contribute to economic development by creating a stable

and mutually beneficial business environment.
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In conclusion, the relationship between a buyer and a seller goes far beyond individual transactions;
it is a strategic partnership that can yield significant benefits for both parties. Trust, collaboration,
risk mitigation, and long-term planning are key elements of a strong buyer-seller relationship, and
investing in these relationships can contribute to the success and resilience of businesses in an ever-
changing marketplace.

Q4- “Recent developments in the area of codification include barcodes which help in keeping
count of stocks”. Comment on the statement. Also, explain the steps for devising a barcode for a
business?
ANS- - Recent developments in the area of codification include barcodes which help in keeping
count of stocks. Barcodes are an accurate and effective way of inventory management. At times
there are confusions with respect to labelling in an organization, which may lead to collecting wrong
items from the stock. This can be taken care of by introducing the barcode inventory system. Bar
codes were introduced in 1951 but they were widely adopted only in mid 1970 when supermarkets
started using them. Now they were referred to as universal product codes (UPCs). These codes are
visual representation off data. They use lines and spacing they can be easily read by scanners. In a
UPC barcode, there is information pertaining to the product and manufacturer. It is a one
dimensional barcode. These days there are more than 30 barcodes with different applications. A QR
code for example is a two dimensional barcode. It can store much more information than a UPC like
pricing and shipping details. Some of the major barcodes are given in Figure
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Q4- Explain the concept of Kanban and its usefulness. How does CONWIP differ from
Kanban?
ANS- -
Kanban:

Kanban is the Japanese word for ‘card’ or ‘signal’. Kanban system is a system of scheduling based on
the pull system and uses kanbans, or cards, sent from a downstream operation to trigger production
(or supply) at an upstream operation (or by the supplier). A kanban control system uses , signalling
device to regulate JIT flows. In Japanese Kanban means “sign” or “instruction card.” In a paperless
control system, containers can be used instead of cards. The cards or containers make up the kanban
pull system. The authority to produce or supply additional parts comes from downstream
operations. Workers produce to schedule but execute based on kanbans, which are completely
manual.
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Figure 6 shows Kanban used in workstation making parts A and B. These two parts are stored in
containers next to the work center. When the line uses part A from a full container, a worker takes
the withdrawal Kanban from the container and travels to the machining center storage area. There
the worker finds a container of part A, removes the production Kanban, and replaces it with the
withdrawal Kanban. This card authorizes movement of the container. The freed production Kanban
is placed in a rack by the machining center and authorizes another lot of material. Parts are
produced in the order of the cards on the rack. The cards become the dispatch list. The same
approach is used to authorize vendor shipments. The system requires everyone to do exactly what is
authorized and to follow the procedures. There are clearly some limitations to the Kanban system.
Kanban is intrinsically a system for repetitive manufacturing. Also, since each daily assembly
schedule must be very similar to all other daily schedules, it becomes essential to be able to freeze
the MPS for a fixed time period, generally at least one month. The final assembly schedule must,
thus, be very level and stable. Kanban will not succeed without modification in a batch production
(non-repetitive manufacturing) environment. It requires a leveled schedule, standard containers and
very strict discipline. It may be considered inflexible in that it cannot easily respond to irregular
changes (in the MPS) and to large unexpected changes in market demand. Also, the implementation
of Kanban scheduling requires great cooperation from outside suppliers (recall supplier’s flexibility in
the definition). Moreover, from the perspective of the manufacturing process, it places emphases on
process technologies, such as product-based flow configurations, and may, therefore, require
considerable investment of time and money in developing new production methods, procedures,
jigs, fixtures, etc. and perhaps even new capital equipment

Kanban is a visual management and production control system that originated in Japan, particularly
within the Toyota Production System (TPS). The word "Kanban" itself means "visual card" or "signal
card" in Japanese. The core concept of Kanban is to manage and control the flow of work or
production processes efficiently and effectively. Here's how Kanban works and its usefulness:

Visual Signals: In a Kanban system, work items, tasks, or production units are represented by
physical or digital cards (Kanban cards). These cards serve as visual signals that convey information
about what needs to be done, such as the type of work, quantity, and priority.

Work in Progress (WIP) Limits: Kanban systems impose limits on the number of work items that
can be in progress at any given time. These limits prevent overloading of the system and ensure that
work is completed at a sustainable pace.

Pull System: Kanban operates on a pull system, meaning that work is pulled into the system only
when there is capacity and demand. Work is not pushed into the system based on predetermined
schedules.

Continuous Improvement: Kanban encourages a culture of continuous improvement. Teams

regularly review their processes, identify bottlenecks or inefficiencies, and make adjustments to
optimize workflow.

Transparency: Kanban provides transparency into the status of work items and the overall
workflow. Team members can see at a glance what is in progress, what is waiting, and what needs to
be done next.
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Usefulness of Kanban:

Kanban is useful for several reasons:

Efficiency: It helps teams and organizations work more efficiently by visualizing and managing
work in progress. This reduces bottlenecks and ensures that resources are used effectively.

Flexibility: Kanban is adaptable to various types of work, whether it's software development,
manufacturing, project management, or service delivery. It accommodates changes in priorities and
workloads.

Quality Improvement: By limiting WIP and focusing on completing tasks before taking on new
ones, Kanban can lead to higher quality work and fewer defects.

Reduced Lead Times: Kanban can help reduce lead times and cycle times, which is critical for
meeting customer demands and staying competitive.

Enhanced Collaboration: Kanban promotes collaboration and teamwork by making work visible
and encouraging open communication among team members.

Customer Satisfaction: Delivering work in a more predictable and efficient manner can lead to
improved customer satisfaction.

CONWIP (Constant Work-in-Progress):

Constant work in Process (CONWIP) limits WIP via cards as similar to Kanban systems. Kanban cards
part number specific, while CONWIP cards are line specific. However, from a pull perspective,
CONWIP cards limit WIP in the same manner as Kanban cards. CONWIP uses cards to control the
number of WIPs. For example, no part is allowed to enter the system without a card (authority).
After a finished part is completed at the last workstation, a card is transferred to the first
workstation and a new part is pushed into the sequential process route. Spearman et al. (1990)
proved the potential of COWIP systems in controlling WIP numbers as compared to Kanban systems.
CONWIP is another production control system that shares some similarities with Kanban but
operates differently in key ways:

Work in Progress: CONWIP maintains a constant level of work in progress, meaning that there is
a fixed number of work items in the system at all times. When a task is completed, a new task is
released into the system to replace it.

No Individual Task Tracking: Unlike Kanban, CONWIP does not track individual tasks or work
items. Instead, it focuses on maintaining a consistent level of overall work in progress.

Release Based: CONWIP typically operates in a release-based manner, with new work being
released into the system at predefined intervals or when certain conditions are met.

Key Differences between CONWIP and Kanban:

Control Mechanism: Kanban uses individual task-level tracking with visual signals, whereas
CONWIP focuses on maintaining a constant overall level of work without tracking individual tasks.
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Task Prioritization: Kanban allows for individual task prioritization, while CONWIP tends to treat
all work items equally within the defined work in progress limit.

Workflow Flexibility: Kanban offers more flexibility in adjusting to changes in workloads and
priorities, as work items can be added or reprioritized individually. CONWIP follows a more fixed,
release-based approach.

Visualization: Kanban emphasizes visualizing individual tasks, making it easier to identify

bottlenecks or issues at a granular level. CONWIP focuses on maintaining a constant level of overall
work.

In summary, both Kanban and CONWIP are production control systems that aim to improve
workflow efficiency and reduce waste. Kanban focuses on individual task-level tracking, flexibility,
and visual signals, while CONWIP maintains a constant work in progress level and operates in a more
fixed, release-based manner. The choice between these systems depends on the specific needs and
goals of an organization or team.