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Material Management

Arnav Sharma
• Definition
• Objectives of Material Management
• Purpose of Material Management
• Function of Material Management
• Focus of Material Management
• Advantages of Material Management
• Challenges of Material Management

Materials Management
• Materials are any commodities used directly or
indirectly in producing a product such as raw
materials, component parts or assemblies.

• Materials management is the grouping of
management functions supporting the complete cycle
of material flow, from the purchase and internal
control of production materials to the planning and
control of work in process to the warehousing,
shipping, and distribution of the finished product.
– Thomas F. Wallace & John R. Dougherty

• Materials management is the management of the flow of
materials into an organization to the point, where, those
materials are converted into the firm’s end product(s)
– Bailey & Farmer

The executive who engage in materials
management are concerned with three basic
activities: buying, storage of materials and
Main depts. Of MM
• Materials planning
• Purchase
• Stores
• Inventory control
Objectives of Materials Management
• Is to minimize cost
• Procure and provide material at lowest cost
• Reducing investment tied yup in inventories
• Purchase, receive , transport and store materials
efficiently and reduce related costs.
• Continuous supply of materials
• Cut down costs through simplification,
standardization , value analysis and import
• Minimizing procedural delays in procuring materials

Purpose of Material Management
• To gain economy in purchasing
• To satisfy the demand during period of replenishment
• To carry reserve stock to avoid stock out
• To stabilize fluctuations in consumption
• To provide reasonable level of client services

An Integrated approach to materials management
• Materials planning
• Make or Buy decisions
• Purchasing
• Receiving and inspection
• Storage
• Inventory control
• Distribution of materials
• Transportation
• Disposal of surplus, obsolete and scrap materials
• Developing new sources of supply
• Import substitution
• Market research
• Waste management

Functions of Materials Management
• Materials planning
• Purchasing of materials
• Reducing store keeping and warehousing
• Inventory control
• Standardization simplification and value analysis
• Transportation and material handling
• Dispose of scrap surplus and obsolete materials
Focus of Material Management
• To procure right materials
– In Right Quantity
– Of Right Quality
– At Right Time
– From Right sources
– At Right prices
– 5 R’s, principles
Advantages or benefits of MM
• Material cost can be lowered ( Sales price can be brought
down to a reasonable level)
• Controlling of indirect cost (such as materials movement)
• Risk of inventory loss minimized (theft, pilferage )
• Reduction in loss of time of direct labour
• Cost of material used in different department ascertained
• Control of manufacturing cycle
• Material congestion in storage places avoided
• Improvement in delivery of the product
Challenges of MM
• Selection of appropriate vendors
• Land and storage cost increase
• Difficulty in forecasting demand accurately
• Scarce capital for investment in materials inventory
• Diversification of product lines
• Optimizing time and quantity for products
• Management of information