Professional Documents
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Material Management
Material Management
MANAGEMENT
Definition
It is concerned with planning, organizing and controlling the flow of materials
from their initial purchase through internal operations to the service point through
distribution.
OR
To get
1. The Right quality
2. Right quantity of supplies
3. At the Right time
4. At the Right place
5. For the Right cost
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
Objective of material management
Primary Secondary
• Right price • Forecasting
• High turnover • Inter-departmental harmony
• Low procurement • Product improvement
• & storage cost • Standardization
• Continuity of supply • Make or buy decision
• Consistency in quality • New materials & products
• Good supplier relations • Favorable reciprocal relationships
• Development of personnel
• Good information system
Economy in material management
• Containing the costs
YES
DE
D ETTEERRMMIINNEE DDR
R UG
U GSS && DDRRUUGG
DDOONNATIO
ATIONN RRE QUI R E E NT S
E QU I RE M
S O UR
URCE AD J US
ADJ USTT
QQUUAN TITIES
AN TITIES
NO
DE
D ETTEERRMMIINNEE DDR
R UG
U GSS && DDRRUUGG
GOVERNMENT
G O VER NM EN T YES
PPROD R E QU
RE QUII RE
R E M E NT S
RODUCT
UCTIION
ON
AD J US
ADJ USTT
NO
QQUUAN TITIES
AN TITIES
PPUURRC
C HHAASSEE
REQUIREMENTS
R EQ U IR EM EN TS
NO NO NO
O
OPPEENN TTEEND
NDEER
R RESTRICTED
R ESTR IC TED NEGOTIATED
N EG O TIATED DI
D IRE
RECCT
T
TTEENDE
ND ERR TTEENNDE
DE RR PURCHASE
P UR C H ASE
YE S
YES YES YE S
RE
REQUE
QUESSTT OFF
OFFEERS
RSFFRROM
OM LLOCAT
OCATEE C
CON
O NTA
TACC TT
CA
CALL LL FFOORR RERE L IABL E RELIABLE
EL
E L IGI
IGIBBL
L E SU PPL
SUPP L I E RS L IABL RELIABLE
OF
O F F E RS
RS SUPP
E SUP PLLIER
IER
SUPSUPP LIER
P LIERS
S
EEVA L UAT
VAL UATEE && EEVA
VALLUAT
UATEEOF OFFFEERRS
S NEGOT
NE GOTIAT IATEE PPRRIICE
CE & ESTAB
ESTABLIS H
LISH
SE
SELE
LECT
CTSU PPL IIEERR
S UPPL && SE
SELLEECTCT &
SUPSUP
P LYP LYC O N D ITION S PRI CE
SSUP
UPPL I E RSS
P LIER C O N D ITION S
PPU
URRCH A SSEE OR
C HA ORDDEER
R PPUURRCCHHAASSEE ORD E RR / /
OR DE PPU
URRC
CHA
HASSEE PPU
URRC
CHHA
ASSEE
// C
COON
NTTR RAAC
CTT CONTRACT O
ORRD
DEER
R // O
ORRD
DEER
R //
C
COONNTR
TRAC
ACTT C
COONNTR
TRAC
ACTT
DDRRUUGS
GSRE
RECEIVED,
CEIVED,CHE
CHECKE
CKEDDAGAINS T PPURC
AGAINST URCHAS
HASEEOORRDDEERR/ /CCOONNTTRRAACCTTSPE
SPECIFICAT
CIFICATIONS
IONS&&CL
CLEEARE
AREDD
FFOR
O R DIST
DISTRI
RIBUTI ON
BUT ION
Open tender
•Public bidding, resulting in low prices
•Published in newspapers
•Term - 4 weeks
•Quotations must be sent in the specific forms that are
sold, before the time &date mentioned in the tender
form
•In technical items, ‘two packets or two bins’ system is
followed. Offers are given in two separate packets.
•Technical bid
•Financial bid
Cont……
• First technical bid is opened & short listed
• Then financial bid of selected companies are opened & lowest is selected
•Delayed tenders & late tenders are not accepted. But if, in case of delayed
Spot purchase
It is done by a committee, which includes an officer from stores, accounts &
purchasing departments
Risk purchase
If supplier fails, the item is purchased from other agencies & the difference in cost
is recovered from the first supplier
Points to remember while purchasing
•Proper specification
•Invite quotations from reputed firms
•Comparison of offers based on basic price, freight & insurance, taxes and
levies
•Quantity & payment discounts
•Payment terms
•Delivery period, guarantee
•Vendor reputation
ECONOMIC ORD ER O F
QUANTITY(EOQ)
A AV AE AD CATEGORY 1 10 70%
B BV BE BD CATEGORY 2 20 20%
C CV CE CD CATEGORY 3 70 10%
History sheet
Even a common man must know the basics of material management so that he
can get the best of the available resources and make it a habit to adopt the
principles of material management in all our daily activities