FUNCTION OF MATERIALS MANAGEMENT

Inventory Arrangement and

Control:
Production and Material
Control
Purchasing

Materials Handling

Receiving

production control

physical distribution
IMPORTANCE OF MATERIAL
MANAGEMENT
1 •EFFECTIVE COST CONTROL

2 •CONTINUAL GROWTH OF ORGANISATION

3 •VALUE ADDED PRODUCTION (VAP)

4 •SUPPORT TO THE ORGANISATION

5 •SUPPORT TO THE NATION

6 •QUALITY CONSCIOUS

7 •EXPENDITURE OF MATERIAL

8 •CORPORATE AND SOCIAL RESPONSIBILITY

ADVANTAGES OF INTEGRATED
MATERIAL MANAGEMENT
1 •Inventory Arrangement and Control

2 •Production and Material Control

3 •Purchasing

4 •Materials Handling

5 •Receiving

6 •production control

7 •physical distribution
Functions of Material Management
Material Planning and Control

Purchasing

Stores Management

Inventory Control or Management

Standardization

Simplification

Value Analysis

Ergonomics

Just-in-Time (JIT)
ADVANTAGES OF INTEGRATED MATERIAL
MANAGEMENT

EIP
(Elec
troni Dea
Better Better Co- Improved
c d
data stoc
Accountability Ordination Performance

proc k
essin
g)
CLASSIFICATION OF MATERIALS
1 •Raw materials

2 •Purchase components

3 •Work-in-progress

4 •Finished goods

5 •Spares

6 •Consumables

7 •Machinery and equipment

IMPORTANCE OF INVENTORY

To allow economic
To cover anticipated
production and changes in demand
purchase or supply

To protect against To provide for

uncertainties transit

IMPORTANCE
OF
INVENTORY
 FUNCTIONS OF INVENTORY

Stock control

Data
Cost control
analysis

Risk Cash flow

management management

Order
fulfilment
 Scope of inventory control

Examine the work

Determination of
of inventory
inventory policies
policy

Determining lead Determining

time various stock levels

Determining
Safety or buffer
economic order
stock
size
 CATAGORIES OF INVENTORY

Shortage or
stock out
Ordering Carrying Cost & Cost
Cost Cost of
Replenishme
nt
TYPES OF MATERIAL/INVENTORY
DEMAND FORECASTS
1 •Qualitative forecasts

2 •Quantitative forecasts

3 •Naive forecasts

4 •Moving average forecasts

5 •Exponential smoothing forecasts

6 •Seasonal forecasts

7 •Causal forecasts
i
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MERITS OF MATERIALS REQUIREMENT
PLANNING
Improved inventory management

Improved production planning

Better lead time management

Cost savings
  
DEMERITS OF MATERIALS REQUIREMENT
PLANNING
Complexity

Data accuracy

Inflexibility

Dependence on computer systems

  
IMPORTANT TOOLS USED IN THE INVENTORY CONTROL AND
MANAGEMENT
1  
•A.B.C Analysis

2 •EOQ (Economic Order Quantity)

3 •VED Analysis

4 •GOLF Classification

5 •5XYZ Analysis

6 •SDE Classification

7 •HML Classification

8 •S-OS Classification

9 •FNSD Classification
Merits Of  Economic Order Quantity
(EOQ)
Improved
Cost inventory
Increased
savings management efficiency

Better customer Improved

service cash flow
Demerits Of  Economic Order Quantity
(EOQ)
Inadequate
Simplistic
consideration of
assumptions variability

Limited Inflexibilit
applicability y
 TYPES OF PURCHASES
Raw Materials

Semi-Finished Products or Components

Finished Products

Maintenance, Repair, and Operating Items (MRO)

Production Support Materials

Services

Capital Equipment

Transportation
 METHODS OF PURCHASING
By
Requirem
ent

Purchasing Market
for a Certain
Future Purchasin
Period g

Speculativ
e
Purchasing
 PRINCIPLES OF PURCHASING

The right The right

material price

The right
transportatio The right
n quantity

PRINCIPLES
OF
PURCHASIN
The right G The right
delivery quality

The right The right

contract time
The right
The right
specificatio
source
n
 PURCHASING SYSTEM
Hand to mouth
buying
Seasonal Forward buying
buying

Tender buying Reciprocity

Blanket order Scheduled

buying

Speculative
Contract buying buying
Hedging
purchase
PRINCIPLES OF IMPORT SUBTITUTION
Encouragement
of domestic
Reduction Diversification
of imports of the economy
production

Industrial Balance of
development trade
METHODS OF INTERNATIONAL PURCHASING

Direct import

export
Online
marketplaces management
company (EMC)

Foreign Trading
subsidiaries companies

Joint ventures Agents and

brokers
CHARACTERISTICS OF INTERNATIONAL
PURCHASING
1 •Buyer

2 •Supplier

3 •Importer

4 •Exporter

5 •Freight Forwarder

6 •Customs Broker

7 •Banks

8 •Insurance Provider

9 •Regulatory Authorities

10 •International Chamber of Commerce (ICC)

 BENEFITS OF INTERNATIONAL
PURCHASING

Access to a
Competitive wider range
advantage of goods and
services

BENEFITS OF
INTERNATIONA
L PURCHASING
Learning Cost savings
opportunities

Diversification Improved
of suppliers quality
RISK IN INTERNATIONAL PURCHASING

Qualit
y Risk
Politic Transport
al Risk ation Risk

Regulato Curren
ry Risk cy Risk
Payme
nt Risk
 IMPORT PURCHASE PROCEDURE
Identifying the need for the goods or services

Identifying potential suppliers

Requesting quotes

Negotiating terms

Placing an order

Receiving the goods or services

Approving payment

Record keeping
 OBJECTIVES OF STOREKEEPING
Minimizing cost of Maintaining the
production through Services to user
minimizing cost on value of
materials
departments
materials

Establishing Advising
coordination with materials
other departments manager
 FUNCTIONS OF STOREKEEPER
Identifica
tion of
Record materials
Receipt of
keeping and
accounting materials

Issue and Storag

dispatch e
Material
verification Inspec
and stock
taking tion
 TYPES OF STORES

Main or
Wareh centraliz
ouses ed stores
TYPES
OF
STORES
Tool and Branch or
miscellane decentrali
ous stores zed stores

Central
store with
sub-stores
 BENEFITS OF STOREKEEPING
Minimum Continuous Protection and
Investment flow of material preservation

Fewer Proper storage

Good quality at
for improved
minimum cost accidents output
STORES RESPONSIBILITIES
1 • Receiving and inspecting goods

2 • Stocking and organizing inventory

3 • Issuing inventory

4 • Recording inventory movements

5
• Conducting regular inventory
audits

6
• Maintaining a clean and organized
storage area

7
• Ensuring compliance with policies
and procedures

8
• Communication with other
departments

9 • Conducting training
STORES PROCEDURE

Receiving goods
Inspection of goods
Storage of goods
Issuing goods
Physical inventory count
Stock taking
Documentation
Security
Re-order level
Disposal of inventory
LOCATION OF STORE HOUSE
Accessibility

Proximity to the source of inventory

Proximity to the point of use

Security

Climate control

Space

Cost
FACTORS AFFECTING LOCATION OF STORE HOUSE
 
Accessibility

Proximity to suppliers

Proximity to customers

Storage requirements

Security

Cost

Availability of labour
SECURITY MEASURES IN STORES

SECURITY
MEASURE
S IN
STORES
PROTECTION AND PREVENTION
OF STORES 
Security measures

Fire prevention

Climate control

Pest control

Regular maintenance

Proper storage
METHODS OF STORE ACCOUNTING
First-in,
first-out
(FIFO)

standard Last-in,
cost first-out
method (LIFO)

Average
cost
method
VARIOUS STAGES IN VALUE ANALYSIS
Informati
on
gathering

Implemen Functiona
tation l analysis

Evaluatio
n and
selection
OBJECTIVES OF MATERIAL HANDLING

Enhancing Improving
customer productivit
service y

OBJECTIVE
S OF
MATERIAL
HANDLING

Improving Enhancing
quality safety

Reducing
costs
OBJECTIVES OF MATERIAL HANDLING
Improving Enhancing safety
productivity

Reducing costs

Improving quality Enhancing

customer service
TYPES OF MATERIAL HANDLING
Forklifts

Conveyor systems

Automated guided vehicles (AGVs)

Pallet jacks

Cranes

Hoists

Stackers

Trolleys
PRINCIPLES OF MATERIAL HANDLING

PRINCIPLES
OF
MATERIAL
HANDLING
FACTORS AFFECTING SELECTION OF
MATERIAL HANDLING
Type of
products or
materials

Size and
Cost weight of
products

Safety Distance to be
requirements travelled

Frequency of
movement
FUNCTIONS OF VENDOR
MANAGEMENT

Vendor selection and on boarding

Contract management

Relationship management

Performance management

Risk management

Financial management

Continuous improvement
FACTORS RELEVANT FOR THE SELECTION
OF A VENDOR
1 • Quality
2 • Price
3 • Quick Delivery
4 • Service
5 • Assurance of supply
6 • Size of the supplier
7 • Number of suppliers
8 • Local suppliers
9
• Miscellaneous
Considerations
VENDOR DEVELOPMENT

Identify critical commodities for

development
Identify vendors for critical
commodity development
Formation of internal team
Meeting with top-management of
vendor
Identify opportunities for
development
Define feasibility and viability

Joint agreement of project

Monitoring progress of project

Follow-up and modification

 VENDOR EVALUATION
Establishing Collecting Evaluating
evaluation vendor vendor
criteria information performance

Selecting a Ongoing
vendor monitoring
7C’S OF EFFECTIVE VENDOR EVALUATION
Competen Commitm
cy
Capacity ent

Control Cash Cost

Consistenc
y
FUNCTIONS OF PURCHASE DEPARTMENT

Identifying
purchasing
needs

Sourcing and
Ensuring
evaluating
compliance
suppliers

Managing Negotiating
supplier and
relationships contracting

Purchasing
Managing
and
inventory
procurement
 PURCHASE DEPARTMENT
RESPONSIBILITY
Sourcing and Contract Supplier
Procurement Management Management

Cost Inventory Complian

Reduction Management ce

Reporting
and Analysis
BUYER AND SELLER RELATIONSHIP

Communic
ation

Long-term
Trust
focus

Honesty Respect

Collaborati
Flexibility
on
VARIOUS STAGES IN VALUE ANALYSIS

Information Stage

Evaluation Phase Functional Analysis

Brain Storming
 OBJECTIVES OF ISO 9000
Enhance
customer
satisfaction

Meet regulatory Improve quality

requirements management

Enhance supplier Promote a

relationships process approach

Ensure Increase
consistency and efficiency and
standardization effectiveness
 TYPES OF ISO
ISO 9000 - Quality
management

ISO 14000 -
ISO 26000 - Social
Environmental
responsibility
management

ISO 27001 -
50001 - Energy
Information security
management
management

ISO 45001 -
ISO 22000 - Food Occupational health
safety management and safety
management
BASIC REQUIREMENT FOR ISO 9000
CERTIFICATION
Develop and
implement a
quality manual

Obtain third-party Define the scope of

certification the QMS

Identify and
Conduct internal
document
audits
procedures

Establish a process
for continuous
improvement