Compiled Attendance BBA III SEC

Material management
Material management is an approach for planning, organizing, and controlling

all those activities that are concerned with the flow of materials into an
organization.
Materials management can deal with campus planning and building design for the
movement of materials, or with logistics that deal with the tangible components of
a supply chain. Specifically, this covers the acquisition of spare parts and
replacements, quality control of purchasing and ordering such parts, and the standards
involved in ordering, shipping, and warehousing the said parts. Materials management
is the function responsible for the coordination of planning, sourcing, purchasing,
moving, storing and controlling materials in an optimum manner in order to provide a
pre decided service to the customer at a minimum cost.
The scope of Materials Management varies greatly from

company to company and may include material planning
and control, production planning, Purchasing, inventory
control, in-plant materials movement, and waste
management.
It is a business function for planning, purchasing, moving,

storing material in a optimum way which help organisation
to minimise the various costs like inventory, purchasing,
material handling and distribution costs.
The fundamental objectives of the Materials Management function ,often

called the famous 5 Rs of Materials Management, are acquisition of
materials and services :
 of the right quality

 in the right quantity
 at the right time
 from the right source
 at the right price
Functions of Materials Management

functions of materials management can be categorized in two ways as follows:
(I) Primary
(II) (II) Secondary
They are discussed below:
(I ) Primary Which can be classified as:
1. Efficient materials planning
2. Buying or Purchasing
3. Procuring and receiving
4. Storing and inventory control
5. Supply and distribution of materials
6. Quality assurance 4 / Materials and Financial Management
7. Good supplier and customer relationship
8. Improved departmental efficiency
Secondary objectives There can be several secondary objectives of materials

management. Some of them are given below
(i) Efficient production scheduling
(ii) (ii) To take make or buy decisions
(iii) (iii) Prepare specifications and standization of materials
(iv) (iv) To assist in product design and development
(v) (v) Forecasting demand and quantity of materials requirements (vi)
Quality control of materials purchased
(vi) (vii) Material handling
(vii) (viii) Use of value analysis and value engineering
(viii) (ix) Developing skills of workers in materials management
(ix) (x) Smooth flow of materials in and out of the organization To fulfill all
these objectives, it is necessary to establish harmony and good co-
ordination between all the employees of material management
department and this department should have good
From the management point of view , the key objectives of MM are :
 To buy at the lowest price , consistent with desired quality and service
 To maintain a high inventory turnover , by reducing excess storage , carrying

costs and inventory losses occurring due to deteriorations , obsolescence and
pilferage
 To maintain continuity of supply , preventing interruption of the flow of materials

and services to users
 To maintain the specified material quality level and a consistency of quality which
permits efficient and effective operation
 To develop reliable alternate sources of supply to promote a competitive

atmosphere in performance and pricing
 To minimize the overall cost of acquisition by improving the efficiency of
operations and procedures
 To hire, develop, motivate and train personnel and to provide a reservoir of talent
 To develop and maintain good supplier relationships in order to create a supplier

attitude and desire furnish the organisation with new ideas , products, and better
prices and service
 To achieve a high degree of cooperation and coordination with user departments
 To maintain good records and controls that provide an audit trail and ensure
efficiency and honesty
 To participate in Make or Buy decisions
Materials Management thus can be defined as that function of business that is

responsible for the coordination of planning, sourcing, purchasing, moving, storing and
controlling materials in an optimum manner so as to provide service to the customer, at
a pre-decided level at a minimum cost.
The broad Materials function has the following as identified and interlinked sub
functions:
Materials planning and control:Materials required for any operation are based on
the sales forecasts and production plans.
Planning and control is done for the materials taking into account the materials not
available for the operation and those in hand or in pipe line.
This involves estimating the individual requirements of parts, preparing materials

budget, forecasting the levels of inventories, scheduling the orders and
monitoring the performance in relation to production and sales.
Purchasing: Basically, the job of a materials manager is to provide , to the user

departments right material at the right time in right quantity of right quality at right price
from the right source.
To meet these objectives the activities undertaken include selection of sources of

supply, finalisation of terms of purchase, placement of purchase orders, follow up,
maintenance of relations with vendors, approval of payments to vendors, evaluating,
rating and developing vendors.
Stores : Once the material is delivered , its physical control , preservation , minimisation
of obsolescence and damage through timely disposal and efficient handling,
maintenance of records, proper locations and stocking is done in Stores.
Inventory control : One of the powerful ways of controlling the materials is through
Inventory control.
It covers aspects such as setting inventory levels, doing various analyses such as ABC ,
XYZ etc ,fixing economic order quantities (EOQ), setting safety stock levels, lead time
analysis and reporting.
Materials Management's scope:
The scope is vast. Its sub functions include Materials planning and control,
Purchasing, Stores and Inventory Management besides others.
Basically, under its scope are :
 emphasis on the acquisition aspect

 inventory control and stores management
 material logistics, movement control and handling aspect
 purchasing, supply , transportation , materials handling etc
 supply management or logistics management
 all the interrelated activities concerned with materials
Materials management can thus also be defined as a joint action of various materials
activities directed towards a common goal and that is to achieve an integrated
management approach to planning, acquiring, processing and distributing production
materials from the raw material state to the finished product state.
In its process of managing , materials management has such sub fields as inventory
management , value analysis, receiving, stores and management of obsolete , slow
moving and non moving items. The various activities represent these four functions:
 Planning and control

 Purchasing
 Value analysis and
 Physical distribution

Compiled Attendance BBA III SEC

Uploaded by

Copyright:

Available Formats

Compiled Attendance BBA III SEC

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Compiled Attendance BBA III SEC

Uploaded by

Copyright:

Available Formats

Material management

Material management is an approach for planning, organizing, and controlling

The scope of Materials Management varies greatly from

It is a business function for planning, purchasing, moving,

The fundamental objectives of the Materials Management function ,often

 of the right quality

Functions of Materials Management

Secondary objectives There can be several secondary objectives of materials

 To maintain a high inventory turnover , by reducing excess storage , carrying

 To maintain continuity of supply , preventing interruption of the flow of materials

 To develop reliable alternate sources of supply to promote a competitive

 To develop and maintain good supplier relationships in order to create a supplier

 To achieve a high degree of cooperation and coordination with user departments

 To participate in Make or Buy decisions

Materials Management thus can be defined as that function of business that is

This involves estimating the individual requirements of parts, preparing materials

Purchasing: Basically, the job of a materials manager is to provide , to the user

To meet these objectives the activities undertaken include selection of sources of

Materials Management's scope:

Basically, under its scope are :

 emphasis on the acquisition aspect

 Planning and control

You might also like