Materials Management
Materials management is a function, which aims for integrated approach towards the
management of materials in an industrial undertaking.
Its main objective is cost reduction and efficient handling of materials at all stages and in
all sections of the undertaking.
Its function includes several important aspects connected with material, such as,
purchasing, storage, inventory control, material handling, standardisation etc.
Materials management is defined as “the function responsible for the coordination of
planning, sourcing, purchasing, moving, storing and controlling materials in an optimum
manner so as to provide a pre-decided service to the customer at a minimum cost”.
Material managers determine the amount of material required and held in stock, plan for
the replenishment of these stocks, create inventory levels for each type of item (raw
material, work in progress or finished goods), and communicate information and
requirements to procurement operations and the extended supply chain.
Materials management also involves assessing material quality to make sure it meets
customer demands in line with a production schedule and at the lowest cost.
Material management systems embrace all of the activities related to materials and are a
basic business function that adds value to a finished product.
It can also include the procurement of machinery and other equipment needed for
production processes as well as spare parts.
Types of Materials
Purchased Materials: The raw materials used production process, spare parts and
components that usually do not appear in the end product.
Work in progress: Materials in the semi-finished state.
Finished goods: Final products ready for delivery and distribution.
Supplies: These are consumable goods.
Objectives of Materials Management
The objectives of material management are sometimes referred to as the ‘Five Rs of
Materials Management’:
1. The right material
2. At the right time
3. In the right amount
And of the quality that is:
1. At the right price
2. From the right sources
Scope or Functions of Materials Management
Material Planning and control
Purchasing
Stores Management
Inventory Control or Management
Expediting
Transportation
Standardisation
Simplification
Value Analysis
Ergonomics
Just-in-Time (JIT)
Materials planning and control: Based on the sales forecast and production plans, the
materials planning and control is done.
• 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: This includes selection of sources of supply finalization in terms of
purchase, placement of purchase orders, follow-up, maintenance of smooth relations with
suppliers, approval of payments to suppliers, evaluating and rating suppliers.
Stores management: This involves physical control of materials, preservation of stores,
minimization of obsolescence and damage through timely disposal and efficient handling,
maintenance of stores records, proper location and stocking.
• A store is also responsible for the physical verification of stocks and reconciling them
with book figures. A store plays a vital role in the operations of a company.
Inventory control or management: Inventory generally refers to the materials in stock.
• It is also called the idle resource of an enterprise.
• Inventories represent those items, which are either stocked for sale or they are in the
process of manufacturing or they are in the form of materials, which are yet to be utilized.
• The interval between receiving the purchased parts and transforming them into final
products varies from industries to industries depending upon the cycle time of
manufacture.
• It is, therefore, necessary to hold inventories of various kinds to act as a buffer between
supply and demand for efficient operation of the system.
• Thus, an effective control on inventory is a must for smooth and efficient running of the
production cycle with least interruptions.
Expediting: Continuous monitoring as well as ascertaining and maintaining the flow and
supply of materials to prevent stock outs and stoppage of production.
Factors affecting expediting,
• Insufficient or zero inventories
• Failure of material handling devices
• Uncertainty in demand and production activity
Transportation: It involves using the safest and most economical means to transport the
materials to the site where they are needed.
Modes of transport of materials are,
• Aviation
• Land transport
• Ship transport
• Pipelines
• Inter-modal transport
• Multi-modal transport
Other related activities
(a) 3S
1. Standardization: Standardization means producing maximum variety of products from
the minimum variety of materials, parts, tools and processes. It is the process of
establishing standards or units of measure by which extent, quality, quantity, value,
performance etc. may be compared and measured.
2. Simplification: The concept of simplification is closely related to standardization.
Simplification is the process of reducing the variety of products manufactured.
Simplification is concerned with the reduction of product range, assemblies, parts,
materials and design.
3. Specifications: It refers to a precise statement that formulizes the requirements of the
customer. It may relate to a product, process or a service.
(b) Value analysis: Value analysis is concerned with the costs added due to inefficient or
unnecessary specifications and features. It makes its contribution in the last stage of
product cycle, namely, the maturity stage. At this stage research and development no
longer make positive contributions in terms of improving the efficiency of the functions
of the product or adding new functions to it.
(c) Ergonomics (Human Engineering): The human factors or human engineering is
concerned with man-machine system. Ergonomics is “the design of human tasks, man-
machine system, and effective accomplishment of the job, including displays for
presenting information to human sensors, controls for human operations and complex
man-machine systems.”
Just-In-Time (JIT) Manufacturing: It is a philosophy rather than a technique. By
eliminating all waste and seeking continuous improvement, it aims at creating
manufacturing system that is response to the market needs.
• The phase just in time is used to because this system operates with low WIP (Work-In
Process) inventory and often with very low finished goods inventory.
• Products are assembled just before they are sold, subassemblies are made just before they
are assembled and components are made and fabricated just before subassemblies are
made.
• This leads to lower WIP and reduced lead times.
• To achieve this organizations have to be excellent in other areas e.g. quality.
• JIT is viewed as a “Production methodology which aims to improve overall productivity
through elimination of waste and which leads to improved quality”.
• JIT provides an efficient production in an organization and delivery of only the necessary
parts in the right quantity, at the right time and place while using the minimum facilities”.
