Material Management is a branch of logistics that deals with the tangible components of supply chain. Specifically this covers the acquisition of spare parts & replacements quality control of purchasing & ordering such parts & standards involved in ordering, shipping & warehousing. The material management is ideal for the industries who are seeking foolproof tracking of the flow & management of material information in their enterprises from purchase, inventory management to aspects of production & sales. It can also be a stepping stone for the future ERP solutions. In other words we can say that material management is acting as bone of the organization On the basis of it we can measure the health of an organization now day’s industries related to Manufacturing, production & other verticals can use this tool to run their organization in a profitable way & to enhance their profit. Material management can help the student to understand the importance of MM. This course is a very useful collection of all the relevant information related to MM which will be helpful for the student to understand this aspect in a better wayAfter completion of the course shall develop the following skills & competencies: A:-Basics of Marketing management B:-Appropriate idea about the uses of MM in an organization C: Concept of MM D:-Future of MM in organization development
Material Management
Every organization, big or small, depends on materials and services from other organizations to Varying extents. These materials and services are obtained through exchange of money. The various materials used as inputs, such as raw materials, consumables & spares, are required to be purchased & made available to the shops / users as & when needed to ensure uninterrupted production. Therefore, efficient management of input materials is of paramount importance in a business organization for maximizing materials productivity, which ultimately adds to the profitability of the organization. The main concern of any Business management is to maximize the Return on Investment (ROI). The relationship of various entities here can be expressed as:
Thus ROI = profit margin + asset turnover rate
A firm’s profit margin reflects management’s ability to control costs in relations to revenue. The asset turnover rate reflects management’s ability to effectively utilize the firm’s productive assets. Hence a firm can improve ROI in three ways:-
- By reducing cost
- By getting more sales from available assets or Get Currency converter
- By some combination of the above Thus, it is the cost control that holds the key.
In many manufacturing organizations, the cost of materials alone happens to range from 40 % to 60 % of the total expenditure. Obviously, a better management of material is expected to ensure reduction in overall cost of operation and smoothness in supply of inputs.
This requires well coordinated approach towards various issues involving decision making with respect to materials.
All the materials related activities such as material planning & indenting, procedure, variety reduction through standardization & rationalization, reducing uncertainties in demand & supply, handling & transportation, inspection, proper storage & issue of materials to the internal customers, inventory management, vendor management & finally disposal of obsolete, surplus & scrap materials etc. taken together is termed as “INTEGRATED MATERIAL MANAGEMENT”.
To carry out these functions efficiently, it is essential to have a very good supplier base, order booking process & inventory management system as well as expert MATERIALS MANAGEMENT (MM) Professional
Materials management is just managing all types of materials in an organization. It can be broken down into three areas: acquisition, quality control, and standards.
Quality Assurance
Materials management also ensures that parts and materials used in the supply chain meet minimum requirements by performing Quality Assurance (QA). While most of the writing and discussion about materials management is on acquisition and standards, much of the day to day work conducted in materials management deals with QA issues. Parts and material are tested, both before purchase orders are placed and during use, to ensure there are no short or long term issues that would disrupt the supply chain. Material management is most important for industrial point of view Quality assurance, or QA for short, refers to planned and systematic production processes that provide confidence in a product’s suitability for its intended purpose. It is a set of activities intended to ensure that products (goods and/or services) satisfy customer requirements in a systematic, reliable fashion. QA cannot absolutely guarantee the production of quality products, unfortunately, but makes this more likely.
Two key principles characterize QA: “fit for purpose” (the product should be suitable for the intended purpose) and “right first time” (mistakes should be eliminated). QA includes regulation of the quality 8 of raw materials, assemblies, products and components; services related to production; and management, production and inspection processes.
It is important to realize also that quality is determined by the intended users, clients or customers, not by society in general: it is not the same as ‘expensive’ or ‘high quality’. Even lowly bottom-of-the- range goods can be considered quality items if they meet a market need.
Standards
The final component of materials management is standards compliance. There are standards that are followed in supply chain management that are critical to a supply chain’s function. For example, a supply chain that uses Just In Time or lean replenishment requires absolute perfection in the shipping of parts and material from purchasing agent to warehouse to place of destination. Systems reliant on vendor-managed inventories must have up-to-date computerized inventories and robust ordering systems for outlying vendors to place orders on. Materials management typically insures that the warehousing and shipping of such components as are needed follows the standards required to avoid problems. This component of materials management is the fastest changing part, due to recent innovations in SCM and in logistics in general, including outsourced management of warehousing, Mobile computing and real-time logistical inventories
Materials management, thus, can 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.
Materials Management as such is a key business function that is responsible for co-ordination 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.
Materials Management’s scope is vast. Its sub functions include Materials planning and control, Purchasing, Stores and Inventory Management besides others.
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 The various activities represent these four functions:-
- Planning and control
- Purchasing
- Value analysis and
- Physical distribution
