Production Control and Materials Requirement Planning

These, together with purchasing and raw materials handling, are generally grouped under the materials management function. Sometimes the objectives set by the management for these functions clash and cause a drop in the level of the customer service and/or a rise in physical distribution costs as a whole. Production is the focal point of all this activity, because production levels determine the needs for raw materials, parts, etc., and also the amount and types of finished products, which in turn influence the delivery times and modes for the distribution function.

Materials management is the ‘single manager’ organization concept embracing the planning, organizing, motivating and controlling of all activities and personnel principally concerned with the flow of materials in an organization. If the physical distribution concept is adopted by a business, it is usual to combine all activities concerned with raw materials under a single manager, who is sometimes also responsible for production scheduling. These activities are similar to those concerned in physical distribution of finished products, the difference being in the materials handled and their recipients.

 Just-in-Time (JIT) Logistics Systems

This is a logistics system by which materials arrive at the point of use just in time, thus saving on inventories “and warehousing. Their implementation affects the purchasing, transport, warehousing, production, quality control and data processing functions, and requires an amount of discipline which many businesses find difficult to create and sustain.

In order to be successful, it has to be operated by all channel members in a given channel. It calls for all materials to be part of the work-in-progress, without pausing to collect storing expenses. Each part of the manufacturing process has to get the right elements in the correct amounts just in time. JIT is found to work best in repetitive manufacturing situations where the suppliers are close by, the forecasts are accurate and there exist significant levels of inventory to start with. Significant cost reductions can be made if JIT is successfully applied.

Planning a Logistics Strategy

Strategy for the logistics process requires the evaluation of possible physical distribution systems which meet the customer service standards required at the lowest possible cost A system thus properly planned will increase the “response of the various elements in the process, the sensitivity to the distribution environment, knowledge of the possibilities of cost reduction and service optimization in the function, and the awareness of the effect of corporate strategy on the process.

The planning begins with deciding on the customer service strategies and goals, and goes on to the functions and investment involved in physical distribution, to decide on systems and procedures for the functions and then developing these strategies in human resource terms and implementing them. After this process is complete, the criteria for the selection of channel members have to be established. The performance of the strategy has to be monitored periodically and action for improvement taken if needed.

The logistics strategy needs to be updated whenever there is an appreciable change in one or more of the following

  • Demand
  • Customer service levels.
  • Products
  • Distribution costs
  • Pricing policy

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