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Definition & Scope...........
Materials Management 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.
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The broad Materials function has the following as identified
and
interlinked sub functions: |
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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. |
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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 |
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,fixing economic order
quantities (EOQ), setting
safety stock levels, lead time analysis and reporting.
Materials Management's scope is vast. Its sub
functions include Materials planning
and control, Purchasing,
Stores and Inventory Management besides others.
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:
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Planning
and control
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Purchasing
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Value
analysis and
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Physical
distribution
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