BBA BCH matrials management

MATERIALS MANAGEMENT
Materials management is that aspect of management function which is primarily concerned

with the acquisition, control and use of materials needed and flow of goods and services
connected with the production process having some predetermined objectives in view.
The main objectives of materials management are:
• To minimise material cost.
• To purchase, receive, transport and store materials efficiently and to reduce the related
cost.
• To cut down costs through simplification, standardisation, value analysis, import
substitution, etc.
• To trace new sources of supply and to develop cordial relations with them in order to
ensure continuous supply at reasonable rates.
• To reduce investment tied in the inventories for use in other productive purposes and
to develop high inventory turnover ratios.
INTRODUCTION AND MEANING
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.
SCOPE OR FUNCTIONS OF MATERIALS MANAGEMENT
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”.
From the definition it is clear that the scope of materials management is vast. The functions
of materials management can be categorized in the following ways:
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.
MATERIAL PLANNING AND CONTROL
Material planning is a scientific technique of determining in advance the requirements of
raw materials, ancillary parts and components, spares etc. as directed by the production
programme. It is a sub-system in the overall planning activity. There are many factors,
which influence the activity of material planning. These factors can be classified as macro
and micro systems.
Macro factors: Some of the micro factors which affect material planning, are price trends,
business cycles Govt. import policy etc.
Micro factors: Some of the micro factors that affect material planning are plant capacity
utilization, rejection rates, lead times, inventory levels, working capital, delegation of
powers and communication.

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MATERIALS MANAGEMENT

Materials management is that aspect of management function which is primarily concerned

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