2. Definition
It is concerned with planning, organizing and
controlling the flow of materials from their initial
purchase through internal operations to the service
point through distribution.
OR
Material management is a scientific technique,
concerned with Planning, Organizing &Control of flow
of materials, from their initial purchase to destination.
3. AIM OF MATERIAL MANAGEMENT
To get
1. The Right quality
2. Right quantity of supplies
3. At the Right time
4. At the Right place
5. For the Right cost
4. PURPOSE OF MATERIAL MANAGEMENT
To gain economy in purchasing
To satisfy the
demand during period of
replenishment
To carry reserve stock to avoid stock out
To provide
services
reasonable level of client
6. PRIMARY OBJECTIVES
Buying the best item at the lowest cost
Reduction in inventory cost and High inventory
turnover
Maintaining the flow of production
Maintaining the consistency of quality
Optimisation of acquisition and possession,
resulting in lower cost
Cordial relationship with suppliers
Maintaining good records
Contribution towards competitiveness
7. Promotion of standardisation with suppliers
Committees to decide on economic make –
or- buy decisions
Development
of
inter
departmental
relationships
Can undertake acquisitions
8. Four basic needs of Material
management
1. To have adequate materials on hand when needed
2. To pay the lowest possible prices, consistent with
quality and value requirement for purchases
materials
3. To minimize the inventory investment
4. To operate efficiently
9.
Cost can be lowered
Controlling of indirect cost (such as materials
movement)
Risk of inventory loss minimised (theft, pilferage )
Control of manufacturing cycle
Material congestion in storage places avoided
Improvement in delivery of the product
10. PLANNING (Plans for capacity or production
levels and required inventory levels
MATERIAL UTILISATION (efficiency of the flow
of materials through the plant)
PHYSICAL (storing, receiving and issuing of
materials and physical checking of inventory of
raw materials, work in process, finished goods,
record keeping)
CONTROL OR FOLLOW UP (feedback and
corrective action involved)
11. Selection
of appropriate vendors
Land and storage cost increase
Difficulty in forecasting demand accurately
Scarce capital for investment in materials
inventory
Diversification of product lines
Optimising time and quantity for products
Management of information
12. Functional areas of material management
1. Purchasing
2. Central service supply
3. Central stores
4. The print shops
5. The pharmacy
6. Dietary
& Linen services
13.
14. (ABC = Always Better Control)
This is based on cost criteria.
It helps to exercise selective control when
confronted with large number of items it rationalizes
the number of orders, number of items & reduce the
inventory.
15. Small in number, but consume large amount
of resources
About 10 % of materials consume 70 % of resources
Must have:
Tight control
Rigid estimate of requirements
Strict & closer watch
Low safety stocks
Managed by top management
16. Intermediate.
About 20 % of materials consume 20 % of resources
Must have:
Moderate control
Purchase based on rigid requirements
Reasonably strict watch & control
Moderate safety stocks
Managed by middle level management
17. Larger in number, but consume lesser amount of
resources
About 70 % of materials consume 10 % of resources
Must have:
Ordinary control measures
Purchase based on usage estimates
High safety stocks
ABC analysis does not stress on items those are less
costly but may be vital
18. This approach helps the materials manager to exercise
selective control and focus his attention only on a few
items when he is confronted with lakhs of stores items.
By concerning on ‘A’ category the materials manager is
able to control inventories and show visible results in a
short span of time
By controlling the ‘A’ its and doing a proper inventory
analysis, obsolete stocks are automatically pinpointed.
Many organizations have claimed that the ABC analysis
has helped in reducing the clerical costs and resulted in
better planning and improved inventory turnover.
19. •
•
ABC analysis has to be resorted to because
equal attention to ‘A’ ‘B’ and ‘C’ items will not be
worth while and would be very expensive.
Concentrating on all the items is likely to have a
diffused effect on all the items irrespective of the
priorities.
20. It gets harder to do correctly the longer you do
them.
Needs to be completed in the moment for the most
accuracy.
Still might reflect the biases of the data collector.
