The need for materials management was first felt in manufacturing undertakings. The servicing organizations also started feeling the need for this control. And now even non-trading organizations like hospitals, universities etc. have realized the importance of materials management. Every organization uses a number of materials. It is necessary that these materials are properly purchased, stored and used.
Any avoidable amount spent on materials or any loss due to wastage of materials increases the cost of production. The object of materials management is to attack materials cost on all fronts and to optimize the overall end results. Materials management connotes controlling the kind, amount , location and turning of the various commodities used in and produced by the industrial enterprises. It is the control of materials in such a manner that it ensures maximum return on working capital.
De Rose : “Material management is the planning, directing, controlling and co-ordination of all those activities concerned with material and inventory requirements, from the point of their inception to their introduction into manufacturing process.”
As per De Rose all those functions which start with the procurement of materials and end with completion of manufacturing are a part of material management.N.K. Nair: “Material management is the integrated functioning of the various sections of an organization dealing with the supply of materials and allied activities in order to achieve maximum co-ordination.”
N.K. Nair has emphasized the co-ordination of all those activities which are related to the efficient use of materials.
Importance of Material Management:
Material management is a service function. It is as important as manufacturing, engineering and finance. The supply of proper quality of materials is essential for manufacturing standard products. The avoidance of material wastage helps in controlling cost of production. Material management is essential for every type of concern.
The importance of material management may be summarized as follows:
- The material cost content of total cost is kept at a reasonable level. Scientific purchasing helps in acquiring materials at reasonable prices. Proper storing of materials also helps in reducing their wastages. These factors help in controlling cost content of products.
- The cost of indirect materials is kept under check. Sometimes cost of indirect materials also increases total cost of production because there is no proper control over such materials.
- The equipment is properly utilized because there are no break downs due to late supply of materials.
- The loss of direct labour is avoided.
- The wastages of materials at the stage of storage as well as their movement is kept under control.
- The supply of materials is prompt and late delivery instances are only few.
- The investments on materials are kept under control as under and over stocking is avoided.
- Congestion in the stores and at different stages of manufacturing is avoided.
Functions of Material Management:
Material management covers all aspects of material costs, supply and utilization. The functional areas involved in material management usually include purchasing, production control, shipping, receiving and stores.
The following functions are assigned for material management:
- Production and Material Control
Production manager prepares schedules of production to be carried in future. The requirements of parts and materials are determined as per production schedules. Production schedules are prepared on the basis of orders received or anticipated demand for goods. It is ensured that every type or part of material is made available so that production is carried on smoothly.
Purchasing department is authorized to make buying arrangements on the basis of requisitions issued by other departments. This department keeps contracts with suppliers and collects quotations etc. at regular intervals. The effort by this department is to purchase proper quality goods at reasonable prices. Purchasing is a managerial activity that goes beyond the simple act of buying and includes the planning and policy activities covering a wide range of related and complementary activities.
- Non-Production Stores
Non-production materials like office supplies, perishable tools and maintenance, repair and operating supplies are maintained as per the needs of the business. These stores may not be required daily but their availability in stores is essential. The non-availability of such stores may lead to stoppage of work.
The transporting of materials from suppliers is an important function of materials management. The traffic department is responsible for arranging transportation service. The vehicles may be purchased for the business or these may be chartered from outside. It all depends upon the quantity and frequency of buying materials. The purpose is to arrange cheap and quick transport facilities for incoming materials.
- Materials Handling
It is concerned with the movement of materials within a manufacturing establishment and the cost of handling materials is kept under control. It is also seen that there are no wastages or losses of materials during their movement. Special equipment’s may be acquired for material handling.
The receiving department is responsible for the unloading of materials, counting the units, determining their quality and sending them to stores etc. The purchasing department is also informed about the receipt of various materials.