Function of Material Management
The primary functions of material management are required to meet the primary objectives
Material Requirement Planning (MRP): Material Requirements Planning (MRP) is a computer-based production planning and inventory Control system. MRP is concerned with both production scheduling and inventory control. It is a material control system that attempts to keep adequate inventory levels to assure that required Materials are available when needed. MRP is applicable in situations of multiple items with complex bills of materials. MRP is not useful for job shops or for continuous processes that are tightly linked.
The major objectives of an MRP system are to simultaneously:
- Ensure the availability of materials, components, and products for planned production and for Customer delivery,
- Maintain the lowest possible level of inventory,
- Plan manufacturing activities, delivery schedules, and purchasing activities.
MRP is especially suited to manufacturing settings where the demand of many of the components and subassemblies depend on the demands of items that face external demands. Demands for end items are independent. In contrast, demand for components used to manufacture end items depend on the demands for the end items. The distinctions between independent and dependent demands are important in classifying inventory items and in developing systems to manage items within each demand classiﬁcation. MRP systems were developed to cope better with dependent demand items. The three major inputs of an MRP system are the master production schedule, the product structure records, and the inventory status records. Without these basic inputs the MRP system cannot function.
Inventory Arrangement and Control: In the cosmopolitan world of today, the inventory arrangement would mean the purchase of materials to be stored before entering the production stage or sold out, such that the stock cost is zero. There are three kinds of inventories: a) raw material, b) purchased goods, and c) finished components. Their inventory control is the responsibility of the materials management department, production department and the sales department. It is always important to ensure that inventory at different levels is maintained, the raw materials are available at each level and that there is proper flow of materials from one production facility to another at all levels in a manufacturing firm.
Continual and effective flow and supply of materials: The required material by all production center and other departments should be ensured for its continuity in flow and supply by the material management department. Many a times, low or zero inventories lead to stock-outs and halts in production. Importer or lack of material handling tools can also lead to hurdles in material supplies. Alternately options or emergency supply systems can be deployed to ensure continuity in production lines. Fluctuations in both demand and productions capacity are the critical factors. To keep pace with changing demands and perceptions of consumer, the management needs to maintain continuity in productions and control the flow of materials supply and distributions at different productions facilities and other related departments in an organization.
Material Quality Control: The quality of the finished products manufactured will depend upon the quality of raw material used to manufacture those products. Therefore, the purchase of right quality of materials is indeed very important. The quality of materials can be measured through proper inspection, specification, quality control, simplification and standardization. The components and parts can be assured for reliability by their size and dimensions within tolerance limits.
System Efficiency: This function ascertains the efficiency of the system being used. If the system used for materials management in inept of faulty, the above objectives cannot be met, irrespective of the procedure adopted. For things to be maintained in an effective manner as planned for managing materials, an effective control ought to be there for every single process in the department. The Management Information Systems (MIS) and a feedback control mechanism should be adopted at every stage to organise the management and employees’ performance and achieve best results.
The secondary objectives can only be fulfilled through the following key secondary functions of the materials management:
Standardization and Generalization: The design and the technical department of an organization, which comes after the production department process, determine the standards and specifications of different types of materials. The term ‘standard’ encompass the alterations in sizes and variety, the quality and the exchangeability of components and products. Standard and generalization (or simplification) ensures proper utilization of materials and diminishes wastage. Standard materials can also be availed at economic costs. It also aids the purchasing department in selecting the materials and the vendors from whom they need to be purchased. If there is lesser variety of materials to be bought and stored, it saves on both the kinds of investors as well as the costs of transporting those inventories to the stores. Manufacturing a standard product ensures overall cost of production.
Product Design and Development: The product sales can be boosted with its range and functionality. With the help of the advanced technology such as computer such as Computer Aided Design (CAD), the product can be designed different with a variety of options and yet a fast pace. Another technology development in manufacturing is the computer Aided Manufacturing (CAM) that can bring both a variety as well as flexibility to a product. The materials management department shall then perform as per the use of the ranges of material and produce variety of components and hence, ensure the delivery of such material.
Manufacturing and Purchase Decisions: The manufacturing and purchase decisions are a part of the management’s policy decisions. The organization’s capacity and other facilities developed to produce a range of items should be the prime objective and is the most important planning activity of every organization. However, when an organization grows rapidly, its sales also increases at the same pace and this is when it comes critically important to take a decision on whether the organization must buy the parts or expand its facilities to keep pace with the rising demand and sales. This is also a key decision for the materials management department and aides in the selection of vendors such that the items can be purchased at reduced prices. The manufacturing and buying decisions can be largely influenced by material assessment, its availability, procurement, alternate material selection and inventory control functions, and are taken on the basis of the cost economics and cost-benefit analysis developed by the organization by use of existing and future production capacity of skills, labour and available machines in the factory.
Material Coding and Classification: One of the important functions of materials management, the material coding and classification provides support to the production and purchasing department of an organization. The materials are classified through a simple yet standard method, such as ABC Analysis, to manufacture the product or sell various goods. This method is used by many organizations for the purposes of classifying and storing materials, which are identified by their codes and nomenclatures. The coding methods should be used by every firm to keep a check on the range of materials, their quantities and costs.
Estimation and Planning: The MRP can be implemented through accurate estimates of sales and demand for products in the industry. Market fluctuations should be given due consideration to make any production control. The materials management department can make use of one of the methods of forecasting that gives productive results to the organization. Predicting the future demand of sales helps in the planning of materials supply.