In fact, as we have said before, with the market pressure intensifying, manufacturing organisations are forced to cut down costs and here the materials manager steps in to play his role. This study considered the procurement practices and factors affecting material management with respect to time, cost and quality. Inappropriate material storage contributes to waste generation. Materials have all along been considered important in a manufacturing organization but their management has assumed an added importance because of ever increasing importance of materials control in the present day competitive market. Such being the vast area covered by materials management, its importance does not need much elucidation. In financial accounting, the subject is usually posed as a problem of inventory valuation; in cost accounting, the primary problem is the determination of the cost of various materials used in manufacturing and a proper charge to the cost of goods sold. Lot and Serial Tracking is used to control and monitor from receipt to shipment the allotment of lot or serial numbers for items part and finished goods. The discussion of material management deals with-, 1. All Rights Reserved. Many U.S. firms to-day consider procurement in their materials management concept and integrate it in their day to day operation. It is the process of planning, organizing, staffing, directing and controlling the flow of materials from their initial purchase to destination. Cost is a very important factor and perhaps the most important factor for materials management. For example, in the purchasing process, discounts and bulk order may be economical as it reduced the transportation and ordering cost, thus, by minimizing the procurement cost of materials, the higher chances for reducing the overall project cost and concurrently increasing company profit. Concept of Materials Management 3. The success of their business depends on the safe and efficient transport of their product from one area of the warehouse to another. Materials have to be preserved; obsolescence and damage through timely disposal of material have to be minimized. Therefore, the availability of sufficient quantity of materials affects the projects time. Materials management is concerned with planning, directing and controlling the kind, amount, location, movement and timing of various … To serve the customer as pre-determined at the least possible cost integrated materials management concept has emerged. Read this article to learn about Material Management. It comes within the scope of materials management to ensure that there is a smooth flow of goods from the producer to the ultimate consumers. Thus the concept of materials management has been put to challenges of the complexities of the modern techniques of production. The concept of materials management does not remain static but proceeds still further. The widening of the materials management area has taken effect with the emergence of integrated materials management. Materials constituting a major portion of the total cost now demand special treatment and close supervision by a vigilant management. It also covers various other aspects of materials such as setting inventory levels, ABC analysis, deterring EOQ, setting safely stock levels, lead time analysis and reporting. The relationship is represented below: ROI = Profit/ Sales × Sales/Fixed Assets + Current Assets. Materials Requirement planning empowers the company’s logistical processes. All information about a specific lot / serial number can be accessed instantly. The main objectives of materials management are to reduce 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, 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. Is Democratic Leadership Effective in All Situations? The planning of materials involves estimating parts requirements, preparation of materials budget, inventory level forecasting, order scheduling and finally monitoring the performance with a view to achieving the targeted sales and production. Required fields are marked *. The Importance of Material Handling in any Industry. To sum up, materials management means the activities relating to laterals control. Hence, the efficient material management practice throughout entire process will minimize the waste generation. Nov. Materials management is a vast area of activities — right from the planning of materials, their procurement in right quantity and quality, their proper dispatch on proper time, and their disposal if found obsolete or in excess. The materials management of an organization is obviously p concerned with materials needed for production but to say this only is, to simplify the functions of materials management. Responsible estimates indicate that approximately 70 per cent of the major U.S. manufacturing firms currently utilize some operating forms of the materials management concept. 5 ways to create omnichannel customer engagement. The following are the important secondary objectives of materials management.