IntroductionMaterials management
The wealth of a country measured by its national
products the out put of goods and service produced by the nation .. Goods are physical objects we can tough, feel or see.( Tangible). Service are the performance of some useful function such as Banking, medical care,( intangible)
business of converting raw materials to form that is of far more value and use to the consumers than the original raw materials. Exp- Logs are converted into Table .chair iron ore into steel in to cars ,refrigerator. This conversion process called Manufacturing or production
Definition
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.
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
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 stabilize fluctuations in consumption To provide reasonable level of client services
Secondary
Forecasting Inter-departmental harmony Product improvement Standardization Make or buy decision New materials & products Favorable reciprocal relationships
2. 3. 4. 5. 6. 7.
Sound purchasing methods Skillful & hard poised negotiations Effective purchase system Should be simple Must not increase other costs Simple inventory control programme
Operating environment
Operations management works in a complex
environment affected by many function Among the most important are Government regulation, Economy. Competition Customers Quality
Govt. is Extensive .regulation applied to such areas as the environment, safety, product liability, and taxation.Govt.or the lack of it ,affects the way business is conducted EconomyEconomic condition influence the demand for a companys product or service. Competition competitive product. Customer.-demanding A fair price, Right ( quality) Higher product & service. Delivery lead time . Better per-sale and after sale service product and volume flexibility QualityProvide better quality
Materials management
Evaluation
Materials management covers all aspects of materials and their supply necessary for converting raw materials into finished products. Evaluation done throughPlanning and programming of materials
Management functions that supports the entire materials flow cycle from ,materials planning, purchasing, inventory control, stores, warehousing and dispatch Materials management is also defined as the concept which brings together under one manager the responsibility for determining the manufacturing requirements, scheduling the manufacturing process, and procuring ,storing ,and dispersing materials
coordinating function responsible for planning and controlling materials flow. OR Controlling the kind ,amount, location, movement and timing of various commodities used in and produced by the Industrial Enterprise
.
Scope
1- Corporate policy. 2-materials planning & budgeting. 3Materials research. 4-Source selection and development, 5-Purchasing research. 6-Inventory control. 7-Value engineering/analysis. 8-Import Purchasing 9- legal aspects in purchasing& stores Management. 10-Materials handling 11- Logistics management
Cost involved
Various cost involved in Materials management. 1- Basic cost of Materials. 2-Govt.levis & taxes. 3- Ordering Cost.4- Inventory carrying Cost. 5-Pacaging and Packing cost. 6-Materials handling cost. 7-Freight cost. 8-Insurance cost. 9-Wastage during receipt, storage, production cost.
Improve R.O.R. * A-Increase Profit keeping Capital constant. B- Reduced capital keeping profit constant
R.O.R. PProfit P/C C-Capital. S-sales S/C
p/s
profit margin
A-Increase profit keeping capital Constant. B- Reduce capital keeping profit constant
A- Increasing profit keeping capital constant. 1Increase units sold (s). 2increase units produced (N). 3 Increase unit price (P). 4Reduced unit cost. (c) B-Reducing Capital Fixed capital. Land,building,plant & m/c Working capital.-materials ,(inventory)
follow well co-ordinated and integrated approach towards various areas which involves decision making with respect to materials Exp..- Reduce the inventory cost. by
Reducing lead time minimize uncertainties. Cut down varieties. Reduction programming.
8-Transpotaions. 9- Disposal of surplus ,obsolete and scrap materials 10- Developing new sources of supply. 11- Import substitute. 12-Ancillarisation. 13-Insurance management. 14-Materials cost reduction and cost control. 15- Waste management. 16- Materials research.
interest are taken.) 4)- better co ordination. 5)- Maintain good relations to other department. 6)-easy to collect date for analyses. 7)-Improves the opportunities for Growth.
Logistics Management
Concept of logistics
Logistics is concerned with getting product and service
where they are needed when desired. ConceptBusiness logistics' is the planning ,organizing and controlling all activities that facilitate product flow from the point of raw materials acquisition to the point of final product. and the necessary information flow ,for the purpose of providing a sufficient level of customer service in a cost effective manner.
Logistics Management-.
Council of Logistics management defines it as the process of
planning, implementing and controlling, a flow & storage of Goods ,Service,& related information in the most efficient way, from the point of origin to the point consumption. OR Logistics Management encompasses all materials flows management from inflow of purchased materials in to works materials flow through manufacturing processes and materials flow to customer. --- as per the customers requirement at the lowest possible cost.
Significance
Raw materials . Initial processing. Production - Finished Retailers. Customers Parts and Sub assembling. Centre Goods Components
Supplier
Inbound logistics
Production
outbound logistics
Customer
Materials Management
Physical distribution
Logistics Management
In plant logistics
Customers need
What he wants. When he wants Where he wants Why he wants How he wants
Organizations need
How much money (returns) organization
wants?--(profitability). How long organisation wanted to remain in business & make money. Long term profitability.
Objectives
Basic objectives logistics management is to get the right goods
or services to the right place, right time in right condition and right cost. 1- high level of service 2- minimize operating cost. 3-reduce delivery time. (stages) 4- add values at every stage. 5-reduced inventory. 6-improve competitive position. 7- Improve communications. 8-Pramote co-operation and co-ordination among sub system.
Order processing Transportation. Inventory Management. Warehousing. Materials handling. Packaging. Product scheduling. Information system.
- Provide wide mix products (Colour, Size, Styles.) Make available when required.
utility.
-
Form Utility. (right product.) Possession Utility.( Right communicating & right price) Time utility. (when it is required.)
control.
Operational Elements.
Materials handling-is concerned with movement of product at the stocking point and it involves such decision
. Packing and packaging.-is concerned with design of packing of the product that ensures damage free movement of the product.
Inventories
inventories required to be maintained to take care of needs between the time of demand and time of supply.
Logistics interfaces.
Required to make connectivity to all concerned.
Order processing.
Through this activity does not contribute much to total cost, but it contribute to reduce lead time
process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-oforigin to point-of-consumption
encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thirdparty service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.
Supply-Chain Management
Planning, organizing, directing, & controlling
flows of materials
Begins with raw materials Continues through internal operations Ends with distribution of finished goods Example: Your suppliers supplier
The Supply-Chain
VISA
Material Flow
Credit Flow
Supplier
Manufacturing
Retailer
Consumer
Retailer
8% 9%
COGS Payroll
83%
Other
Other
Retail
13% 16%
COGS Payroll
Source: U.S. Department of Commerce, Bureau of Census, 1987 Census of Manufacturers: General Summary of Retail Trade (Washington, D.C.: Government Printing Office, 1991)
71%
Other
that are linked by the movement of products along it. The supply chain starts and ends with the customer Customer: The customer starts the chain of events when they
decide to purchase a product that has been offered for sale by a company. The customer contacts the sales department of the company, which enters the sales order for a specific quantity to be delivered on a specific date. If the product has to be manufactured, the sales order will include a requirement that needs to be fulfilled by the production facility.
high level strategic decisions concerning the whole organization, such as the size and location of manufacturing sites, partnerships with suppliers, products to be manufactured and sales markets. Tactical: Tactical decisions focus on adopting measures that will produce cost benefits such as using industry best practices, developing a purchasing strategy with favored suppliers, working with logistics companies to develop cost effect transportation and developing warehouse strategies to reduce the cost of storing inventory. Operational: Decisions at this level are made each day in businesses that affect how the products move along the supply chain. Operational decisions involve making schedule changes to production, purchasing agreements with suppliers, taking orders from customers and moving products in the warehouse.