DefinitionManagement of the flow of materials into an org.

To a
point, where, those materials are converted into the firms
end product(s).
Bailey and Farmer
The function responsible for the co-ordination of
planning, sourcing, purchasing, moving, storing &
controlling materials in an optimum manner so as to
provide a pre-determined service to the customer to a
minimum cost.
-Goplakrishnan & M. Sundaresan

 The amount of money spent on materials is higher

than other inputs put together.
Materials offer considerable scope for reducing
costs and improving profits.
Materials ad value to the product.
Quality of the finished goods depends on the
quality of the materials used to produce them.

 Materials encompasses areas such as purchasing,

storing, inventory control, material handling,
transportation & shipping, etc.
There is procurement and preservation of scarce
materials for future use.
Use of bio-degradable and less toxic materials.
Providing right materials in right quantity, at the
right time, at the right price from the right
source of supply.

 Materials are life blood of development of

humanity.
Since, there is maximum scope of cost reduction
in the area of materials, doing the job of
efficient and effective management of materials
is seen as the key to higher productivity.

Basic question faced by any industry is to MAKE /

BUY?
Estimates :
Manufacturing costs
Purchase costs
Technical skills
Availability of materials
Transportation costs, etc
e.g. : M/s Supreme co. Ltd. Makes T.V. Sets. Decisionbuy parts or make parts. Difference in purchase price and
manufacturing cost is the return on investment.

Facilities Procurement
Focus on facilities and equipment
arrangement
e.g. :
Expansion of company:
Selection of site
Design of company
Handling dealings with contractors
Dealings with process engineer

Calculating quantities for scheduling

Sales forecast is studied.
Availability of labour, materials, etc is checked.
Capacity of the house is analyzed.
Storage capacity is analyzed.
Schedules keep on changing with respect to demand
for end products.

Ordering of Materials
Procedure of ordering and purchasing:
Place requisitions and work orders are made.
Send enquiries for Quotations.
Negotiate and place the orders
Do the follow-up.
Get the expected material by Quality standards.
Minimum damages in packaging, storing and dispatch
is seen after.

Packaging the finished goods, storing

and dispatch:
This functions establishes 3
important function pertaining to the
production & sales of a product.

 Binning or storing.
Constitutes to assets of company.
Improper management = Loss creation.
Safety Margin:
Prevention is better than cure.
Delays lead to shortage.
Inventory provides safety margin.

 Multi-purpose function.
In & out of factory movement.
Reducing transportation cost.

Auditing invoices ; filing claims of refunds.

 Low price
Helps in Reducing COP
High Inventory Turnover
Low cost acquisition & possession
Continuity of Supply
Consistency of Quality

 Cordial supplier relation

Development of personnel
Maintenance of good records

 Reciprocity
Inverse relationship

Standardization and Simplification

Quality, reduction in sizes and variety, interchangeability of
parts and products

Design and Development of the Product

Computer Aided Manufacturing (CAM)
Variety of materials

Coding and Classification of Materials

Help the production and purchasing department
Codes and nomenclatures

 Make and Buy Decisions

At Growth stage

Forecasting and Planning

Market fluctuations & fluctuation in demand

Product Improvement

Engineering of product
Compromise between design and economic objectives

New material & products

Latest development in material &components

Role of R&D dept. & product development dept

 Efficient production scheduling

Inter-departmental Harmony
All the department need to help material mgt dept.
Provides smooth functioning of organization

Developing skills of workers in materials

management
Specialization by workers

At design stage to get sense of competitiveness of the

product cost estimates are required.Materials,dimensions,
and processes not finalized.
Once a decision is made and tools are made, it becomes
expensive to make changes. Experienced materials
personnel can estimate relative costs. This has to be made
from sketches.

Using Standard Components

Using standard components can be less costly. The
implementation can be fast.

Manufacturability of the
component
It is required from the point of view of manufacture of
the component. This is essential to avoid fictitious
drawing, which may not be possible to make the
component .

Introducing New Materials

The material persons are in contact with the outside
developments and can help engineers by introducing them.

 It is desirable to develop suppliers for the

components. In such cases, the company may
decide to buy from a certain supplier. They
supplier may put up his needs into the
adaptation.

 Design engineers have difficulty in choosing from

a number of acceptable designs and specifications.
The engineer can determine which materials and
processes will do the job, by the needs the data
like, the relative cost and availability of material.

 However in the non-manufacturing

organizations it has more responsibilities.
Materials are purchased, but there is no
tangible finished product. Usually there is no
equivalent of production control. The
examples of this type of organizations are
Airlines, Hospitals, etc.