Today's Terminology....

Certified Supplier
A supplier whose Quality assurance system producing reliable product / service are accepted by the buyer. Inspection may not be done for this supplier's product 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

 
 

 

 

Supply Chain Management
 
 
 

Every organization, big or small, depends on materials and services from other organizations to varying extents. These materials and services are obtained through exchange of money and the physical arrangement of it all is called 'Material Management' or  "Materials Management" .

[material management]  'Material Management' "Materials Management"
 


Various materials used as inputs, such as Raw materials, Consumables & Spares, are required to be purchased and made available to the shops / users as & when needed to ensure uninterrupted production.

Therefore, efficient management of input materials is of paramount importance in a business organization for maximizing materials productivity, which ultimately adds to the profitability of the organization.

This requires well coordinated approach towards various issues involving decision making with respect to materials.
The main concern of any Business management is to maximise the Return on Investment (ROI). The relationship of various entities here can be expressed as:

 

                                          Profit                      Saleseses
                           ROI  =   ---------- X -----------------------------------------
                                          Sales        Current Asset + Fixed Asset

Thus ROI = profit margin + asset turnover rate

A firm's profit margin reflects management's ability to control costs in relations to revenue. The asset turnover rate reflects management's ability to effectively utilize the firm's productive assets.

Hence a firm can improve ROI in three ways :

  • By reducing cost
  • By getting more sales from available assets or
  • By some combination of the above
    Thus , it is the cost control that holds the key

In many manufacturing organisations, the cost of materials alone happens to range from 40 % to 60 % of the total expenditure. Obviously, a better management of material is expected to ensure reduction in overall cost of operation and smoothness in supply of inputs.

This requires well coordinated approach towards various issues involving decision making with respect to materials.
 

All the materials related activities such as material planning & indenting, purchase systems & procedure, variety reduction through standardization & rationalization, reducing uncertainties in demand & supply, handling & transportation, inspection, proper storage & issue of materials to the internal customers, inventory management, vendor management & finally disposal of obsolete, surplus & scrap materials etc. taken together is termed as “Integrated Materials Management”

To carry out these functions efficiently, it is essential to have a very good supplier base, order booking process & inventory management system as well as expert

MATERIALS MANAGEMENT (MM) professionals.

Materials Management is a key business function that is responsible for co-ordination of planning, sourcing, purchasing, moving , storing and controlling materials in an optimum manner so as to provide a pre-decided service to the customer at a minimum cost.

In its process of managing , materials management has such sub fields as inventory management , value analysis, receiving, stores and management of obsolete , slow moving and non moving.

Materials Management's scope is vast. Its sub functions include Materials planning and control, Purchasing, Stores and Inventory Management besides others. The various activities represent these four functions:

  • Planning and control

  • Purchasing

  • Value analysis and

  • Physical distribution

The planning and control functions are inventory management , production planning and scheduling.

Purchasing functions are buying, subcontracting, value analysis and follow ups.

 

Distribution functions are receiving , packaging, shipping, transportation and storage, making it the Integrated Materials Management.
 

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- Vijay Mathur, C.P.M, A.P.P.,MBA,M.Sc.