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Definition & Scope of Materials Management

Material management is an approach for planning, organizing, and controlling all those activities principally concerned with the flow of materials into an organisation.

 

The scope of Materials Management varies greatly from company to company and may include material planning and control, production planning, Purchasing, inventory control, in-plant materials movement, and waste management.

It is a business function for planning, purchasing, moving, storing material in a optimum way which help organisation to minimise the various costs like inventory, purchasing, material handling and distribution costs.

The fundamental objectives of the Materials Management function ,often called the famous 5 Rs of Materials Management, are acquisition of materials and services  :

 

  •  of the right quality

  •  in the right quantity

  •  at the right time

  •  from the right source

  •  at the right price


From the management point of view , the key objectives of MM are :
 

  • To buy at the lowest price , consistent with desired quality and service
     
  • To maintain a high inventory turnover , by reducing excess storage , carrying costs and inventory losses occurring due to deteriorations , obsolescence  and pilferage
     
  • To maintain continuity of supply , preventing interruption of the flow of materials and services to users
     
  • To maintain the specified material quality level and a consistency of quality which permits efficient and effective operation
     
  • To develop reliable alternate sources of supply to promote a competitive atmosphere in performance and pricing
     
  • To minimize the overall cost of acquisition by improving the efficiency of operations and procedures
     
  • To hire, develop, motivate and train personnel and to provide a reservoir of talent
     
  • To develop and maintain good supplier relationships in order to create a supplier attitude and desire furnish the organisation with new ideas , products, and better prices and service
     
  • To achieve a high degree of cooperation and coordination with user departments
     
  • To maintain good records and controls that provide an audit trail and ensure efficiency and honesty
     
  • To participate in Make or Buy decisions

 

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


The broad Materials function has the following as identified  and interlinked sub functions:

 

Materials planning and control: Materials required for any operation are based on the sales forecasts and production plans.

Planning and control is done for the materials taking into account the materials not available for the operation and those in hand or in pipe line.

This involves estimating the individual requirements of parts, preparing materials budget, forecasting the levels of inventories, scheduling the orders and

monitoring the performance in relation to production and sales.

Purchasing: Basically, the job of a materials manager is to provide , to the user departments right material at the right time in right quantity of right quality at right price from the right source.

 

To meet these objectives the activities undertaken include selection of sources of supply, finalisation of terms of purchase, placement of purchase orders, follow up, maintenance of relations with vendors, approval of payments to vendors, evaluating, rating and developing vendors.

Stores : Once the material is delivered , its physical control , preservation , minimisation of obsolescence and damage through timely disposal and efficient handling, maintenance of records, proper locations and stocking is done in Stores.
 

Inventory control : One of the powerful ways of controlling the materials is through Inventory control.

It covers aspects such as setting inventory levels, doing various analyses such as ABC , XYZ etc ,fixing economic  order quantities (EOQ), setting safety stock levels, lead time analysis and reporting.

Materials Management's scope:

The scope is vast.  Its sub  functions include Materials planning and control, Purchasing, Stores and Inventory Management besides others.

Basically, under its scope are :
 
  • emphasis on  the acquisition aspect
  • inventory control and stores management
  • material logistics, movement control and handling aspect
  • purchasing, supply , transportation , materials handling etc
  • supply management or logistics management
  • all the interrelated activities concerned with materials

 

Materials management can thus also be defined as a joint action of various materials activities directed towards a common goal and that is to achieve an integrated management approach to planning, acquiring, processing and distributing production materials from the raw material state to the finished product state.

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 items. The various activities represent these four functions:
 

  • Planning and control

  • Purchasing

  • Value analysis and

  • Physical distribution

 

 

 

See here more on Scope of Materials Management

 
 
 
 
 
 

 
 

 

 

 

 

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