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Production control
Inventory control
Materials Handling
The relationship of these functions can be better explained by studying the flow
of materials through the entire firm; starting from the selection of a supplier to
the point where the products reach the customers.
Materials flow is a stepwise process that describes the involvement of different
departments through which materials are processed and made available for the
end customers, represents the material flow process of a typical manufacturing
firm.
Production Control
Purchasing department
Receiving department
Raw materials inventory department, and
Production department
Each department is headed by a manager who is responsible for all the activities
in the department. The production control function of materials management is
aimed at ensuring that the adequate amount of materials required for production
is available and the supply is obtained in the most effective and economical
manner.
Purchasing department
The main task of the purchasing department is to acquire the required materials
in the right quantity, of the right quality, from the right source, at the right time
and at the least possible cost. Materials can be purchased in two ways :
centralized or decentralized. In centralized purchasing activity is carried out by a
separate department usually known as the purchasing department. It purchases
materials in large quantities by grouping orders from all the departments of a
firm. In general, larger firms follow the centralized purchasing route, as it results
in consistency in buying policies and uniformity in maintaining purchasing
records. Also, the buyer maximizes his purchasing power, which helps him obtain
large purchase a discounts.
In decentralized purchasing, there are no special departments for purchasing.
Heads of individual departments undertake the activity of purchasing on the
basis of their departmental requirements. This results in greater flexibility in
departmental activities, as it is easier for the head of the department to change
purchasing preferences rapidly as per the requirements. Some firms hire external
specialists, called contract consultants to negotiate purchasing terms and
conditions. However, no firm adheres strictly to any one of these approaches and
usually follows a mix of the approaches.
The important tasks performed by a purchasing department are: processing the
requisitions for materials and supplies from all departments of the organization,
identifying and selecting supplies (or vendors) to obtain the materials required,
negotiating with suppliers in relation to purchasing contracts and quantity
discounts, inviting bids to acquire certain materials, and evaluating suppliers in
terms of their quality and promptness in delivery.
Receiving department
The primary responsibility of the receiving department is to process incoming
shipments of materials. In several firms, the activity of receiving materials is
taken care of by the purchasing department itself.
The tasks of the receiving department include unpacking incoming materials,
checking their quantity and inspecting their quality and generating receiving
reports.