Materials Management

Materials Management 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.
Meaning
it is a business function for planning, purchasing, moving ,storing material in a optimum way which help
organization to minimize the various costs like inventory cost, material handling cost and distribution
cost.
Materials Management embraces all activities concerned with materials except those directly concerned
with designing or manufacturing the product.
Materials Management deals with controlling and regulating the flow of material in relation to changes
in variables like demand, prices, availability, quality, delivery schedules etc.
L.J. De Rose:
“Material management is the planning, directing, controlling and co-ordination of all those activities
concerned with material and inventory requirements, from the point of their inception to their
introduction into manufacturing process.”
As per De Rose all those functions which start with the procurement of materials and end with
completion of manufacturing are a part of material management.
N.K. Nair:
“Material management is the integrated functioning of the various sections of an organization dealing
with the supply of materials and allied activities in order to achieve maximum co-ordination.”
N.K. Nair has emphasized the co-ordination of all those activities which are related to the efficient use of
materials.
Thus, material management is an important function of an organisation covering various aspects of
input process, i.e., it deals with raw materials, procurement of machines and other equipment’s
necessary for the production process and spare parts for the maintenance of the plant. Thus in a
production process materials management can be considered as an preliminary to transformation
process.
SCOPE OF MATERIAL MANAGEMENT
1) Emphasize the acquisition aspect;
2) Inventory control and stores management,
3) To materials logistics, movement control and handling aspects.
4) Purchasing, supply, transportation, materials handling etc.,
5) Supply management’ or ‘logistics management’
6) Covers all the interrelate activities concerned with materials.
Importance of Material Management:
Material management is directly associated with the operational efficiency of an organization. A good
material management system ensures the availability right materials in the production process with
minimum wastage so as to cut losses. Here are the few ways which show the importance of material
management and how it influences your project performance: –
1)Time:- Time is widely recognized as a primary criterion for performance measurement. Poor material
management can have a negative effect on project time, like the insufficient stock of materials, lead
to idling time as workers try not to exhaust the stockpile or it is worsened by the work stoppage. Due
to this shortage, materials need to be reordered and causes longer idling time. Consequently, the work
progress will be delayed. Therefore, the availability of sufficient quantity of materials affects the
projects time.
A proper material management system ensures that there is enough buffer stock so as to prevent any
stoppage in production.
2)Cost:- Cost is one of the major consideration in the entire cycle of projects. Effective material
management is able to reduce the overall cost of material. For example, in the purchasing process,
discounts and bulk order may be economical as it reduced the transportation and ordering cost, thus, by
minimizing the procurement cost of materials, the higher chances for reducing the overall project cost
and concurrently increasing company profit.
However, the reasonable time needs to be considered so that the materials are not ordered too early or
it may affect the company capital, interest charges, and storage charges. Wrong calculations can lead to
over or under stocking which will be bad for the industry. A proper MM system helps in determining
the number of materials to be ordered to reduce cost without any obstructions in production.
3)Quality:- The term quality has sometimes become a problem as it is a subjective matter and
understood differently by different people and organizations. Therefore, it is important to be able to
identify client’s requirements and specify clearly in the contract document.
Availability of resources such as materials and equipment as planned during project duration is one of
the factors contributing to quality performance. The available equipment also needs to be in good
condition and in sufficient quantity. Without the proper and sufficient equipment, quality of the project
can be jeopardized. Similarly, the materials itself also needs to be inappropriate quality according to the
specification. In sum, the available resources must be in accordance with the specification, sufficient
quantity and functional.
4)Productivity:- The productivity is measured in terms of unit completely accomplished during given
period and the related costs in terms of man-hours or money. After analysis in different industries, a
research organization reported that the lack of materials is a primary factor that had a moderate to
strong effect on productivity. More importantly, it has been accumulated that disruptions in material
management resulted in a loss of labor productivity as well.
With appropriate site storage, workers energy can be productively used to perform the task in progress.
This situation is also similar to the efficient site layout for material movement. Efficient movement of
materials increases productivity whilst reduces material travel time. Besides, the availability of
material and equipment motivates workers to improve work productivity.
5)Waste:- Waste refers to any material that needs to be moved out from the site due to damage, non-
use or cannot be used due to non-compliance with specification and surplus or debris by-product of the
production process. In simple words, waste is a product or material that is unwanted and required to
transported out. Inappropriate material storage contributes to waste generation.
Strategies for waste minimization are the stock control for minimization of over or duplicate ordering,
good practices of material handling, systematic inventory process and proper material storage. Hence,
the efficient material management practice throughout entire process will minimize the waste
generation.
objectives of Material Management 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