ETHICS IN

MATERIAL
MANAGEMENT

Presented by
Akshay Tichkule
Mayuresh Chavan

Materials Management
Materials are any commodities used directly or
indirectly in producing a product such as raw
materials, component parts or assemblies.
Materials management is the grouping of
management functions supporting the
complete cycle of material flow, from the
purchase and internal control of production
materials to the planning and control of work
in process to the warehousing, shipping, and
distribution of the finished product.
Thomas F. Wallace & John R. Dougherty

Functions of Materials
Management
Materials planning and programming
Raw material purchase
Receiving, store keeping, and
warehousing
Issuing of material
Inventory control
Value engineering
Transportation of materials
Vendor development
Vendor rating
Disposal of scrap and surpluses

Focus of Material
Management
To procure right materials
In
Of
At
From
At

Right
Right
Right
Right
Right

Quantity
Quality
Time
sources
prices

5 Rs, principles of purchasing

Primary Objectives
Buying the best item at the lowest cost
Reduction in inventory cost and High
inventory turnover
Maintaining the flow of production
Maintaining the consistency of quality
Optimization of acquisition and
possession, resulting in lower cost
Cordial relationship with suppliers
Maintaining good records
Contribution towards competitiveness
Personnel development

Secondary Objectives
Promotion of standardisation with
suppliers
Development of reciprocal relations
with customers
Committees to decide on economic
make or- buy decisions
Development of inter departmental
relationships

ETHICS IN MATERIAL
MANAGEMENT.
Ethics: The inner
guiding moral
principle, values and
belief that people use
to analyze or interpret
a situation and then
decide what is right or
appropriate way to
behave.

BUINESS ETHICS
Ethics represents eternal & prevalent moral
standard, personal values, corporate code of
conduct.
Essence of socio-economic ethics- awareness in
contributing towards efficiency & humanizing our
outlooks & actions.
Business ethics: Self generated system of moral
standards in the realm of business to which
substantial majority of executives give voluntary
asscent.
The conduct of individual/ corporate professional
involves destiny of corporate bodies or society.

ETHICS IN BUYING
Discipline which points out the obligation
between person or a group of person, based on
written code of civilized conduct.
Tries to set standard in absolute terms, as
ethical behaviour gets a man respect, social
recognition moral strength & internal satisfaction.
The personal character of buyer will determine
what other people think of him.
The reputation of an organization relies on the
thoughts action & deeds of Purchase personnel.

 Buyer can purchase everything.

The ethics & intigrity of purchasing personnel
should be such that the supplier should always trust
them.
Good buyerConfidence in his own judgement,
Fair dealing,
Relating to source selection & development,
Negotiation in price,
Inspection,
Documentation,
The buyer seller relationship should be fair,
cordial & long lasting.

 ECIFPMM: Members shall not use their

authority or office for personal gains& shall
seek to uphold and enhance the standard of
purchasing.
Maintaining an unimpeachable standard of
integrity in business relations.
Complying with the letter & spirit of laws.
Loyalty towards the company & faith in his
profession are the basic codes of purchasing
professional.

Code of professional org. by

IIMM

To consider total interest of ones org. in all

transaction without impairing the dignity &
to ones office.
To buy without prejudice, to obtain max.
ultimate value for each rupee spent.
To subscribe & work for truth & honesty in
buying and selling.
To accord a prompt & courteous reception to
all who call up on legitimate business
mission.
To respect ones obligations & those of ones
org. consistent with good business practices.

Problems in ethics
Tempting environment for purchasing
executives.
Influence of other department on
purchasing decisions
Attitude of people towards bribery
Political and business environment
e.g. scandals like bofors,
commonwealth games

Backdoor selling
Backdoor buying by self-styled experts,
bypassing purchase department
e.g. engineers often try to bypass
buyers in the
purchase of spares,
fabricated items
Steps should be taken to build trust by
adequate technical knowledge with buyers
Over dependent buyer is in trouble

Backdoor selling
Buyer should be loyal and honest to
all his colleagues so that backdoor
selling is minimized in short run and
eradicated in long run
Political pressure and interference
from top causes backdoor selling

Tips for ethical buying

Adhere to corporate/ departmental codes
Give fair treatment to all suppliers
Do not make personal purchase invoice
in companys name
Avoid switching of orders like quantity
changes, postpone or cancel order
Avoid discussion of one vendor with
others and maintain confidential
information
Discourage revision of quotation after
receipt of tenders

Tips for ethical buying

Avoid vendors with unethical nature
Observe the truthfulness of all
transactions with suppliers
Quick testing, sampling and inspection
process to make quick decisions of
payments
Rely on commonsense approach rather
than legalistic frame
Settle disputes on the basis of facts
and fairness