NAME; SHAH AASIMA.
ROLL NO; 13.
SEMESTER; IMBA 8TH.
SUBJECT; MARERIALS MANAGEMENT.
TEACHER INCHARGE; SHAHKAR SIR.
RELEVANCE OF MATERIALS MANAGEMENT.
Materials management can be defined as “an integrated management approach to planning,
acquiring, processing and distributing production materials from the raw material state to the
finished product state”. Materials management is a key business function that is responsible for the
coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an
optimum manner, so as to provide pre-determined service to the customer at a minimum cost.
Materials management has such sub-fields as:
inventory management
value analysis
receiving
stores and management of the obsolete
slow moving and non-moving materials
Materials management is the branch of logistics that deals with tangible components of a supply
chain. It covers the acquisition of spare parts and replacements, quality control of purchasing and
ordering such parts, and the standards involved in ordering, shipping, and warehousing the said
parts. The physical arrangement of materials/spare parts is called materials management. Planning
and control of the functions supporting the complete cycle (flow) of materials, and the associated
flow of information is called materials management. Materials management is concerned with the
control of materials in such a manner which ensures maximum return on working capital. Materials
management is concerned with the location and purchase of materials needed, their storage and
movement. It also arranges to keep an account of them. It is also responsible for planning their
movement through manufacturing processes, store rooms and distribution channels. Materials
management provides an integrated system approach to the coordination of the materials activities
and the control of total material costs. The materials management function ranges from receiving
the material requisitions from user department to placement of purchase orders and then, on the
other hand, receiving the materials from vendors and making it available to the user’s departments.
RELEVANCE;
The goal of materials management is to provide an unbroken chain of components for production to
manufacture goods on time for customers. The materials department is charged with releasing
materials to a supply base, ensuring that the materials are delivered on time to the company using
the correct carrier. Materials is generally measured by accomplishing on time delivery to the
customer, on time delivery from the supply base, attaining a freight, budget, inventory shrink
management, and inventory accuracy. The materials department is also charged with the
responsibility of managing new launches.
In some companies materials management is also charged with the procurement of materials by
establishing and managing a supply base. In other companies the procurement and management of
the supply base is the responsibility of a separate purchasing department. The purchasing
department is then responsible for the purchased price variances from the supply base.
Material management is a service function. It is as important as manufacturing, engineering and
finance. The supply of proper quality of materials is essential for manufacturing standard products.
The avoidance of material wastage helps in controlling cost of production. Material management is
essential for every type of concern.
The importance of materials management cannot be overemphasized in this complex industrial
world. It affects not only a particular industry but the entire economic activity of a whole nation.
Material contributes to the quality of the end product. The amount spent on materials is increasing
in relation to the expenditure on other inputs. Materials add value to a product.
The relevance of material management may be summarized as follows:
1. The material cost content of total cost is kept at a reasonable level. Scientific purchasing helps in
acquiring materials at reasonable prices. Proper storing of materials also helps in reducing their
wastages. These factors help in controlling cost content of products.
2. The cost of indirect materials is kept under check. Sometimes cost of indirect materials also
increases total cost of production because there is no proper control over such materials.
3. The equipment is properly utilized because there are no break downs due to late supply of
materials.
4. The loss of direct labour is avoided.
5. The wastages of materials at the stage of storage as well as their movement is kept under control.
6. The supply of materials is prompt and late delivery instances are only few.
7. The investments on materials are kept under control as under and over stocking is avoided.
8. Congestion in the stores and at different stages of manufacturing is avoided.
