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					MATERIAL MANAGEMENT
AND INVENORY CONTROL
          INTRODUCTION
• Materials form a major part of the costs of
  any industry. About 60% of the cost of any
  product is attributable to materials.
• Effective material management ensures
  that the cost of materials is minimised
  resulting in increased profitability for the
  organisation.
  MATERIAL MANAGEMENT
• Material management may be defined as
  the planning, acquiring, storing, moving
  and controlling of materials to optimise the
  usage of facilities, personnel and capital
  funds and to provide service to the user in
  line with the organisational aims.
                functions
• Materials planning and controlling
• Purchasing of materials
• Store and inventory control functions.
       Materials Planning and
            Controlling.
• A forecast requirement of materials is
  prepared based on the forecast demand
  and the production plan. Budget is
  prepared for materials.
• A forecast of inventories to be held is also
  prepared. Based on the forecasts orders
  are scheduled and progress is monitored
  in relation to production and sales.
               Purchasing.
• This includes selection of sources of supply,
  finalising the terms of purchase, placing orders,
  follow up of placed orders and approval of
  payments to suppliers. The source must be able
  to supply materials in the desired quantity and of
  the desired quality. The source should be
  reliable and should continue to supply the
  materials as required. Smooth relations must be
  maintained with suppliers. Another important
  function related to purchase is vendor rating.
  Vendors are rated according to their ability to
  deliver materials.
Stores and Inventory Control.
• Storage of materials requires special care.
  Stores must be preserved. Obsolescence and
  damage should be minimised through timely
  disposal and efficient handling. Proper records
  should be maintained. These include records of
  receipts and issues, prices, sources and so on.
  Stores must be properly located and laid out to
  reduce material handling to the minimum.
  Periodic verification of stores must be carried
  out.
• Inventory control includes setting inventory
  levels, fixing levels of safety stock to be
  maintained, carrying out lead time analysis
  and employing techniques to reduce he
  inventory. Safety stock is the stock
  maintained as a reserve to deal with
  fluctuations in demand and lead time. The
  time between placing an order and
  actually receiving the material is called
  lead time.
    OBJECTIVES OF MATERIALS
           MANAGEMENT
•   Low procurement price.
•   High inventory turnover
•   Low cost of acquisition and possession
•   Continuity of supply
•   Consistent quality
•   Low payroll costs
•   Favourable supplier relations
•   Maintenance of good records
•   New Materials, Processes and Products
•   Economic Make or Buy Decisions
•   Standardisation
•   Product Improvement
CENTRALISATION VERSUS



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posted:5/8/2010
language:English
pages:10