It also gets involved in purchasing decisions that are necessary for production. Materials Management is vital for the process that is received from raw materials, machinery, production processes, maintenance, among others, because with this management you can order and classify the inventories in the most accurate way. With the Management of Materials, one is responsible for the planning, movement, storage and control of materials to enhance and provide excellent customer service with a predetermined cost that is minimal.
One of the objectives is to provide an interrupted chain of components for production in time for customers. The materials department takes care of the supplies by ensuring the on-time delivery of these. Materials Management also takes care of the procurement of materials by connecting with suppliers.
In some organizations they have a separate department that takes care of this called the purchasing department. The main objective of this method is the provision and monitoring of appropriate processes of the materials at the lowest cost.
Correct selection of the required material, evaluation of this in sales with the sales department. Low operating costs and maintain profits without neglecting the quality offered to the customer. Receive and control the material in a safe way and the good condition it must have. Identify the stock and take the production process to get the final product. Planning and control of Materials Management is important in order to achieve the desired results. The planning and control is done with the areas that need to find the processes of the operations.
This means that it is necessary to have the necessary parts, budget the materials, inventories, schedule the orders and monitor their process in relation to production and sales because the costs will be of investment for the delivery of the final product. Because of the economic control and the investment in the raw materials, it is necessary to have the inventories of the purchase and management of the materials that are needed for the processes of creating of the final product.
It is the collection of the materials that are needed to complete production, and the follow-ups of these. With this in order you can keep track of the performance that the company is having and also its finances.
With well managed inventories, the cost decision making can be much easier when it comes to purchases because you can see what is needed for the production and how much could be invested, trying to maintain a good cost with the balance that is needed.
It also helps to know the existence of what you have stored in the warehouse and the record of the process that has had what has gone into production from arrival to delivery. This is the maximum amount of materials you wish to keep in storage or in the warehouse. Taking into account certain factors such as: the product has a very good acceptance by the customer, the cost of storage and transport, the time of the assortment by the supplier among others.
This is the minimum amount of materials or products you want to keep in the warehouse or store. It is the control of materials in such a manner that it ensures maximum return on working capital. 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.
Nair has emphasized the co-ordination of all those activities which are related to the efficient use of materials. 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 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. 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. The equipment is properly utilized because there are no break downs due to late supply of materials.
The wastages of materials at the stage of storage as well as their movement is kept under control. Material management covers all aspects of material costs, supply and utilization. The functional areas involved in material management usually include purchasing, production control, shipping, receiving and stores.
Production manager prepares schedules of production to be carried in future. The requirements of parts and materials are determined as per production schedules. Purchasing should be done economically and on time to maintain material supplies and increase final profits by lowering expenses. An inventory can include a range of goods being held including partially finished items, goods ready for sale and those used in production.
Many industries try to time purchasing so that materials enter stores just ahead of production, although there is also a need to gauge supplier levels so items can be stocked before they become unavailable. Inventories are required to control the flow of raw materials, purchased goods and finished parts and components. Supply chain management can require materials to be distributed to different sites or production centres, each of which needs to be continuously supplied.
Lack of stock can lead to financial losses through having to source replacement production materials or having to halt production schedules.
Poor storage can also lead to material supply disruptions through damaged or misplaced stock. Material management teams should be able to mitigate against these situations by using alternative supply systems. Quality control of materials is also important, since good quality materials lead to good quality products. Factors such as durability, dimensional accuracy, dependability, performance, reliability and aesthetic value can all be important quality factors for materials management, depending upon the applications.
All five of these types need to work together for the successful management of materials from purchase and supply through to utilisation. The overriding aim of material managers is to maintain a consistent flow of materials for production. This seemingly straightforward task has a range of potential difficulties to overcome including incorrect bills of materials, inaccurate stock-taking, shipping and receiving errors, unreported scrap, and production reporting issues.
Planning, organising and controlling the flow of materials means it is possible to manage purchasing and shipping to coincide with a manufacturing process and the final delivery of products.
While material managers oversee the inventory management needs of a company, the actual procurement of materials may be undertaken by a separate purchasing team. Keeping track of the availability of raw materials and products can also deliver cost savings and ensure a maximum return on working capital.
Materials constitute a major cost of construction projects. The flow of materials into a project is essential to ensure timely completion. A stock-out disrupts, work, and its effects are both visible and invisible. There are several functions it involves, such as production and material control, purchasing, non-production stores, transportation, materials handling, and receiving. Material Management can be used in a very efficient planning manner in buying and purchasing materialistic functions.
It is concerned with some activities like controlling amount, kind, movement, location, and various production processes.
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