Materials management is a process, through which a firm or company is supplied with goods and services which it requires for succeeding in its goals of buying, movement of materials and storing. Putting in the simplest terms materials management is about moving the materials within an organization. What do “materials” mean? Materials can basically be defined as those objects or things that are to be moved in order to produce goods. Material is one of the 5M’s that a manager has at his command, the other being Men, Machine, Methods and Money. Materials could be in the form of raw materials, paperwork, messages or information etc. So materials can be both tangible and intangible. You see the newspaper boy delivering the newspaper to your doorstep everyday or the milkman delivering the milk packets to you. These are tangible materials. There is also some material moved when you watch a movie on your television or when you receive a phone call. These are the intangible materials that are moved. So materials management is an important function of every business. The better is the materials management in a company the better is the health of that company.
The parameters related to materials management are as follows:
Many industries buy the materials and do the following activities with them in a step by step manner:
Materials management does the following activities for the materials requirements:
About twenty-five years ago, there wasn’t a strong competition in market and materials management was not a vital part of an organization. At present, it is a vital activity of management in production. Important functions of materials management are planning, purchasing and controlling. The enhanced productivity is its aim and is used to perform the following:
Definition: materials management is defined as a concept in an organization which plans and control distinct materials, their supply, their flow from the stage of raw materials to the stage of finished goods and handover goods to customers as per the needs of customers in right time.
History of Materials Management:
Materials management became a vital function of management and the department of materials management was started at the time of World War I in the United States of America. The advancement of principles of scientific management in the 20th century by F.W. Taylor decreased the cost of production and proper utilization of materials was enhanced. Charles baggage was known as “materials man” because of his book on an economy of manufacturing and machinery which explains about the functions of purchasing. Between the years 1970 and 1999 materials management enhanced a lot.
Objectives of Materials Management:
The objectives of materials management are of two types and those are as follows:
Apart from these objectives, there few other important objectives in a firm and those are as follows:
Functions of Materials Management:
The functions of materials management are as follows:
Standardization and Simplification
The Structure of the Organization with Materials Management as a Separate Function:
A structure of the organization with materials management as a separate function is explained with the aid of a diagram and it is as below:
Fig1: Structure of Organization with Materials Management as a Separate Function
The Structure of Materials Management’s Department in an Organization:
Department of materials management is required in a firm or organization to control and coordinate various activities of materials management and its structure is as below:
Fig2: Organization of Materials Management Department
Types of Materials:
There are three distinct types of materials and those are:
OBJECTIVES AND ADVANTAGES OF MATERIALS MANAGEMENT IN AN ORGANIZATION
Materials Management has several core objectives and many secondary objectives. The core objectives of material management are:
· Proper, cost effective material procurement.
· Proper storage of materials so as to minimize wastages and material hold ups.
· Making available the material TIMELY.
A good material management system will keep up to data records of all the information generated in it, preferably using a computer-based system.
In addition to these primary objectives a materials management system indirectly fulfills many secondary objectives also. These secondary objectives are normally related to the functions of a material management system. Some of these secondary objectives are:
· Identifying new or better sources of supply
· Development and sustenance of relationships with the vendors
· Creating a standardized quality of the products
· Performing the value analysis of inventory. This can be related to the cost of materials.
· Creating a smooth flow of materials and information among the various sections of materials management system.
The material management system works under the broad basic objectives of an organization that is “maximum profit with sustained growth and research, satisfied customers and staff of the organization”. The material management supports this objective by providing support through:
· Continuity of supply by maintaining a uniform flow of materials,
· Reducing the costs of materials purchased and handling by using scientific techniques and electronic tools. The use of scientific tools and techniques for materials and information management,
· Minimizing holdups of working capital and performing effective inventory control,
· Releasing working capital by ensuring effective control over inventories,
· Providing high quality at the lowest price, and
· Development of better relationships with customers and suppliers.