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Material Management


Material Management


Materials management serves various functions—materials planning, purchasing, receiving, stores, material handling, inventory control, scrap and surplus disposal, etc. These functions isolation yield optimal results, e.g. purchasing helps in availing quantity discounts and buying maximum material on one batch. On the other hand, stores will be interested in keeping stocks to the minimum. The three vital functions of materials management, namely materials planning and control, purchasing and stores and inventory control are handled by managers reporting to the vice-president of materials. Various functions of materials management are materials planning, purchasing, receiving, stores, inventory control, scrap and surplus disposal. If some of these functions are separately handled, there is a chance of a conflict of interests. Purchasing department, if allowed to operate independently, may take decisions which result in sub-optimization. In an integrated set-up, a responsible materials manager in- charge of inter-related functions, is in a position to exercise control and coordinate with an overview that takes care of the conflicting objectives of the individual functions. Integration is helpful in the rapid transfer of data through effective and informal communication channels. It is again important as the materials management function usually involves handling a vast amount of data. Thus the combination of the various functions helps in shortening the message channels and also helps the various functions identify themselves to a common materials management department, which, in turn, results in greater coordination and better control. In the integrated approach to materials management, there is interdependent materials department. Design, sales, finance and personnel departments are considered separate departments and their heads derive authority directly from the CEO. This position enables the materials manager to formulate policies and procedures in a manner which will benefit the organization as a whole instead of any particular department thus helping in the accountability in materials as well as other departments. One which achieves its objectives in the most cost-efficient manner is an effective organization. The inter-related functions of material management are normally looked after by individuals. With an increase in the number of activities, the function of individuals become more and more specialized, the integrated material management concept requires central co-ordination of all the inter-related activities. In the context of materials management, planning has to be done for highly non-programmed decisions such as import policy, foreign exchange availability and credit squeeze. Planning too must be done for highly programmed decisions such as inventory for working capital, out delivery schedules, etc.