Materials Management. Materials Management. Introduction: Why should we discuss? Purchase policy Receiving goods Inventory process Distribution Equipment- General tips. Materials management-definition.
Materials Management • Introduction: Why should we discuss? • Purchase policy • Receiving goods • Inventory process • Distribution • Equipment- General tips
Materials management-definition Definition: A process encompassing acquisition, shipping, receiving, evaluation, warehousing and distribution of goods, supplies and equipment Each step is vital
Definition • It is concerned with planning, organizing and controlling the flow of materials from their initial purchase through internal operations to the service point through distribution. • OR • Material management is a scientific technique, concerned with Planning, Organizing &Control of flow of materials, from their initial purchase to destination.
AIM OF MATERIAL MANAGEMENT • To get • 1. The Right quality • 2. Right quantity of supplies • 3. At the Right time • 4. At the Right place • 5. For the Right cost
PURPOSE OF MATERIAL MANAGEMENT • To gain economy in purchasing • To satisfy the demand during period of replenishment • To carry reserve stock to avoid stock out • To stabilize fluctuations in consumption • To provide reasonable level of client services
Objective of material management • Primary • Right price • High turnover • Low procurement • & storage cost • Continuity of supply • Consistency in quality • Good supplier relations • Development of personnel • Good information system • Secondary • Forecasting • Inter-departmental harmony • Product improvement • Standardization • Make or buy decision • New materials & products • Favorable reciprocal relationships
Basic principles of material management • Effective management & supervision • It depends on managerial functions of • Planning • Organizing • Staffing • Directing • Controlling • Reporting • Budgeting • 2. Sound purchasing methods • 3.Skillful & hard poised negotiations • 4.Effective purchase system • 5.Should be simple • 6.Must not increase other costs • 7.Simple inventory control programme
Materials management functions • Material planning and programming • Purchasing and outsourcing • Inventory control • Storekeeping and warehousing • Codification
Materials management functions ..contd. 6. Standardization and evaluation of all products 7. Transportation and material handling 8. Inspection and quality control 9. Cost reduction through value analysis 10. Disposal of surplus / obsolete material 11. Distribution
Inventory • Stocks to ensure un interrupted supplies • The idle resources which have future economic value • Cushion between estimated and actual demand of materials
Inventory control A scientific system which indicates: • What to order • When to order • How much to order • How much to stock
ABC ANALYSIS • (ABC = Always Better Control • About 10 % of materials consume 70 % of resources • About 20 % of materials consume 20 % of resources • About 70 % of materials consume 10 % of resources
‘A’ ITEMS • Small in number, but consume large amount of resources • Must have: • Tight control • Rigid estimate of requirements • Strict & closer watch • Low safety stocks • Managed by top management • ‘C’ ITEMS • Larger in number, but consume lesser amount of resources • Must have: • Ordinary control measures • Purchase based on usage estimates • High safety stocks • ABC analysis does not stress on items those are less costly but may be vital
‘B’ ITEM • Intermediate • Must have: • Moderate control • Purchase based on rigid requirements • Reasonably strict watch & control • Moderate safety stocks • Managed by middle level managemen
SDE ANALYIS • Based on availability • Scarce • Managed by top level management • Maintain big safety stocks • Difficult • Maintain sufficient safety stocks • Easily available • Minimum safety stocks • FSN ANALYSIS • Based on utilization. • Fast moving. • Slow moving. • Non-moving. • Non-moving items must be periodically reviewed to prevent expiry • & obsolescence • HML ANALYSIS • Based on cost per unit • Highest • Medium • Low • This is used to keep control over consumption • at departmental level for deciding the frequency of physical verification
VED ANALYSIS • Based on critical value & shortage cost of an item • It is a subjective analysis. • Items are classified into: • Vital: • Shortage cannotbe tolerated. • Essential: • Shortage can be tolerated for a short period. • Desirable: • Shortage will not adversely affect, but may be using more resources. These must be strictly Scrutinized
The pharmaceutical industry • Important one in the industrial world because of its major role in sustaining a healthy nation. • Includes many: • Some specialize on research and development in respect to drugs or medicine for curing one existing or new infection or disease
Some are into manufacturing drugs and others are into prescribing drugs, marketing drugs and the likes. • An experienced store/warehouse manager and logistics and warehouse manager, have to answer, lots of query • Such as:-
Answer on why drugs expired without knowing, damages, supplying wrong strength for another, lost in transit if saddled with a bit of logistics responsibilities and so on.
Story of a successful person • As soon as I got on the job, I rolled out what I want to achieve which every store manager is expected to do if he must achieve success on the job. Take a look at mine. • The store/warehouse is committed to:
i. serving you better via prompt delivery or dispatch of stocks, ii. enhancing effective communication, iii. handling your complaints with courtesy, absolute care and prompt response,
iv. proper and accurate documentation(s) for effectiveness and efficiency, and v. due process for in-coming, out-going and out-sourcing of stocks.
This is mine and you need something similar to this, not exactly. • It all depends on your organization and what you want to do or achieve. • Inventory management and control thus is a very vital knowledge at a store or warehouse manager must have in order to perform well on the job.
Practically, inventory management is all about ensuring that • Everything about your stock is well planned and organized such that there is easy flow of stock within and outside the firm. • This means that you must have enough stocks to satisfy all orders
Ensure that customers continue to have stocks at all time. • It is a complex things and quite challenging. Programs reorder level, maximum and minimum stock level, warning level, annual demand, etc. This is about INVENTORY OR STOCK CONTROL.
References • Hospital-planning, design and management- D Kunders S Gopinath A Katakam 4. Selected Readings in Hosp Admin –IHA 2000 5. Hospital Admin – G M Francis Jaypee