Logistic Management

1. Managing Material Flow
TC/IS/2011/MS/118
Logistic Management
Department business and Management
Studies
Trincomalee Campus

2. Objectives of the chapters…
• To identify the material management and its aspect and
activities.
• To identify the major objectives of material management.
• Forecasting .
• Total Quality Management.(TQM)
• Measurement of material management performance.
• To identifying the Material Management Improvement
System.

3. ‘’ Administration of raw materials,
subassemblies, packaging material and
in-process inventory ‘’
Material
Management

4. Material Management Activities

5. Major Objectives of Material Management
Company Objectives
Objective of the
material management
Low cost High level
of service
Quality
assurance
Low level of
tied-up cost
Support
of other
functions

6. Aspect of Material Management
Purchasing and
procurement
Production control
Inbound logistics
Warehousing and
storage
Management
information system
control
Inventory planning and
control
Salvage and scrape
disposal

7. Forecasting
‘’ Predict the future through
quantitative or qualitative method or
combination of both ‘’
- Customer satisfaction
- Product efficiency
- Superior negotiation
- Pricing and promotion
management
- Stock out
- Safety stock
needs

8. Forecasting Techniques
Demand
forecast
Supply
forecast
Price
forecast
Long-term
forecast
Midrange
forecast
Short-term
forecast

9. Total Quality
Management
‘’ Application of quantitative and Human resource to
improve the material services supplied to an
organization, all the process within the organization
and the degree to which the needs of the customer are
met ‘’

10. Measuring the Performance of Materials
Management
 Service level
 Inventory level
 Price level of materials
Order cycle time, fill rate, number of
production delays
Slow moving inventory, inventory
turnover

11. Material Management Improvement System
Kanban /
Just-in-time
( JIT )
MRP system
- MRP I (Material
Requirement Planning )
- MRP II
(Manufacturing
Resource Planning)
DRP system
- DRP I (Distribution
Requirements Planning )
- DRP II (Distribution
Resource Planning)

12. Kanban /
Just-in-time
( JIT )
‘’ Production strategy that reduce manufacturing costs
and to improve quality markedly by waste elimination
and more effective use of existing company resources
‘’
 JIT II concept
Apply JIT concept to the purchasing function.

13. • Improved inventory
turn.
• Bettor customer
service.
• Decreased
warehouse space.
• Improved response
time.
Benefits and Problem of JIT
• Production
scheduling.
• Supplier
production
schedule.
• Supplier
locations.

14. Material
Requirements
Planning (MRP I)
‘’ Computer based production and inventory control
system that attempts to minimize inventories while
maintaining adequate material through production
process ‘’

15. Advantages and Disadvantages of MRP I
• - Improved business
results and
manufacturing results.
• Better manufacturing
control.
• More accurate and
timely information.
• Less inventory.
• Optimize material
acquisition cost.
• Higher
transportation
bills and unit cost.
• Delivery problem
and material
shortage.
• Use of standard
software package.

16. Advantages
Manufacturing
Resource
Planning (MRP II)
‘’ Set of activities involved in planning and control of
production operations ’’.
• Inventory reduction.
• Minimize workforce
overtime.
• Reduction in
purchasing cost.
• Improved consistency
in customer delivery
process.

17. Distribution
Requirement
Planning
(DRP I)
Distribution
Resource
Planning
(DRP II)
‘’Extension of (DRP I)
and drive distribution
schedule , control bill of
material ‘’.
‘’Application of
MRP principals to
distribution
environment and
integrate
distribution
needs’’.

18. Uses of DRP generated information
• Coordinate the replenishment of SKU.
• Select transportation modes, carriers, and shipment
sizes.
• Schedule shipping and receiving labour.
• Develop a master production schedule for each SKU.

19. Summary …
Material Management
• Introducing
• Anticipating
• Sourcing and obtaining
• Monitoring
Objectives
• Low cost.
• High level of service.
• Quality assurance.
• Low level of tied up
capital.
• Support other function.
Forecasting
Aspect
• Purchasing and procurement.
• Production control.
• Inbound traffic and
transportation.
• Ware housing and storage.
• MIS control.
• Inventory planning and
control.
• Salvage and scrap disposal.
Just-in-time(JIT)
MRPI,MRPII
DRPI,DRPII
Total Quality
Management