Production & Operation Management

1. CHAPTER 26: Materials Management - an integrated view
Response to Questions
1. Indices would depend upon the extent to which the Materials function
is integrated with other functions in the organization. Different levels
and types of integration would warrant different performance indices.
If the Materials function is integrated right up to the doorstep of the
customer, then a feedback from the customer/s is very important.
(i) Customers’ perceptions on reliability, punctuality,
dependability, cooperativeness, flexibility, initiative etc. are
very valuable.
(ii) Quantitative indices on ‘percent on-time delivery’ are easily
available.
(iii) Indices of ‘quality received’ would also help.
The internal efficiency indices could be, for instance:
(a) inventory turnover
(b) average stock
(c) total stock of inventory
(d) personnel bill of Materials department vs. materials usage
(annual)
2. Having logistics under materials management function shows a high
degree of integration of the materials function, almost right up to the
customer. In the present day world, this is very desirable.
However, every integration process assumes organization
capabilities, attitudes and preparedness. If these are lacking, a well-
meant integration effort may lead to confusion and consequent loss of
organizational efficiency and effectiveness.
3. As mentioned earlier, it is not a question of assigning one function to
another. Rather, it is question of achieving organizational integration
and achievement of the larger goals more effectively.
4. The jobs do not vanish. They remain. What vanish are the barriers,
the walls preventing a flow of information so vital to decision-making
at any level in the organization. What vanish are organizational ego
centers; and, as a result, the organization’s ultimate goals become
more vivid and actions become more coordinated and easier to take.

2. 2
Integration is not about having amorphous entities together. That
would not help. Integration is mutual coordination, empathy and
harmony with singular focus on organization’s objectives. Different
limbs have different functions; but, they function as one body.
5. Making materials management into a profit center – instead of looking
at it as a cost center – would make the materials function more
integrated into the organization by making it partially accountable for
one of the organizational final goals – viz. profit.
As mentioned in response to Question #2 earlier, the materials
function and other interacting functions should be ‘prepared’ or
‘enabled’ to stand up to the new responsibilities, new ways of
interacting, and new attitudes which all seem daunting and confusing
in the beginning. In a relay team, much training is needed in passing
the baton and in comprehending the relative roles of the team
members.

3. 3
CHAPTER 26: Materials Management – an integrated view
Objective Questions
1. Materials management function can involve:
a. Purchasing.
b. Purchasing and inventory control.
√c. Purchasing, inventory control and logistics.
d. none of the above.
2. Inventory can be a part of Production strategy because:
√a. inventories form a part of production capacity.
b. more inventories mean less labour costs.
c. inventories can be more easily managed through inventory
models.
d. none of the above.
3. For an organization, more inventory would mean:
a. more flexibility
b. less flexibility
c. less adaptability
√d. none of the above
4. Supply chains would ideally require:
a. better integration within a company.
b. better integration outside of a company.
√c. a & b
d. none of the above.
5. Large inventories could be found:
a. in house.
b. in the pipeline.
c. in warehouses outside the factories.
√d. in any of the above.
6. Effective inventory control should aim towards:
a. more than adequate inventories to run production smoothly.
b. minimal inventories.
√c. adequate level of inventories.
d. zero inventories.
7. Production strategy includes:
a. purchase price of materials.
√b. inventory levels.
c. learning curves.
d. measured day work system.

4. 4
8. Imbalances in physical distribution:
a. affect production minimally.
√b. can severely affect production.
c. affect only materials movement and storage.
d. do not mean much to a firm.