2. INTENT
Meaning
Concept
Objectives
Essentials of Material Control
Advantages of Material Control
Techniques of Material Control
Purchase Department
Objectives of PD
Qualifications and Duties of Purchase Manager
Levels of Stock
Economic Order Quantity
Store Keeping and Stock/Inventory Control
3. MEANING AND CONCEPT OF MATERIAL CONTROL
Meaning :
Providing right quantity of material of the right quality at the right time and place at the minimum
cost. Material control is an important function of the management.
Regulation of an organization relating to procurement, storage and usage of materials in such a way as to
maintain an even flow of production without excessive investment in material stock.
Defined as, “A systematic control over purchasing, storing and consumption of materials, so as to
maintain a regular and timely supply of materials, at the same time avoiding over- stocking.”
4. OBJECTIVES OF MC
Objectives :
To make available all types of materials and stores of right quality without any interruption
To make purchase of materials of required quality to the standard fixed for finished product
Purchase of materials at reasonably low cost or at maximum economy
Investment in materials should not tie up huge amount of capital. Overstocking has its own
limitations.
To avoid abnormal wastage, leakage, etc. of the materials, store-keepers must be trained to minimize
the loss of stores
To avoid obsolescence of materials by adopting better method of issue of materials
To provide the management with information of raw materials - cost, availability, etdc..
To ensure proper storage and utilization of materials
5. ESSENTIALS OF MC
Should be co-operation and co-ordination among the departments dealing with materials – purchasing, receiving, testing,
storage, production planning of materials
Purchasing of materials should be centralized under expert personnel
All items in the store should codified, classified and standardized
Proper forms to be used – issue, transfer, return of material etc.
Material storage to be planned to avoid losses from theft, deterioration, damage, evaporation, pilferage, etc.
Store control measures – ABC analysis, stock verification, etc.. Should be introduced
Stock at different level to be ensured – Avoid shortage, over stocking
Purchasing quantity to be fixed – reduce the ordering costs and carrying costs
Materials and supply should be properly stored
Receiving and inspection procedure to be chalked out
Regular reports of materials purchased, issued, obsolete, spoiled, defective, etc. to be submitted to the management
6. ADVANTAGES OF MC
Material Control has to facilitate the following:
- Elimination of waste in the use of materials
- Reduction of risk of loss on account of theft, loss, fraud, etc.
- Availability of the right quality of material in time
- Avoidance of overstocking
- Possibility of economic buying
- Reviewing and revising of product design and savings in material
- Quick and accurate availability of data and savings in material
- Preventions of production delays
7. PURCHASE DEPARTMENT
Starts with initiation of purchase requisition and ends with receipt of materials by stores and payment of bills.
Large firms, entrusted to an efficient purchasing department headed by Purchase Manager or Chief Buyer.
Roles of Purchase manager :
- Posses good knowledge of the requirements of the firm and know the quality and grade of a product
- The source of supply of needed store-items
- Posses administrative and organizational ability
- Good knowledge of market trends
- Conversant with the Mercantile Law, Contract Act, Sale of Goods Act, Insurance Act, etc
- Man of high integrity and honesty
- Facilitate in continuous flow of material from store to the production department
- Quick in taking decisions
- Maintaining good relations among the subordinates
- Obtain maximum value of every rupee spent by him
8. OBJECTIVES - PD
• Specialisation
• Economy in Purchasing
• Optimum Investment
• Maintenance of cordial relationship
• Developing alternative sources
• Adoption of best methods
• Source of Information
9. LEVELS OF STOCK
Demand and supply method of stock control :
a) Levels of Stock b) EOQ
Levels of stock:
• Minimum stock level
• Maximum stock level
• Danger level
• Reorder level
10. EOQ
Factors like cost of purchasing and receiving, normal
consumption, interest on capital, availability of storage
accommodation, ordering and carrying costs
a) Carrying cost
b) Ordering cost
EOQ = √ 2AB
CS