2. 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.
3. 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
4. PURPOSE OF MATERIAL MANAGEMENT
•To gain economy in purchasing
•To carry reserve stock to avoid stock out
•To stabilize fluctuations in consumption
5. Primary
•Right price
•Low procurement
•& storage cost
•Continuity of supply
•Consistency in quality
•Good supplier
relations
•Development of
personnel
Objective of material management
Secondary
•Forecasting
•Inter-departmental
harmony
•Product improvement
•Standardization
•New materials & products
•Favorable reciprocal
relationships
7. Four basic needs of Material
management
1.To have adequate materials on hand
when needed
2.To pay the lowest possible prices,
consistent with quality and value
requirement for purchases materials
3.To minimize the inventory investment
4.To operate efficiently
8. Basic principles of material management
1. 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
9. Elements of material management
1.Demand estimation
2.Identify the needed items
3.Calculate from the trends in
Consumption during last 2 years.
4.Review with resource constraints
10. CONCLUSION
Material management is an important management tool
which will be very useful in getting the right quality &
right quantity of supplies at right time, having good
inventory control & adopting sound methods of
condemnation & disposal will improve the efficiency of
the organization & also make the working atmosphere
healthy any type of organization, whether it is Private,
Government ,Small organization, Big organization and
Household.
Even a common man must know the basics of material
management so that he can get the best of the available
resources and make it a habit to adopt the principles of
material management in all our daily activities
12. PURCHASE MANAGEMENT
Purchase management is not only buying, but also
includes the planning and policy activities covering
a wide range of related and complementary
activities.
IT INCLUDES THE FOLLOWING WAYS:-
Research and development activities required for
proper selection of material and source.
Follow up to ensure timely delivery.
Coordination of activities of purchase department
with other department.
Coordination with internal division of
procurement,traffic,receiving,stores and
accounting.
13. IMPORTANCE OF PURCHASING
providing material of right quality, at right time and
at right price.
1% saving in material cost is equivalent to 10%
increase in turnover.
Purchase manager spends 50% funds of the
company.
Present concept is to buy more than to produce.
Purchasing can contribute to import substitution.
It is responsible for timely implementation of the
project.
Purchase management is important part of
materials management.
14. OBJECTIVES :-
Maintaining continuity of supply:- the purchasing
function must ensure the continuous availability of
materials , supplies and equipments to maintain
production schedule.
Maintenance standards quality:- the purchasing
function must ensure that the material purchased
must be of required quality in order to produce
the goods.
Avoidance of duplication ,waste and
obsolescence:- the purchasing authority must
have the accurate knowledge of the items in hand
and the requirements for a particular period in
order to have proper decision in view of long
15. • Maintenance of company’s competitive position:- this is neces
make sure that company’s quality standards are not lower th
close competitors.
• Maintenance of company’s good image:- the purchasing agen
create a good image in the minds of suppliers . This will help
purchasing operation and to discover new ideas and materia
lowering its cost or improving products.
•Developing alternative sources of supply:- alternative sources
must be exposed for increasing the bargaining power of the b
minimizing the cost of purchases. Purchases can be made fro
sources if a particular supplier fails to supply goods.
16. FUNCTIONS OF PURCHASING
There are two functions of purchasing
department
:- PRIMARY FUNTION
:- SECONDRY FUNCTION
17. PRIMARY FUNCTION :-
• Obtaining prices
• Selecting vendors
• Awarding purchase orders
• Follow up
• Adjusting and setting complaints
• Training of purchase personnel
• Vendor relation
• Inventory control
18. SECONDARY FUNCTION :-
Scheduling order and deliveries
Proper inspection and accounting
Market research
Contract and agreement
Transportation and tariff
Make or buy decision
Sales of scrap , salvage and surplus
