This document discusses the importance of materials management in India's developing economy. It notes that India spends 15,000 crores rupees annually on materials, with 3000 crores spent on imports and 2500 crores locked up as net material stock. The document advocates for an integrated approach to materials management, bringing together functions like materials planning, purchasing, inventory control, and stores management. An integrated approach allows for better coordination, accountability, and performance compared to operating these functions separately.
1. MATERIALS MANAGEMENT
By: Prof. R. V. Kolhe
Assistant Professor,
Civil Engineering Department
Sanjivani College of Engineering,
Kopargaon
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Importance
India's developing economy:
– 15000 crores rupees of material
purchased every year
Imports 3000 crores
Net Material stock 2500 crores (lock up)
Directorate General of supply and disposals
buy materials worth Rs.1200crores.
R.V.Kolhe
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ROI (Return on Investment)
ROI = Profit Sales
Sales Fixed Asset + Current asset
x
ROI depends on the manner in which materials are used.
Fixed asset = Capital all ready sunk
Scope = Efficient management of materials constituting
towards the current asset
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Functions defined
Scope of materials management is vast; some
major functions:
– Materials planning and control:
Material planning & control is done based on sales
forecast and production plans; it involves
Estimating the individual requirement of materials
Preparing materials budget
Forecasting the levels of inventories
Scheduling the order
Monitoring the performance
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– Purchasing
Purchasing includes
Selection of source of supply
Finalisation of terms of purchase
Placement of purchase order
Follow-up
Maintenance of smooth relations with suppliers
Approval of payments
Evaluating and rating the suppliers
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– Stores and Inventory control
This involves physical control of materials.
Preservation of stores
Minimising obsolesce and damage
Maintaining stores records
Proper location and stoking
Physical verification of stock
Reconciling stock with records…
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Inventory control covers
Setting the inventory levels
ABC analysis
EOQ
Setting safety stock levels
Lead time analysis
Reporting
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If these functions are separately handled, conflict of
interest occurs
Purchasing department if operated independently may
treat discount as an important parameter for purchasing;
which will result in sub-optimization.
That is; we need to balance the conflicting objectives
from total organisations point of view.
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Integrated set-up:
Materials manager is responsible for all interrelated
functions.
He is in position to exercise control and coordinate
the conflicting objectives of individual functions.
Helps in rapid data transfer through effective and
informal communication system.
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Out put:
Integrating of various functions ensures that
message channels are shortened and the
various functions identify themselves to a
common materials management departments;
which in turn results in greater coordination
and better control
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Advantages of Integrated concept
Better accountability
Better coordination
Better performance
Adaptability to EDP (electronic data processing)
Other