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

2. 06/04/20202
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

3. 06/04/20203
Material Expenditure
Sr. No. Avg. Exp. Of
Materials (%)
Industry
01 > - 65 Cotton yarn, Earthmoving equipments, Sugar, Wool,
Jute, Commercial vehicles, Fabrication
02 60 - 65 Cotton textile, Bread
03 55 - 60 Engineering, Non ferrous
04 50 - 55 Ship building, Chemicals, Tyre, Machine tools,
Cement, Electricity,
05 45 - 50 Pharmaceuticals
06 40 - 45 Steel, News paper, Aircrafts, Fertilizers
R.V.Kolhe

4. 06/04/2020 R.V.Kolhe4
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

5. 06/04/2020 R.V.Kolhe5
Process

6. 06/04/2020 R.V.Kolhe6
Integrated approach
 What is integrated approach?
 Is it really required?
 What are consequences of not implementing
integrated approach?

7. 06/04/2020 R.V.Kolhe7
MM Functions
 Material planning
 Purchasing
 Receiving
 Stores
 Inventory control
 Scrap & Surplus disposal

8. 06/04/2020 R.V.Kolhe8
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

9. 06/04/2020 R.V.Kolhe9
– 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

10. 06/04/2020 R.V.Kolhe10
– 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…

11. 06/04/2020 R.V.Kolhe11
 Inventory control covers
 Setting the inventory levels
 ABC analysis
 EOQ
 Setting safety stock levels
 Lead time analysis
 Reporting

12. 06/04/2020 R.V.Kolhe12
 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.

13. 06/04/2020 R.V.Kolhe13
 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.

14. 06/04/2020 R.V.Kolhe14
 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

15. 06/04/2020 R.V.Kolhe15
Advantages of Integrated concept
 Better accountability
 Better coordination
 Better performance
 Adaptability to EDP (electronic data processing)
 Other

16. 06/04/2020 R.V.Kolhe16
THANK YOU