The document discusses raw material management and inventory control in manufacturing organizations. It addresses several key points: 1) Efficient raw material management is critical to the overall performance of a manufacturing organization. It involves determining economic order quantities, re-order levels, and minimum/maximum stock levels. 2) Effective inventory control, including forecasting, planning, inventory control, scrap control and disposal, is important for efficient operations, profitability, and survival. 3) Maintaining the right stock levels can improve working capital utilization and profitability. Both overstocking and understocking raw materials can cause problems. 4) Proper documentation and systems are needed to provide reliable information for planning, follow-up

1. Introduction
 The importance of raw material to efficient
operation of a manufacturing organization
cannot be over underlined
 In the form of
right quality
availability of the raw
material
right quantity
of the ensuing
output
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2. Conti…
RMM is critical to the overall performance
 Nearby demand and other forces like competitor’s
actions
RMM is to determine on the bases of efficient
management and effective planning which include
economic order
quantity (EOQ)
re-order level
minimum/maximum
stock levels
2

3. Functions of Material
Management
 Organized and operated on an integrated basis and is
also presumed to be responsible for material
 forecasting,
 planning,
 inventory control,
 scrap control
 and disposal
 information regarding purchases and inventories within
the framework of the financial policies
3

4. Conti…
 RMM efforts towards achieving efficiency in the
 procurement,
 transportation,
 stocking and
 utilization of inputs of a manufacturing organization
4

5. Conti…
 Effective and efficient functioning of the
material management has direct bearing on
the total performance of the organization
 Holding the right stock level could improve the
level of
available
working capital
Could be
profitably
employed in
other areas
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6. Literature Review
RELATIONSHIP BETWEEN INVENTORY AND RAW
MATERIAL
Inventory refers to totality of stocks, being held by a
business enterprise at a particular time. It includes
1) Raw materials,
2) In-progress or semi finished goods,
3) Finished goods.
4) Other stocks such as: tools, spare parts and
production consumables.
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7. Conti…
 Raw materials are component parts of the stock of
inventories carried by a manufacturing firm at a
given time.
 Every organization has inventories of some type and
the economics and techniques of inventory
management are critical for
 efficient operation,
 profitability
 and survival; especially in a highly competitive
environment
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8. Relationship Between Inventory
And Raw Material
 Inventory control is a method of recording and
reporting the movement of raw materials within a
company:
from material
stock room
any of the
manufacturing
processes
finished product
stage
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9. Classification Of Inventory
Management System
 The use of inventory management system in RMM
practice is commanding today;
 Mantho (1994) classified Inventory Management
computer based activities into three broad areas:
1
Inventory record
keeping
2
Inventory
decision-making
3 Material
requirement
planning (MRP)
system:
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10. Inventory management effected by the these
variables..
High
inflation rates
& more buying
low availability of
traditional materials
High costs of
labor leading to
less making
Rapid
development
of micro
processors
increasing # of
suppliers entering
the procurement
market software in
decision
making support
systems
New technological
innovations lead
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11. Important Elements In Raw Material
Management
The key elements for efficient material
management
Purchasing
Inventory
Control
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12. Conti…
 Another important issue in material management is the
matter of
 The proper documentation is provide timely and reliable
information for planning, follow-up and control.
M
• Maintaining good
systems and procedures
D
• Strict discipline in
documentation
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13. Material Management Problem:
 The manager becoming interested in inventory further
spare parts operation, management became interested in
the first place
 Over- stocking as identified above is not the only problem
in material management.
 Under-stocking could lead to a bigger problem
13

14. Conti…
In (2008) made a study of
40 small and medium
enterprises (SMEs) in
Bangalore, India of
manufacturing industry
sector.
For low inventory
management practices
Material Management practices were poor
formal practices for managing inventories
was also inadequate.
lack of appreciation for Inventory
Management (IM) among the entrepreneurs
lack of qualified staff
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15. Conti…
Todd (Article writer) Prescribed rules;
A. The implementation should be considered as a
planned and strategically business improvement.
B. Implementation should deliberate on people not the
systems.
C. Determine a long-term vision of future to provide a
focus for real business benefits.
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16. D. The project must have a full time project manager
reporting to a multi-disciplined executive management.
E. An educational plan must be constructed in line with
software and computer system plans.
F. Before the system goes to live, the base data must be
audited and achieve an acceptable level of accuracy.
16
Conti…

17. Raw Material Management Problem In The
Nigerian Manufacturing Sector
The people give inadequate attention to trace down the
problems to find right solution at right time
 Problems faced by firms are followed as:
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18. Conti…
 The inefficient use of
 production time,
 labor and other resources
 due to delays and disturbances during
production
Effects
1) Inability to fulfill customer order
2) Low Marketshare
3) Low capacity utilization
4) loss of revenue
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19. Conti…
2) Poor liquidity position of many manufacturing concerns
i. To hold too much stock than necessary So e.g(firm need
50 tons material but place order for 90 tons)
Effects(of extra 40 tons stock)
• capital is locked
• Maintenance charges, godowns expenses,
• And org. will never regain if this extra stock become
obsolete or useless
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20. Conti…
3) All slow-moving stock items should be identified;
• Slow Moving Stock: items which are consumed from date
of reception from 60-180 days
To reduce
• Maintenance cost
• Unlock capital
• In this way, liquidity positions of manufacturing
organizations will be better.
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21. Conti…
4) Employment of illiterate employees should be reduced
as they can misplace and dislocate important files ,
documents and inventory items
 In areas where higher stock management education is
not required, (like stock keeping and records) employee
should be given adequate orientation and training.
 There should also be training and retraining of
employees to ensure that they are kept abreast of
developments in the field.
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22. 5) The use of electronic data processing devices will
remove the problem of inability to use inventory models.
22
Conti…