Operations Management

Chapter 13 : Materials Management

Necessity of Materials Management
Functions of Materials Management
Production Control
Inventory Control
Materials Handling
Materials Management Technology
Robots
Automated Storage and Retrieval Systems
Automated guided vehicles
Materials Management Techniques
JIT Purchasing
Kanban Systems
ABC Classification Systems

Chapter Summary

Every organization invests a considerable amount of capital on materials. In many cases, the cost on materials exceeds 50 percent of the total cost of goods produced. Such a large investment requires considerable planning and control so as to minimize wastage. Materials management encompasses all operations management functions from purchasing to the final delivery of the end items.

The scope of materials management includes decision on purchasing raw materials, management and control of work in progress items, stores and warehouse management, and the shipping and distribution of finished products. The materials flow is divided into three different overlapping functions - production control, inventory control and the materials handling function.

The objective of the production control function is to regulate the flow of materials throughout the manufacturing cycle. The departments that are part of the production control function are the purchasing, receiving, raw materials inventory and production departments. The inventory control function covers raw materials inventory, the production department and the finished goods department.

The materials management function handles the physical movement of materials into, through and out of the firm. The departments that are involved in material handling functions are the purchasing, receiving, raw material inventory, production, finished goods inventory, shipping, distribution and warehouse departments. Storage of materials is an important aspect of materials management.

All types of materials such as. raw materials, work-in-progress, finished goods, spare parts and other consumable goods are stored such that they are easily available whenever and wherever required. Usage of technology has improved the efficiency of the material handling. The technologies that are commonly used in materials handling are robots, automated guided vehicles, and automated storage and retrieval systems.

Techniques used in the management and control of material in an organization include the Kanban system, the ABC classification system and JIT purchasing. Through proper management and control of materials, an organization can achieve significant cost saving, reduction in lead time, improvement in production efficiency and reduction in wastage.

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