Material Management is a key function in every business that manufactures products or provides services directly to customers. It functions as the company’s nervous system, making sure that materials flow steadily from suppliers into storage and then out to the production floor. Once the materials are late, the whole production line is in a mess; once piled up with so many raw materials that do us no good, they withhold capital and create waste. The optimal balance between availability and costs In order to avoid both position extremes a professional material management system strikes the best compromise.
Material management is not merely a matter of a support activity. It is a business critical function impacting efficiency, quality, customer service and profitability. That facilitates appropriate resource utilization The significance with the material management process is found in what students can learn by understanding what is material management, objectives, importance of material management and functions Importance of Material Management Principle Advantages of Material Management Meaning Role Organisation English Detailed It also leads to intelligent use and application of resources in a business enterprise.
What is Material Management?
Material Management is a scientific technique, concerned with Planning, Organizing &Control of flow of materials from their initial purchase to destination. It ensures that the right material is available on time, in the right quantity, at the right place and in proper form.
To simplify this further:
Its job is making sure production doesn’t stop due to lack and warehouse not run over from excess.
Consider a factory that produces study tables. If the supply of — wood, screws, polish or the packaging material is cut off all of a sudden, no work can be done in these factories.” On the other side, in case of top-up purchase (buying two fold wood), it might get spoiled, adjoin moisture or even occupies unwanted space. Both situations harm the business. A solid material management system ensures that the company is purchasing just what it needs, when it needs it without tying up an excess or risking running short.
Objectives of Material Management
The goals of material management go beyond maintaining stock. They help stabilize the whole system of production delivering availability, affordability and efficiency.
Our main goal is to keep the line running. Materials we need to show up in time, but not so soon that they jack the cost of where to store them. Smooth production is also contingent on quality of materials. When low-quality parts come in, the rest of production is negatively affected – resulting in defects and unhappy customers.
Another important goal is to decrease costs. Because material costs are a significant part of total production cost, small reductions in purchasing, storage or negotiation can yield profitable gains. Material management is also aimed at minimizing wastage, handling them carefully and not putting em in a situation where materials are outdated or unusable.
One of the newer goals for the management of materials is to improve relationships with suppliers. Quality suppliers enable organisations to obtain consistent quality and deliveries. They’d had these relationships for a long time and so they were able to get much better price, better payment terms and the trust was mutual.
Overall, these are practical goals that enable companies to operate effectively and keep a production line humming along without either waste of money or loss of time.
Importance of Material Management
Appreciating this importance and the impact of materials management on reasonable the effective performance of a business is easier when you think just how much it touches – or does not touch, to put it more accurately – every aspect of your company’s life. The most obvious impact is cost. Materials usually account for the largest proportion of production costs. Even a 5% efficiency in materials handling can yield a substantial leap in profit margins. That’s why companies also invest in the right level of forecast accuracy, disciplined buying and order fulfillment and stocking position.
Another important aspect is productivity. Workers would be able to get on with their work if their materials were supplied, delivered and in good condition. The machines never stop, orders move faster and products are on time to customers. It directly influences customer satisfaction and brand image as well.
Material management even organizes warehouses through systems for placement and codification. Storages that are orderly minimize material wastage and damage or even injuries as a result of inappropriate handling. Effective stock management safeguards from loss, theft and overstocking. This enables better visibility into patterns of consumption, movement through stock and forecast needs when records are kept accurately.
material management further, aids in financial planning. When you have a sense of how much material your organization is going to require, and when in the future you will need it, organizations are able to budget more efficiently. This helps alleviate any unnecessary cash flow strain and manages working capital more efficiently.
Objectives of Inventory Management & Types of Inventory Management Systems
Functions of Material Management
Material management functions are built around the entire process, from planning through using and disposal. All of these functions are essential so that goods travel in an organized and financially efficient fashion.
It is the basis for the entire system of materials planning. It’s thinking of how much more product that they will need for future production schedules. Proper material planning relies on historical consumption patterns, demand forecasts and supplier lead times to establish the required amounts. This also saves you from surprises and unnecessary shopping at the last moment.
Procurement or acquisition is also a major function. This includes finding suppliers you can trust, getting estimates, negotiating pricing and making sure what gets shipped is what you ordered. Good procurement allows the organisation to obtain high quality materials and services at competitive prices.
The receiving and inspection function checks that the delivery is the same as in the purchase order once materials have arrived. The material is counted, quality checked and documented in the inventory system added. This process ensures that the company doesn’t get naive or incorrect products shipped to it.
Storage and stock control conserve the physical and spiritual state of materials. Warehousing Meaning Warehouses are also organized to be easily accessible, free from any kind of damage and traceable at all times. Inventory management processes manage stock levels at the perfect balance, never allowing production to come to a halt because materials are not available and yet minimising waste if materials do lie idle.
Material handling is the safe, efficient and cost-effective movement of materials from receiving to storage and from storage to production. Good handling can mean less breakage, space saving, and fewer accidents at the worksite.
The last duties are distribution of supplies to multiple departments and handling with the disposal of scrap or obsolete materials. Appropriate disposal matters because it helps recover value and keeps storage areas tidy.
Add to this the way in which all of these elements work together and you get that management of material is a powerful factor in both productivity and cost.
Important Tool of Material Management
A material management employs several tools and techniques, however EOQ which is an important tool of material management that virtually every firm uses. EOQ is the mathematical model that assists in deciding an ideal amount to be reordered every time it runs out.
EOQ balances two essential costs:
Cost of ordering – also cost of placing an order
Cost of carry – cost of holding material in stock
If the company orders with too much frequency, ordering costs increase. And, if it orders too much at a time, holding costs go up. The EOQ is the order quantity for which total cost (including cost of procurement and holding) is the minimum.
If, for instance, a company requires 24,000 units of a particular material per year, it could either distribute the order as 2,000 units per month or make fewer bulk transactions. EOQ identifies the optimal amount to order to achieve the lowest total costs and maintain a constant supply.
Due to its simplicity, ease of comprehension and applicability, the EOQ principle is still widely used in present day material management systems.
Principles of Material Management
Material handling is guided by a few determinable principles which facilitate efficiency. Usually, these principles are referred to as getting the right amount, right quality, right time, right price, right place and the right kind. Each principle guarantees that the materials are bought and managed in a cost-effective manner. These rules combine to help minimize waste, preserve quality and ensure production runs smoothly.
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Conclusion
Material Management is overhead and beyond storing and issuing material. This is a dynamic system that affects cost, efficiency, quality, continuity of production and customer satisfaction. Strong material management practices prevent wastage, reduce inventory pressure, enhance relationship with suppliers and maintain regular production. For BBA or management career pursuers, insight to the deeper aspects of Material Management, its purposes, significance and functions along with its tools such as EOQ can enrich them enough to take up any real business decision anywhere.
FAQs on Material Management
What is Material Management?
Material Management is an important management function which ensures that the right quality and quantity of materials as well as machinery are equipment’s supplied at the required place, in time at to most competitive prices.
Why is Material Management important?
As for why, is certainly a cost-saving measure which also increases efficiency, guarantees ongoing production and helps to keep customers happy.
What is the basic purpose of Material Management?
In such a manner as to avoid too much or too little stock of material in order not to have more stock than necessary.
What is the most important instrument of Material Management?
Economic Order Quantity (EOQ) is a popular method to find the lowest-cost order quantity.
What are the important functions of Material Management?
Planning, procurement, receipt, storage, stock control and handling of materials, issue and disposal of scraps.
👨💼 Author: BBAProject Editorial Team
✍️ The BBAProject Editorial Team comprises business graduates and educators dedicated to creating practical, syllabus-based learning resources for BBA students.
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