Need, Scope and Functions of Integrated Material Management

Considering the primary and secondary functions of materials management, the materials management coordinates with different departments of a manufacturing firm. The cost of manufacturing is a major investment in materials in any manufacturing firm, going up to 55-65% of the total sales value. Soon after the materials are purchased by the organization and brought into the production centers, their value begins to increase in the form of costs associated with materials order, transferring them to inventory, and their maintenance and handling. To achieve economies of scale in costs related to materials management, the organization needs to implement a clear-cut method of planning the quantity of materials to be ordered and stored as inventory and work-in-process inventory. Similarly, to bring reduction in the costs of materials purchase, the manufacturing firm should adopt effective and dynamic techniques of materials management to adapt to the frequent fluctuations in demand and production.

The term ‘integrated material management’ refers to the management of resources in an integrative manner to make way for national economic development, through efficient utilization of MIS, advanced technologies and innovative, economic materials for manufacturing. The management needs to develop a comprehensive materials management system to establish a pathway for the most effective use of the resources through new technological advancements, methods and concepts. The major resources are the manpower, materials and money, and hence, the critical importance of materials management. Out of these three resources, materials should be managed through proper integration to achieve the following functions:

  • Decide on the purchase of materials
  • Ensure the centralization of power
  • Coordinate all functions of the departments
  • Ensure quick and accurate decision-making
  • Administer data analysis by Electronic Data Processing (EDP) and use of computing technology
  • Emphasize on the opportunity for growth

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