Materials Management is referred to as the practice through which the required good and services are supplied to an organization to fulfill its objectives of purchasing, storing and flow of materials. The process is primarily concerned with the planning, procurement, storage and provision of right material in right quantity, of right quality and at right time in order to organise and program the production activity through proper integration in an industrial enterprise. It is indeed the daily activity in many industries, engaged in buying materials, transporting them to the plant, changing the materials into parts, assembling them into finished products, selling and transporting the product to the consumer. An effective materials management facilitates the implementation of these activities that are further dependent upon various materials to be managed, their inventory control, and for movement and supply at different locations.
About two decades ago, there was very low competitive markets related to selling consumer items manufactured by various industrial undertakings, neither was the availability of raw materials to manufacture the finished products was ever scarce. And thus, materials management was never as critical then as it is today and was never given a special recognition in the organizations. Nevertheless, today things have changed drastically; materials management has taken an important seat in every industrial setting, for production streamlining. It is imperative to arrange for all types of materials before initiating the production activity that would be required for production and further supply at different production centers.
Broadly, planning, purchasing, inventory planning and control, storage, materials supply, handling and transportation are major elements of materials management, of which planning, purchasing and scheduling are three key functions of materials management – all centered upon enhanced productivity. Besides, materials management also helps in keeping the cost of production to the minimum, streamlines production and increases profitability. In addition to managing the material cost and its supply, the process also assists in its proper utility, movement, storage, handling and distribution. The planning stage encompasses market research and forecasting of product sales and purchase of materials required for manufacturing the product. Routine-based activities include purchase of material, its procurement, transportation, storage, inventory control, quality control and inspection of materials and products supplied at different production centers prior to production activity. The materials management department is responsible for purchasing materials, handling, packaging, warehouse planning, inventory control, bookkeeping, disposal of surplus and scraps, protection and safety of finished products, stores management, selection of marketing personnel and their training and placement. Therefore, it is very critical for a materials management department to exist in an organization to facilitate production management activities. Materials management complements marketing, sales promotion and quality, quantity and cost control activities in an organization.
The objectives of materials management can be classified into two categories, viz. primary objectives and secondary objectives. Primary objectives are composed of effective materials planning, purchasing, procuring / receiving, storage and inventory control, supply and distribution of materials, quality control, solid customer and supplier relationship, and enhanced departmental competence. On the other hand, secondary objectives are composed of efficient production scheduling, decision-making, materials specification and standardization, product designing and development, demand forecasting, material quantity assessment, quality assurance of purchased materials, material handling, use of value analysis and value engineering, capacity build of workers in materials management, and smooth movement of materials. In order to accomplish these objectives, it is important to maintain harmonious relationship and coordination amongst all employees of materials management department with each other, and with those of other departments in the organization to cater to all production centers.
Other basic yet important objectives of management in every organization include:
- Increase sales by way of sales promotion activities
- Maximize profits through economies of scale
- Improvise customer services
- Globalize the product sales
- Adapt to the advanced technology
- Maintain good employer-employee relationship
- Arrange for alternate material options
- Reduce manufacturing and other related costs
- Introduce a corporate social responsibility
The objectives of materials management should synchronize with the basic objectives of management in order to meet the objectives of the organization.
