MATERIAL MANAGEMENT

CONCEPTS & PRINCIPLES

RUPINDER DEOL
ASSISTANT PROFESSOR
AIIMS RISHIKESH
 INTRODUCTION

• The material management in the health care system is

concerned with providing the drugs, supplies and equipment

needed by health personnel to deliver health services.

• About 40 percent of the funds in the health care system are

used up for providing materials.

• It is of great importance that materials of right quality are

supplied to the consumers

 DEFINITION OF MATERIAL
• Webster defines the word “materials” as “relating to the
production & distribution of economics, goods & social
relationships of owners & labourers”.
• Housely states, “materials” should be used universally to
refer to hospital supplies & equipments.
• “Materials” thus may be defined as “equipment, apparatus
& supplies procured, stocked & utilised by an organisation”
TYPES OF MATERIALS
• DRUGS & MEDICINES- Including anaesthetic agents, vaccines & drugs required

for specific purposes.

• SUPPLIES- Required for diagnosing & treating ailments such as cotton, bandages,

gauze, dressing materials, syringes, needles, forceps, splints, plasters, trays,

bottles, linen, utensils, various chemicals & reagents/ ready kits for

investigations, x-ray plates, radiodiagnostic materials, drugs used in radiology.

• Supplies may also include items of linen like drawsheets, bed cover, mattress,

pillows, masks, aprons, surgical gowns, gloves, etc. or soaps, detergents,

antiseptics, broom, candles, match boxes, needles, stationary items, slippers for

OT, etc.
 TYPES OF MATERIALS contd..
• EQUIPMENTS & INSTRUMENTS- Office furniture, refrigerators, AC,

trolley, tables, screen, examination tables, IV stands, bedside lockers,

sterilizers, X-ray machines, ABG analyzers, pulse oximeter, defibrillators,

cardiac monitor, endoscope, oxygen & nitrous gas cylinders, washing

machines, incinerators, etc.

• FACILITIES- Include non movable materials used for long time compared

to equipments which have limited life span e.g. buildings, toilets, lifts,

water tanks, pumps, kitchen, cooking facilities telephone, etc.

 MANAGEMENT
• “Management may be defined as the art of securing
maximum results with a minimum of efforts so as to
secure maximum prosperity and happiness for both
employer and employee and give the public the best
possible service”.

John Mee
 MATERIAL MANAGEMENT
• Management means bringing together the available resources so as to achieve a specific

objective.

• Management is the function responsible for the coordination of planning, sourcing,

purchasing, storing & controlling materials in an optimum manner so as to provide a

predecided service at minimum cost.

• Housely defined material management as, “The management & control of goods,

services & equipment from acquisition to disposition”.

• Judith A Mnarandole defined material management as, “The management & control of

medical, surgical, clerical, interdepartment services & equipment from acquisition on floor

to disposition”.
 MATERIAL MANAGEMENT

• Material management is a scientific technique, concerned with

planning, organizing and controlling the flow of materials from their

initial purchase through internal operations to the service point

through distribution.

• Material management is the integrated functioning of an

organisation dealing with supply of materials & allied activities in

order to achieve the maximum coordination & optimum expenditure

on materials.
 CONCEPTS OF MATERIAL MANAGEMENT

• Material management is concerned with providing the drugs, supplies and

equipment needed by health personnel to deliver health services.

• The right drugs, supplies and equipment must be at the right place, at the right

time and in the right quantity in order that health personnel deliver health

services.

• Without proper material, health personnel cannot work effectively, they feel

frustrated and the community lacks confidence in the health services and unless

appropriate materials are provided in proper time and is required quantity,

productivity of personnel will not be upto expectation.

 INTEGRATED MATERIAL MANAGEMENT

• Close coordination of all departments which are concerned with utilisation of

materials. If some of functions are to be separately handled, normally a

conflict of interest occurs & there is bound to be an increase in materials

costs.

• In an integrated set up, materials manager is responsible for all such inter-

related functions & is in a position to exercise control & coordination with a

view to ensure proper balance of conflicting objectives of individual functions.

• Integrated material management concept has recently gained greater

importance in India. Although organisations may not be adopting it in totality,

there is a definite tendency to move towards an integrated approach.

 NEED FOR INTEGRATED CONCEPT
• The major functions served by materials management include

Material Planning, Purchasing, Receiving, Stores, Inventory

Control, Scrap and Surplus Disposal.

• If handled separately it may lead to a conflict of interest.

• Eg: if purchasing is handled separately they may over purchase

to avail discounts without considering the expenditure for stores

and inventory control, which will result in over expenditure.

 ADVANTAGES OF INTEGRATED MATERIAL
MANAGEMENT

• BETTER ACCOUNTABILITY- Centralisation of authority & responsibility for all aspects of materials

functions ensures specific accountability.

• BETTER COORDINATION- Coordination of various functions of material management is facilitated.

• BETTER PERFORMANCE- As all inter-related functions are integrated organisationally, an effective

communication & enhanced performance is a natural sequelae.

• ADAPTABILITY TO ELECTRONIC DATA PROCESSING (EDP)- All information with regard to materials

functions is centralised. This facilitates collection, collation & analysis of data leading to better

decisions. Advanced & efficient EDP systems can be economically introduced under integrated set

up.

• MISCELLANEOUS ADVANTAGES- Team spirit is inculcated resulting in coordination & cooperation.

Opportunities of growth & development are better in integrated set up.

 CORPORATE POLICY AND MM
General Corporate Policy

• Are laid out to achieve the corporate goals the organization has set for itself

• Policy must be laid out with regards to source selection, quotations, negotiations, price, quality

etc.

Quality Requirements

• Quality requirements shall be laid out precisely and steps must be taken to ensure that these are

met. If a failure to meet the QR is found steps need be defined to achieve the QR by alternate

means.

Quantity Requirements

• Clear policies shall be laid out as to what procurement procedures need be taken according to the

quantum of purchase.
 ORGANISATION AND CONTROL
• Relationship of Material Management with regard to other departments shall be

finalized to ensure adequate supply and effective utilization of resources.

Organizing Material Management

• Organization based on Commodities –items are classified according to their nature

such as raw materials used, spares, imported items etc.

• Organization based on Location – based on the spread of locations where the

materials are to be distributed a centralized or distributed MM organization shall be

put in place.

• Organization based on Function – here the MM department is structured based on

various functions like Purchasing, Stores, Transport etc.

 MATERIALS PLANNING AND BUDGETING

Importance

• Planning for materials and working out a realistic budget serves as a control

device.

Techniques

• Bill of Material Explosion – to forecast of demand of end products and based on

the demand arriving at the requirements of various materials.

• Past Consumption Analysis – used for items which are consumed on a regular

basis and items for which BoM cannot be prepared. Past consumption is

analyzed and projection for the future is made

 BUDGETING
ABC Analysis

• Always Better Control or Alphabetical approach tries to anaLyse the

distribution of any material by money value of importance in order to
determine its priority.

• Based on the money value of importance the items can be classified into A,
B and C class items.

• This approach helps the manger to have selective control and focus his
attention on a few items when he is confronted by a large variety of items.
 SOURCE SELECTION
Why Source Selection

• Source Selection has to be kept as a corporate policy

• Helps in bringing about a fair competition among the suppliers and supply

failures are kept at a minimum.

Stages of Source Selection

• Searching

• Selection

• Negotiation and Trial Orders

• Rating based on performance Quality

 OBJECTIVES OF MATERIAL MANAGEMENT

• To reduce cost of material

• Ensure a good support with suppliers(vendors)

• Effective and efficient handling of materials at all stages and in all sections.

In other hand objectives of material management

• Low purchase price

• Maintaining continuous supply

• Maintaining quality

• Cordial relationship with supplier

• Low pay roll cost

• Development of vendors
OBJECTIVES OF MATERIAL MANAGEMENT

• Good record

• Low storage cost

• Favorable reciprocal relation

• New material & products

• Standardization

• Product improvement

• Interdepartmental harmony

• Economic forecasting.
AIM OF MATERIAL MANAGEMENT

To get
• The right quality

• Right quantity of supplies

• At the right time

• At the right place

• For the right cost.

 PURPOSE OF MATERIAL MANAGEMENT

• To gain economy in purchasing

• To satisfy the demand during period of replenishment

• To carry reserve stock to avoid stock out.

• To stabilize fluctuations in consumption

• To provide reasonable level of client services

• Increase efficiency of health care systems.

• Develop knowledge and skills of health care

• Provide materials in required quantity and quality as when required.

 FUNCTIONS OF MATERIAL MANAGEMENT

• Material planning & budgeting

• Purchasing

• Inventory control

• Cost reduction

•  Value analysis

• Receiving & inspection

• Stocking & distribution

• Disposal.
 ELEMENTS OF MATERIAL MANAGEMENT

• Material planning • Standardization

• Purchasing • Production control
• Receiving & • Transportation
warehousing • Material handling
• Store keeping • Disposal scarp
• Inventory control
• Value analysis
 BASIC PRINCIPLES OF MATERIAL
MANAGEMENT
• Effective management and supervision; it deals on
material functions of; planning, organizing, staffing,
controlling, report and budgeting.
• Sound purchasing method
• Skillful and hard poised negotiation
• Effective purchase system
• Should be simple
• Simple inventory control program.
 MATERIAL MANAGEMENT IN HEALTH
CARE INSTITUTIONS
• Material management is relatively a new concept in health care field.
• Modern techniques of efficient material management were developed in US
of America during & after 2nd World war which helped industrial developed to
make spectacular progress in improving their productivity.
• Term was unknown in India till 60’s. Terms such as purchasing, store keeping,
transportation, etc. were in use in country which in a vague manner
represented the functions covered by modern material management.
• Many hospitals have started adopting this management concept in whole or in
part to accomplish the objectives of providing efficient patient care due to
increasing awareness of importance of material management in last few years.
 CONCLUSION
• Material management is an important management tool which will be very
useful in getting the right quality & right quantity of supplies at right time,
having good inventory control & adopting sound methods of condemnation
& disposal will improve the efficiency of the organization & also make the
working atmosphere healthy any type of organization, whether it is Private,
Government ,Small organization, Big organization and Household.
• Even a common man must know the basics of material management so
that he can get the best of the available resources and make it a habit to
adopt the principles of material management in all our daily activities
 BIBLIOGRAPHY
• Gupta S, Kant S. Hospital stores management. An integrated approach. 1 st ed. New

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• Chandorkar AG. Hospital administration & planning.1 st ed. Hyderabad. Paras

medical publishers.2004. p.181-215.

• Barrett J. Ward management & teaching. 2nd ed. New Delhi. The English book store.

1967.

• Kunders G D, Gopinath S, Katakam A. Hospitals planning, design & management. 1 st

ed. New Delhi. Tata Mc Graw Hill. 1998.p.282-8.

• P. Gopalakrishnan M. Sundaresan, Materials management - an integrated

approach