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Material MGMT

Materials management is a method for planning and controlling materials flow in a company to ensure the right materials are available when needed. It aims to meet customer demands while minimizing costs. Aggregate planning focuses on production, inventory, and workforce levels over 3-12 months to balance costs and demand. It uses techniques like master scheduling to interface strategic and tactical planning.

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Harish Kumar
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132 views33 pages

Material MGMT

Materials management is a method for planning and controlling materials flow in a company to ensure the right materials are available when needed. It aims to meet customer demands while minimizing costs. Aggregate planning focuses on production, inventory, and workforce levels over 3-12 months to balance costs and demand. It uses techniques like master scheduling to interface strategic and tactical planning.

Uploaded by

Harish Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Material

Management
UNIT I INTRODUCTION
Operating environment-
aggregate planning-role, need,
strategies, costs techniques,
approaches-master scheduling-
manufacturing planning and
control system-manufacturing
resource planning-enterprise
resource planning-making the
production plan
UNIT II MATERIALS
PLANNING
Materials requirements
planning-bill of materials-
resource requirement planning-
manufacturing resource
planning-capacity management-
scheduling orders-production
activity control-codification.
UNIT III INVENTORY
MANAGEMENT
Policy Decisions–objectives-
control -Retail Discounting
Model, Newsvendor Model; EOQ
and EBQ models for uniform and
variable demand With and
without shortages -Quantity
discount models. Probabilistic
inventory models.
UNIT IV PURCHASING
MANAGEMENT
Establishing specifications-selecting
suppliers-price determination-forward
buying-mixed buying strategy-price
forecasting-buying seasonal
commodities-purchasing under
uncertainty-demand management-price
forecasting-purchasing under
uncertainty-purchasing of capital
equipment-international purchasing
UNIT V WAREHOUSE MANAGEMENT
Warehousing functions – types - Stores
management-stores systems and
procedures-incoming materials control-
stores accounting and stock verification-
Obsolete, surplus and scrap-value
analysis-material handling-transportation
and traffic management -operational
efficiency-productivity-cost
effectiveness-performance
measurement
REFERENCES :
1. J.R.Tony Arnold, Stephen N. Chapman, Lloyd M.
Clive, Materials Management, Pearson, 2012.
2. P. Gopalakrishnan, Purchasing and Materials
Management, Tata McGraw Hill, 2012
3. A.K.Chitale and R.C.Gupta, Materials Management,
Text and Cases, PHI Learning, 2nd Edition, 2006
4. A.K.Datla, Materials Management, Procedure, Text
and Cases, PHI Learning, 2nd Edition, 2006
5. Ajay K Garg, Production and Operations
Management, Tata McGraw Hill , 2012
6. Ronald H. Ballou and Samir K. Srivastava, Business
Logistics and Supply Chain Management, Pearson
education, Fifth Edition
7. S. N. Chary, Production and Operations Management,
Tata McGraw Hill , 2012
What is Materials Management?
Materials Management is a method for planning,
organizing and controlling the activities that are
related to the flow of materials in a company. This
can lead to the control of the location, movement
and time of those materials from their introduction,
production, manufacturing process and final
delivery.

Materials management makes sure the materials


available are aligned with the customer demands,
thus giving a schedule of costs and resources that
the company has or needs. Materials management
controls the flow of materials with demand, prices,
quality and delivery schedules
5Rs of Material Management
The objectives of material management are
sometimes referred to as the ‘Five Rs of
Materials Management:’

The right material


At the right time
In the right amount

And of the quality that is:

At the right price


From the right sources
Operating Environment

Operations management works in a complex


environment affected by many factors. Among
the most important are

government
 the economy
 Competition
customer expectations, and
quality
Government. Regulations

Government. Regulation of business by the


various levels of government is extensive.

Regulation applies to such areas as the


environment, safety, product liability, and taxation.

Government, or the lack of it, affects the way


business is conducted.
Economy
General economic conditions influence the
demand for a company’s products or services and
the availability of inputs.

During economic recession the demand for many


products decreases while others may increase.

Materials and labor shortages or surpluses


influence the decisions management makes.
Shifts in the age of the population, needs of
ethnic groups, low population growth, freer trade
between countries, and increased global
competition all contribute to changes in the
marketplace
Competition.
Manufacturing companies face competition from
throughout the world.

They find foreign competitors selling in their


markets even though they themselves may not be
selling in foreign markets. Companies also are
resorting more to worldwide sourcing.

The Internet allows buyers to search out new


sources of supply from anywhere in the world as
easily as they can from local sources.
Customers
Both consumers and industrial customers have
become much more demanding, and suppliers
have responded by improving the range of
characteristics they offer.

Some of the characteristics and selection


customers expect in the products and services
they buy are:
• A fair price.
• Higher-(right) quality products and services.
• Delivery lead time.
• Better presale and after-sale service.
• Product and volume flexibility.
Quality
Since competition is international and
aggressive, successful companies provide
quality that not only meets customers’ high
expectations but exceeds them.
Order qualifiers

Generally a supplier must meet set minimum


requirements to be considered a viable competitor
in the marketplace.

Customer requirements may be based on price,


quality, delivery, and so forth and are called order
qualifiers. For example, the price for a certain type
of product must fall within a range for the supplier to
be considered.
Order winners

To win orders a supplier must have characteristics


that encourage customers to choose its products
and services over competitors’.

Those competitive characteristics, or combination


of characteristics, that persuade a company’s
customers to choose its products or services are
called order winner
Manufacturing Strategy

A highly market-oriented company will focus on


meeting or exceeding customer expectations and
on order winners.

In such a company all functions must contribute


toward a winning strategy. Thus, operations must
have a strategy that allows it to supply the needs
of the marketplace and provide fast on-time
delivery.
Delivery lead time.
From the supplier’s perspective, this is the time
from receipt of an order to the delivery of the
product. From the customer’s perspective it may
also include time for order preparation and
transmittal.
Aggregate Planning
The aggregate planning concentrates on
scheduling production, personnel and inventory
levels during intermediate term planning horizon
such as 3-12 months.

Aggregate plans act as an interface between


strategic decision and short term scheduling.

Aggregate planning typically focuses on


manipulating several aspects of operations-
aggregate production, inventory and personnel
levels to minimize costs over some planning
horizon while satisfying demand and policy
requirements.
Planning
Process

Aggregate
Planning
Aggregate Planning Costs

Basic production costs (fixed and variable):
material costs, labor costs, overtime pay.

Production rate-change costs: hiring, training,
layoff/firing, adding/cutting shifts.

Inventory holding costs: cost of capital, storage,
insurance, taxes, spoilage, shrinkage,
obsolescence.

Backlog costs: expediting, loss of customer
goodwill, loss of sales revenue from cancelled
orders (due to product unavailability).
Approaches to aggregate planning
Top down approach to aggregate planning
involves development of the entire plan by
working only at the highest level of
consolidation of products. It consolidates the
products into an average product and then
develops one overall plan. This plan is
disaggregated to allocate capacity to product
families and individual products.
Approaches to aggregate planning contd...
A bottom-up approach or sub-plan
consolidation approach, involves
development of plans for major products or
product families at some lower level, within
the product line. These sub-plans are then
consolidated to arrive at the aggregate plan,
which gives the overall output and the
capacity required to produce it.

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