Materials Management – An integrated View

The various components of the management of materials were discussed such as:

1. Purchasing
2. Inventory Control
3. Storage and materials handling
4. Physical Distribution of materials

Each of these is equally important and although some division of responsibility and authority is necessary for dealing with them, we cannot treat them as isolated water tight compartments. The decisions taken by a purchasing executive will have to be tempered or modified by the consideration of inventory control; the decisions taken by inventory control have to be taken in the light of feedback provided by the purchasing department; similarly, inventory control has to reckon considerations of storage and handling of materials and vice versa. Physical distribution and its attendant problems have their own feedback effect on the control of inventories of finished goods and therefore on work in process and raw material inventories. In short there is an interrelationship between the different functional elements of materials management.

Let us elaborate a bit. We have seen that the purchasing department has a major role to play as a ‘window’ to the external supply market. In fact, this is one of the most important roles of the purchasing executive. This sensitivity to the changes in the market should be utilized by the inventory control department. Certain circumstances may occur whereby the purchasing manager might advice the inventory control department to cut down or delay the procurement of certain raw materials and supplies, or he may advice the procurement of a larger than usual quantity of the bought out materials at a certain point of time. In such circumstances, the inventory control department should not keep its mind closed to this information. It is true that the function of the inventory control department is to minimize the cost of inventory keeping. But the point that may be sometimes lost, in the zeal to minimize the inventory cost, is to minimize the over all organizational costs related to inventory over a sufficiently long period of time.

The usual inventory control decisions are after all taken with certain or normal positions assumed. It is possible that the underlying premises for the inventory control policies might change due to the changes in the supply market con

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