Need for integrated approach to materials department


In order to be effective, we have to attain highest materials productivity (getting the most out of material investment). This is possible when there is co-ordination and integration of different areas in materials decision making. Inventory control is dependent upon demand/supply management, lead-time, standardization, codification and variety reduction. Thus the problems are inter-dependent and inter-related. Development of Vendors affects the inventory control. The areas now integrated under the materials function are:

Planning Function: The planning part of materials management deals with the following issues:

1. Translation of the sales projections into long-term requirements of methods.

2. On the basis of updated production plan adjusted to the latest sales demand, to adjust the materials accordingly.

3. To project the facilities required for the materials management.

Production control: The production control function develops the short range operations plans and schedules from the long range plans. The function of the production control is to direct and regulate the orderly movement of materials through the entire manufacturing cycle from the procurement of raw materials to the delivery to the delivery of finished goods to- the customers, minimum inventory investment and maximum manufacturing efficiency.

Inventory control: Materials control or inventory control is a systematic procedure for ensuring the availability of items necessary to meet the production requirements at optimum cost. It is concerned with the following issues:

1. Requisition of the materials according to requirements at appropriate time.

2. Decision about the optimum size of the order which is popularly known as economic ordering quantity (EOQ).

3. To keep the updated records of the materials received, issued and held in balance.

4. To report the inventory data to those who use them as the decision tools.

Purchasing: The basic objective of purchasing is to procure the materials of desired quality in time to meet the production specifications and at the lowest ultimate cost. The main activities of purchasing are as under:

1. To select the acceptable supplier.
2. To place the purchase order with the selected supplier.
3. To expedite the delivery of materials to meet the inventory requirements.
4. To keep abreast of the market conditions for the new as well as reordered materials.

Receiving and stores: The main activities of this section are as under:

1. To accept the delivery of purchased materials, to verify them with the purchases order and packing slip, to inspect them and to prepare the ‘Goods Received Note’ for stores and accounts, and to route the received materials to stores or to the using department according to the direction of the order.
2. To issue the materials according to authorized requisition.

Shipping: The shipping function is concerned with the distribution of the finished goods. It involves the following functions.

1. To receive the finished goods from the production department and to verify the quantity

2. To pull the goods from the stores, to identify the customer, to pack and label them and to load into the vehicles for the transportation to customers.

3. To prepare shipping documents such as packing slip, bill of lading, railways receipt, lorry receipt etc. which are forwarded with the shipment.