ROLE OF MATERIALS MANAGEMENT IN OPERATIONS
Materials management is an important organized activity of any business system, which is essential for any manufacturing sector. A careful planning is required while laying the objectives.
The objectives of materials management are either set by the top management or by the materials manager himself keeping in view corporate policies. The main aim of material management is to provide efficient service of continuous supply of bought out materials at minimum cost. These can be raw materials or components for production as direct inputs, spare parts or factory operating supplies. Stock out of any of these may totally disrupt the production causing severe losses to the company.
The following are the objectives set by materials manager in the process of achieving the organizational goals :
To procure raw material at low cost
In a manufacturing firm raw materials play an important role in the process of production . They constitute about 50% of the total cost of production. Therefore, a slight reduction in the cost would certainly reduce the price which would in turn increase the profits of the firm.
To maintain consistent quality
The materials manager should look for quality, even though the raw material is available at a lower cost. As the procurement of raw materials is done only for production, finally a product is manufactured for selling; a customer would look for a quality product apart from price. Therefore, care should be taken to procure the material of precise specifications which would reduce the cost of inspection, degree of defectiveness and increase the inventory turnover, profitability and image of the company.
To ensure continuous supply of raw material
The materials manager should ensure smooth flow of supply of raw materials from suppliers or else, it would affect the process of production â€“which would substantially increase the operating costs and also increases the unit production cost.
To minimize the carrying costs and ordering costs
The material function involves the incidental costs such as costs of ordering material, freight changes, storage costs etc. Reducing any of the above costs, would substantially increase savings, which inturn increases the profits. Techniques such as Economic Order Quantity are used in order to minimize the carrying and ordering costs.
To maintain a good relationship with supplier
A good relationship with the supplier shows the efficiency of the purchase department. Maintaining a good rapport with suppliers would not only have a good image in the industry, but also leads to certain economic advantages like reasonable price, preference in time shortages, intimation about forthcoming shortages etc., which will have an edge over the competitors.
Efficient record-keeping and prompt reporting
Materials management involves huge paper work. Paper processing work should be standardized through designing forms for recurring operations, submission of copies to the needy departments. It should ensure efficient record maintenance and reproduction of records when ever necessary.
To develop new sources and new materials
Purchase research helps in exploring new sources of supply. This may result in the supply of better quality of materials at favorable terms. Procurement of cheaper substitutes than the presently used material ( without affecting the quality) if any, should be availed. Thus it would reduce the cost.
Training and development of personnel
Materials department is an indispensable part of manufacturing sector. Efforts should be made to develop the personnel by training them if necessary; such training programs will not help to improve the morale of the employees but also, contribute to the qualitative.
Due to the conflicting nature of objectives it is difficult to achieve all of them at a time. For example, low cost of acquisition and storing would come in conflict with minimizing the storing costs while, the objective of procurement at a low cost will conflict with continuous supply of materials. Thus, it is difficult to attain all the objectives at a time.