Materials Management Concepts

Receiving and Shipping Function of Materials Management

The principal function of receiving and shipping include deliveries of inbound and outbound freight, inspection, and transfer to and from storage.   Efficient processing of materials at these points is essential for effective stock control, production, and customer satisfaction.

Receiving takes delivery of inbound shipments and releases and materials to inventory.   The major responsibilities include:

  1. Control and scheduling of deliveries.
  2. Accurate checking and recording of shipments received.
  3. Preparation for handling and storage.

Whenever possible, deliveries should be scheduled to balance the workload throughout the day.   For instance, deliveries from local vendors should be requested for the morning hours so that sufficient personnel and equipment are available for processing outbound shipments, which normally peak later in the day.… Read the rest

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Purchasing Management

The purchasing department in any organization acts as an interface between suppliers of materials and the production function.   Since materials comprise one of the largest sources of cash outlay in any manufacturing firm, their acquisition requires careful management. The responsibilities of a purchasing department include learning the material needs of the organization, selecting suppliers and negotiating price, ensuring delivery, and monitoring cost, quality, and delivery performance.

Occasionally the term procurement is used to describe the acquisition of goods and services.   This is a broader term and includes purchasing, stores, traffic, receiving, and inspection. The principal goals of purchasing are related to quality, service, price, and vendor relations.  … Read the rest

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Case Study of Walmart: Procurement and Distribution

Wal-Mart always emphasized the need to reduce its purchasing costs and offer the best price to its customers. The company procured goods directly from manufacturers, bypassing all intermediaries. Wal-Mart was a tough negotiator on prices and finalized a purchase deal only when it was fully confident that the products being bought were not available elsewhere at a lower price. According to Claude Harris, one of the earliest employees, “Every buyer has to be tough. That is the job. I always told the buyers: ‘You are negotiating for your customer. And your customer deserves the best prices that you can get. Don’t ever feel sorry for a vendor.… Read the rest

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Concept of Store Management

Storekeeping is a service function which deals with the physical storage of goods under the custodianship of a person called storekeeper or stock controller. Goods stored may be either, stores or stock. Unworked materials or raw materials are usually referred to as stores and the place where they are kept is known as stores room. Finished products ready for shipment are usually called stocks and are housed in a place called stock-room. Storekeeping, therefore, is that aspect of materials which is concerned with physical storage of goods.

Store functions concern receiving, movement, storage and issue of items- raw materials, bought out parts, tools, spares, consumables etc.… Read the rest

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Purchase Management and Methods of Buying

Purchasing is a function of procuring goods and services from sources external to the organization. In the words of Alford and Beaty,”Purchasing is the procuring of materials, supplies, machine tools and services required for the equipment, maintenance, and operation of a manufacturing plant.” According to yet another authority,” Purchasing is the procuring of materials, tools, stores and services required for the manufacture of a product, maintenance of the machines, and un-interrupted running of the manufacturing plant in a manner that guarantees the marketing of the company’s products in the quantities desired, at the time promised and at the competitive price consistent with quality desired.”… Read the rest

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Negative Aspects of Material Handling Systems

It is bad engineering and worse management practice to look only at benefits and to ignore limitations. Handling systems, at times, have consequences that may be distinctly negative. These too, should be evaluated before the changes are adopted. Some such possible disadvantages are

1) Additional capital investment:

It must be verified that the cost of the handling system is more attractively invested in the system under consideration than in any other part of the business. It should be assured that the gains expected are not based upon a more mechanized system v/s present practice, but rather the proposed new system v/s the best version of present practice.… Read the rest

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