Challenges In Material Management

As per major activity groups involved in materials management in any manufacturing organisation, several issues emerge, which need to be considered while discharging its functions: some of these are

1. Issues related to materials planning

2. Issues related to purchase

3. Issues related to stores or inventory

4. Issues related to material handling and disposal

These are being discussed in greater detail.

1. Issues related to materials planning

a) Materials Identification: 

Materials management department closely and continuously coordinates with the engineering and design, production and process to help identify the materials, sub- assembly, spare parts, tool and equipments needed in the process and manufacture of end products. It provides information with respect to various options, alternative materials available /or could he made available to meet the needs of production. The engineering and design, production and process departments assess these alternatives for suitability to the design from functional point of view, from processing point of view, i.e. whether it will help in easier, faster more efficient performance of process operations? Through meticulous assessment each of the material, component etc is identified. This assessment is a continuous process depending on new materials, substitutes, supply conditions or internal changes in the products, process methods, designs or schedules.

b) Standardisation

Basic purpose of standardisation is to achieve inter- changeability of parts /components internally in the organisation or even across industry. Second purpose is to reduce the number of vanities of parts / components uses in the production process of the organisation.

For example: in manufacture of motor car a large number of nuts and bolts of different dimensions, different specifications may he in use, suitable for various applications in the product. Suppose there are 100 different types of nuts and bolts being used. Through proper standardisation this number of different types can be brought down to 20 or 30 without compromising on functional quality and requirement of the product.

c) Make or buy

Large organisations, (even small organisations ) usually are not in a position to manufacture all parts or components required to be used in the product manufactured by them. This is because :

• It may not he economical to manufacture internally

• In house, expertise / technical skill may not be available

• Additional capital required to set up facilities for the manufacture of the component may not he available

• Specialized manufactures-suppliers of the specialized components may be operating in the market, the components of the right quality may he available at competitive rates

From time to time it needs to be reviewed whether certain items may he more advantageously manufactured in house or to be brought from outside. Materials management activity helps the organisation in taking this decision from time to time. Engineering and design, production, finance departments etc also join together to help take this decision. A decision to make an item in house has long term implications because the company's funds are to he invested into fixed assets to create the manufacturing facilities. Such a decision is very difficult to reverse later on.

d) Coding & Classification

A system of classification and codification for all items/ parts/components, needs to be devised and implemented. So that detailed descriptions need not be referred to every time. The code assigned to an item is uniquely identified. It should be uniformly understood by all concerned in the organisation. The following factors need to considered t tile devising a classification and codification system:

• The basis of classification and codification should he same and consistently applicable to all items

• It should cover all items presently in use and should he capable to take up any new items in future

• Every item should have a unique code / or number such that there is one-to-one correspondence between code and the item. No Two codes should refer to the item, and no two or more items should have same code

• The code should be uniformly used and understood throughout the organisation by the concerned persons. It should be simple to understand and apply. It should normally be self explanatory. 

e) Quality Specification

Materials department, engineering and design department, production department, collectively decide on required quality standards for every items; so as to achieve the desired quality of the end product at the same time meeting the cost target of the end product. Agreed upon quality is precisely specified and becomes part of the item description and also integral part of the code used to identify the item. Usually it is in the form of physical, chemical or performance specifications. Where Engineering Drawing or Blue prints are provided for the part, the quality specifications become integral part of such Drawing or Blue print. Other ways of specifying quality, (which. may be used single or in combination) are:

• By providing samples or prototype

• By providing manufacturing operation specification

• By Brand or Trade name

• By specifying well accepted market grades

• By specifying testing procedures and relevant standards

• By specifying / providing engineering drawing / blue prints. Proper quality specification are of greate help to the purchase department, the suppliers, and the inspection and testing sections.

2. Issues Relating to Purchasing

a) Centralized Vs Decentralized Purchasing 

This issue is comparatively more important and relevant to large corporations operating multiple plants may or may not be located at different places. For a single place organisation decentralization might be feasible on a very limited scale. There are advantages relevant to both the policies. At times, better results can be achieved through combining the two and specifically demarking the items or volumes for which central or local purchasing is responsible.

Some of the possible advantages of centralization are:

a)              Favourable price mid terms can be negotiated because of large volume purchases.

b)             Specialised vendors/ancillaries can be encouraged to take up manufacture and supply of items/components of requited and specified quality.

c)              Administration and control is comparatively more easy and efficient.

d)             Number of personnel required is comparatively less resulting into reduced overhead costs of purchasing.

e)              Paper work, record keeping is consolidated. Possible to develop uniform procedures and policies.

f)              Easier to maintain the quality of purchased parts items: through centralized testing and inspection. It is also possible to conduct testing and inspection at

                                      die vendors

References

• Materials Management, P. Gopalkrishna, M. Sundaresan, Prentice Hall Of India Pvt, Ltd., New Delhi, 1998

• https://www.businessmanagementideas.com/materials-management-2/integrated-materials-management/7026