Material Management: An Overview

Material Management Overview

• Core function of supply chain management
• Involves planning and execution of supply chains to meet material requirements of a company
• Includes controlling and regulating material flow
• Requires assessing variables such as demand, price, availability, quality, and delivery schedules

Objectives of Material Management

• Ensuring the right material is available
• Making materials available at the right time
• Providing materials in the right amount
• Securing materials at the right price
• Sourcing materials from the right sources

Types of Material Management

• Material Requirements Planning
• Purchasing
• Inventory Control
• Material Supply Management
• Quality Control

Scope Management

• The process of identifying, defining, and controlling outputs, outcomes, and benefits
• Scope refers to the totality of outputs, outcomes, and benefits in project management, including the work required to produce them

Material Requirement Planning (MRP)

• Computer-based inventory management technique
• Designed to improve productivity for businesses
• Ensures materials and components are available in the right quantity and delivery schedule
• Considered as Inventory Control
• Useful in production scheduling and purchasing of materials

Material Requirements Planning Steps

• Identify the product type
• Estimate the demand and volume
• Explore required raw materials and components
• Evaluate existing inventory levels
• Examine manufacturing capacity
• Plan the production and cost
• Schedule the delivery

Advantages of MRP

• Assurance that materials and components are available when needed
• Minimized inventory levels and associated costs
• Optimized Inventory Management
• Reduced customer lead time
• Increased manufacturing efficiency through accurate production planning and scheduling
• Optimized use of labor and equipment
• Increased labor productivity
• Ensured capacity utilization
• Increased overall customer satisfaction

Disadvantages of MRP

• The MRP system can be difficult and expensive to implement
• Potential for increased inventory cost if companies hold more inventory than necessary
• Dependence on accurate information

Purchasing

• The act of buying goods and services a company needs to operate and/or manufacture products
• Four types of purchased used in business:
• Standard purchase order
• Planned purchase order
• Blanket purchase order
• Contract purchase orders

Types of Purchase Orders

• Standard Purchase Order: Used for one-time orders companies don't expect to make regularly.
• Planned Purchase Order: Contains similar detail to standard order but delivery date and location are undetermined, with timing being most important.
• Blanket Purchase Order: An agreement with a vendor for future purchases with an unknown quantity of items; include same details as planned purchase orders except the quantity and delivery specifics; sometimes called a "standing order".
• Contract Purchase Order: Specifies negotiated terms and conditions between a business and a vendor, acting as a contract for future purchase orders, and provides guidelines for their occurrence.

Purchase System Types

• Forward Buying: Retailers purchase units during a particular period, hold some in inventory, and sell them in subsequent periods.
• Tender Buying: Involves inviting bids for a project and accepting a formal offer.
• Blanket Order System: A customer places orders with their supplier with multiple delivery dates over a period and negotiate pricing with predetermined advantages with a recurring need for expendable goods.
• Zero Stock: Ordering the exact quantity to be sold, with receipt of goods into stock occurring when needed without on-hand inventory.
• Rate Contract (RC) or Rate of Agreement: A procurement cost reduction strategy aimed at standardizing procurement prices for commonly procured, homogenous, and price varying inputs.
• Reciprocity: The practice of exchanging things from one business to another for mutual benefits.
• Systems Contracts: Exclusive contracts with designated suppliers for specific commodities of goods or services, including pricing and other agreements.
• Stock Level- parts and materials checked against specs and blueprints being approved.

Basic Traffic Activities

• Selecting common or charter carriers and routing for dispatch/shipments as required
• Tracing in-bound shipments of materials
• Auditing invoices from carriers and filing claims for refunds or excess charges
• Developing techniques to reduce transportation costs
• Packaging finished products, labeling, and loading of end products and disposal of scraps

Integrated Waste Management

• A systematic approach to control and dispose of waste
• Aims to divert solid waste and minimize harmful methods like incineration

Benefits of Integrated Waste Management

• Greater service coordination for efficient delivery, and cost savings
• Municipal Solid Waste(MSW) as "clean" stream needing less revenue with more recycling revenue
• Strengthening and expansion of economies
• Conservation of energy, emissions and resources
• Growing the market for environmentally responsible products

Advantages of Integrated Material Management

• Better Accountability
• Better Coordination
• Better Performance
• Adaptability to EDP
• Miscellaneous Advantage

Comprehensive Waste Stream Analysis

• Method used for determining what materials are being dispatched and what proportion.
• Addresses questions about Municipal Solid Waste (MSW) such as how much is generated/diverted, and what the community's waste stream components are

Extended Producer Responsibility (EPR) Policies

• Based on the "polluter pays" principle
• Policy that shares the cost of sustainable disposal with manufacturers and consumers

Human Engineering (Ergonomics)

• Study of the man in relation to work
• Concerned with man-machine systems
• Aims to design tasks, machine systems, and workflows that create an effective accomplishment in jobs

Objectives of Human Engineering

• To enhance the efficiency and effectiveness of activities to increase convenience, reduce errors, and boost productivity
• To enhance desirable human values, including safety, reduced stress, fatigue, and improved quality of life

Just-In-Time (JIT) Manufacturing

• Manufacturing system that aims to eliminate waste and continuously seek improvements to respond to market needs

Seven Wastes

• Overproduction Waste: Reduce set-up times, synchronize quantities and timing between processes, and address layout problems.
• Waiting Waste: Eliminate bottlenecks and balance uneven loads with flexible workforce and equipment.
• Transportation Waste: Optimize layouts and locations, and minimize transportation handling.
• Processing Waste: Questioning the reasons for product existence and each process’ necessity.
• Stocks Waste: Reduce waste by reducing all other inventory wastes
• Motion Waste: Conduct motion studies for consistency
• Defect Waste: develop manufacturing processes to prevent defects and eliminate inspection

Codification

• The process of representing each item by a number, where the digits indicate the group, sub-group, and dimensions of the items.

Objectives of Codification

• Bring all items together
• Facilitate the addition of future items in their proper place
• Classify items according to their characteristics
• Assign a unique code number to each item to prevent duplication and ambiguity
• Highlight excessive variety and promote standardization and variety reduction
• Establish a common language for identifying items
• Set essential parameters for specifying an item
• Specify items according to national and international standards
• Enable data processing analysis

Value Analysis

• An organized creative approach that identifies unnecessary costs without impacting quality, use, life, appearance, or customer features
• Focuses on engineering, manufacturing, and purchasing to achieve equivalent performance at a lower cost
• Addresses costs added due to inefficient or unnecessary specifications and features
• Value is not inherent in a product but is a relative term that changes with time and place

Value Analysis Framework

• To understand item and function costs and possible cheaper alternatives:
• What is the item?
• What does it do?
• How much does it cost?
• Who else would do the job?
• What would be the alternative cost?

Steps in Value Analysis

• 1. Identify the function.
• 2. Evaluate the function through comparison.
• 3. Develop alternatives, if necessary.
• 4. Brainstorm alternative options

Further Considerations in Value Analysis

• Further focus should be given to inventory, waiting, defects, overproduction and transportation

Store Management

• Includes handling and recording item receipts, holdings, and issuances
• Manages inventory levels to avoid overstocking
• Returns damaged and/or defective items
• Stores incoming and outgoing items

Functions of Store Management

• Receiving and accounting for raw materials, components, tools, equipment, and other items.
• Providing adequate storage and preservation for various items
• Accommodating demands of consuming departments with proper issues and accounting for the consumption
• Reduce obsolescence, surplus, etc through correct handling
• Promote quality stock through proper codification, preservation, and handling
• Ensure material handling/preservation measures are adequate
• assist with information regarding purchases.