1. Materials & Logistics Management
An Overview

2. Material Management Controlling the
kind, amount, location, movement & timing of the various commodities used in and produced by the industrial enterprise

3. Functions of Material Management
Material Planning
Purchasing
Inventory Control
Store Keeping
Stores Accounting
Transportation
Disposal of Surplus Material
Material Economics
Waste Management

4. Return on Investment Rate of ROR = Profit / Capital Type I Type II
Profit / Sales X Sales / Capital
= =
Profit Margin X Capital Turnover Ratio
ROR Improvement-
Increase Profit by Keeping Capital Constant
Reduce Capital by Keeping Profit Constant

5. Importance of Material Management
Increasing Profit by Keeping Capital Constant
Increase Number of Units Sold
Increase Production
Increase Unit Price
Reduce Unit Cost

6. A) Increasing Profit Keeping Capital Constant
Lifeline of Any Organization
Dividend Distribution to Shareholders
Employees- Wages & Job Security
Additional Capital for Business Expansion
Capital for Maintenance & Replacement
Improves Quality of life

7. Profit Sales - Cost (Units Sold (Units Produced
X Unit Price) - X Unit Cost)
Example-
Car Production Cost- Rs. 3,25,000/ Unit
Car Sales Cost - Rs. 4,25,000/ Unit
Profit per Car Sale - Rs. 1,00,000/ Unit
Increase Sale OR Increase Production
Increase Unit Price OR Reduce Unit Cost

8. Capital Reduction
Fixed Capital- Land, Buildings, Plant & Machinery etc.
Working Capital- Salary, Maintenance, Inventory, Raw Material Purchase etc.
ROR = Profit / Capital

9. Material Management Cost
Raw Material Cost
Govt. Levies & Taxes
Procurement Cost
Inventory Cost
Packaging Cost
Material Handling Cost
Freight Cost
Insurance Cost
Wastage during Receipt, Storage, Production

11. Activity Chart of Materials Management Department
Materials Planning
Make- or- Buy Decisions
Purchasing
Receiving & Inspection
Storage
Inventory Control
Material Distribution
Transportation
Disposal of surplus & scrap material
Developing new suppliers
Import substitution
Vendor Development
Insurance Management
Cost reduction & control
Waste Management
Material Research

12. Benefits of Integrated Material Management Department
Fast & accurate decision making
Fault finding or improvement activities
Improved Coordination bet departments
Improvement of Inter-department relationship
Data collection & analysis for decision making
Systematic approach to every aspect of process

13. Materials Department Interface with Other Departments
Operations
Accounting & Finance
Design & Engineering
Stores
Inspection & Quality Control
Maintenance Department
Suppliers or Vendors
Material Planning
Personnel & HR
Sales & Marketing

14. Supply Chain Management
Definition-
It is a sequence of organizations – their facilities, functions & activities- that are involved in producing & delivering a product or a service.
SCM is nothing but designing, managing & controlling of this sequence efficiently resulting into customer satisfaction with increase in profits.

15. Evolution of SCM

16. Need of SCM To Improve operations
Increase in outsourcing services/ products
Control on transportation cost
Market Competition
Globalization
E-commerce
Inventory Management
Complexity of various functions of Supply Chain

17. Benefits of SCM Lower Inventory Lower Cost Higher Productivity
Greater Agility
Shorter Lead Times
Higher Profits
Increased Customer Loyalty

18. Elements of SCM Element Issues Customers
Determine Demand for product / services
Forecasting
Prediction of Customer Demand
Design
Improvement in quality/ characteristics of product/ services
Capacity Plan
Matching Demand & Supply
Processing
Quality Control & Working Schedule
Inventory
Maintaining Optimum Inventory Levels
Purchase
Make or buy Decision at times
Supplier
Monitoring, Developing & Maintaining
Location
Selection of Location
Logistics
Choosing Mode of Flow of Materials & Information

19. SCM Approach Mode I- OLD Suppliers & Others Purchase & Planning
Production
Sales
Customers
Mode II- NEW
Supplier I,II & Others
Manufacturer I, II & III with subcontractor
Warehouses I, II, III
Retailer I,II,III, IV
Customers

20. Logistics
It is a channel regarding Flow of Material & Information in the organization.
Internal Logistics
From Stores to Packaging Department
External Logistics
From Packaging Dept. to Customer
3 PL – Third Party Logistics
Packaging Dept to Warehouse to Customer

21. Assignment I
Explain all functions & responsibilities of Materials Manager from forecasting till disposal of scrap. Also Highlight the principles followed.
Explain fully the interface and interdependence of Materials Management function with functions of a company involved into final product manufacturing & selling.
Define SCM. Explain Need, Benefits & Elements of SCM.
Short Notes-
Advantages of Materials Management in Globalised Competitive Economy
Objectives of Materials Management Function