1. Materials Management Planning and controlling the flow of materials
Objectives:
Maximize the use of the firms resources
Provide the required level of customer service

2. Income = Revenue - Expense
Company Objectives
Income = Revenue - Expense
Need to increase income with:
Best customer service
Lowest production costs
Lowest inventory investment
Lowest distribution costs

3. Manufacturing Planning and Control
Planning and controlling the flow of materials through the manufacturing process through:
Production Planning
Implementation and Control
Inventory Management

4. Production Planning To meet the demands of the marketplace
Establish priorities
Ensure capacity
Activities
Forecasting
Master Planning
Materials Requirements Planning
Capacity Planning

5. Implementation and Control
Putting into action and achieving the plans
(made by production planning)
Purchasing

6. Inputs to the Manufacturing Planning and Control System
1. Product description
2. Process specifications
3. Time needed
4. Available facilities
5. Quantity required

7. Bill of Material
Components used to make the product

8. Process Specifications
Recorded on a Route Sheet
Describe how the product is made
Operations required to make the product
Sequence of operations
Equipment and accessories required
Standard time to perform each operation

9. Quantities Required Information from Forecasts Customer Orders
Production Planning

10. Physical Supply / Distribution
All the activities involved in moving goods
from the supplier to the beginning of the production process
from the end of the process to the customer
Transportation • Distribution Inventory
Warehousing • Packaging
• Materials Handling

11. Materials Management A Balancing Act
Transportation
Inventory
Cost
of the
Service
Customer
Service

12. World Health Organization
Materials
25 April, 2017 :
Packaging materials
Finished products
Rejected and recovered materials
Recalled products
Returned goods
Waste materials

13. Definition
It is concerned with planning, organizing and controlling the flow of materials from their initial purchase through internal operations to the service point through distribution.

14. AIM OF MATERIAL MANAGEMENT
To get
1. The Right quality
2. Right quantity of supplies
3. At the Right time
4. At the Right place
5. For the Right cost

15. PURPOSE OF MATERIAL MANAGEMENT
To gain economy in purchasing
To satisfy the demand during period of replenishment
To carry reserve stock to avoid stock out
To stabilize fluctuations in consumption
To provide reasonable level of client services

16. Objective of material management
Primary
Right price
Low procurement
& storage cost
Continuity of supply
Consistency in quality
Good supplier relations
Development of personnel
Good information system
Secondary
Forecasting
Inter-departmental harmony
Product improvement
Standardization
Make or buy decision
New materials & products

17. Economy in material management
Containing the costs
Instilling efficiency in all activities

18. Four basic needs of Material management
To have adequate materials on hand when needed
To pay the lowest possible prices, consistent with quality and value requirement for purchases materials
To minimize the inventory investment
To operate efficiently

19. Basic principles of material management
Effective management & supervision
It depends on managerial functions of
Planning
Organizing
Staffing
Directing
Controlling
Reporting
Budgeting
Skillful & hard poised negotiations
Effective purchase system
Should be simple
Must not increase other costs
Inventory control

20. Elements of material management
Demand estimation
Identify the needed items
Calculate from the trends in Consumption.
Review with resource constraints

21. Objectives of procurement system
Acquire needed supplies as inexpensively as possible
Obtain high quality supplies
Assure prompt & dependable delivery
Distribute the procurement workload to avoid period of idleness & overwork

22. Points to remember while purchasing
Proper specification
Invite quotations from reputed firms
Comparison of offers based on basic price, freight & insurance, taxes and levies
Quantity & payment discounts
Payment terms
Delivery period, guarantee
Vendor reputation
(reliability, technical capabilities, Convenience, Availability, after-sales service, sales assistance)

23. Storage Store must be of adequate space
Materials must be stored in an appropriate place in a correct way
Group wise & alphabetical arrangement helps in identification & retrieval
First-in, first-out principle to be followed OR ..
Monitor expiry date

24. Inventory control
It means stocking adequate number and kind of stores, so that the materials are available whenever required and wherever required.

25. Functions of inventory control
To provide maximum supply service, consistent with maximum efficiency & optimum investment.
To provide cushion between forecasted & actual demand for a material

26. Re-order level: stock level at which fresh order is placed.
Average consumption per day. lead time. buffer stock
Lead time: Duration time between placing an order & receipt of material

27. PROCURMENT OF EQUIPMENT
Points to be noted before purchase of an equipment:
Latest technology
Availability of maintenance & repair facility, with minimum down time
Post warranty repair at reasonable cost
Upgradeability
Reputed manufacturer
Low operating costs
Installation

28. HISTORY SHEET OF EQUIPMENT:
Name of equipment
Code number
Date of purchase
Name of supplier
Name of manufacturer
Date of installation
Place of installation
Spare parts inventory
After sales arrangement
Warranty period
Life of equipment
Cost of maintenance
Date of replacement

29. Maintenance sheet:
Annual maintenance contract [AMC]
Starting date
Expiry date
Service / repair description
Materials / spares used
Cost of repairs
In-house
Outside agency

30. EQUIPMENT MAINTENANCE & CONDEMNATION
Maintenance & repairs:
Preventive maintenance
Master maintenance plan
Repair of equipment

31. PREVENTIVE MAINTENANCE
Purchase with warranty & spares.
Safeguard the electronic equipments with: (as per guidelines)
Voltage stabilizer, UPS
Automatic switch over generator
Requirement of electricity, water, space, atmospheric conditions, etc. Must be taken into consideration
Well equipped maintenance cell must be available
All equipment must be operated as per instructions with trained staff
Maintenance cell
Communications between maintenance cell & suppliers of the equipment.
Follow-up of maintenance & repair services
Repair of equipment
Outside agencies
In-house facility

32. DISPOSAL
1. Circulate to other units, where it is needed
2. Return to the vendor, if willing to accept
3. Sell to agencies, scrap dealers, etc
4. Auction
5. Local destruction

33. Material handling system
Right Definition :
Material handling uses the right method to provide the right amount of the right material at the right place, at the right time, in the right sequence, in the right position, in the right condition, and at the right cost.
19 July 2012
KLE College of Pharmacy, Nipani.

34. Value Analysis Defined…
Value Analysis is defined as a cross-functional objective evaluation used to improve and analyze the value of a product, system or service. The overriding goal of a Value Analysis program is to decrease cost while improving performance and/or quality.
Value Analysis is effective because it is the analysis of both function and cost.

35. Management of Business Logistics, 7th Ed.
Chapter 4
Management of Business Logistics, 7th Ed.

36. Management of Business Logistics, 7th Ed.
Materials Management
Definition - Materials management is the planning and control of the flow of materials that are part of the inbound logistics system.
Materials Management Activities
(procurement, warehousing, production planning, inbound transportation, receiving, materials quality control, inventory management, and salvage and scrap disposal)
Chapter 4
Management of Business Logistics, 7th Ed.

37. Materials Management: 1.Procurement
Buying goods and services for a firm, a process of obtaining goods and services for the firm
Importance
Contributes to the competitive advantage of the firm
Significant portion of the logistics costs
Chapter 4
Management of Business Logistics, 7th Ed.

38. Materials Management: 1.Procurement
Definition of Procurement 12 Activities
1. Identify or reevaluate needs
2. Define and evaluate user requirements
3. Decide whether to make or buy
4. Identify the type of purchase
5. Conduct a market analysis
6. Identify all possible suppliers
Chapter 4
Management of Business Logistics, 7th Ed.

39. Materials Management: 1.Procurement
Definition of Procurement Activities…
8. Prescreen all possible sources
9. Evaluate the remaining supplier base
10. Choose a supplier
11. Receive delivery of the product or service
12. Make a post purchase performance evaluation
Chapter 4
Management of Business Logistics, 7th Ed.

40. Materials Management: 2.Importance of Item and Service Purchased
Products and services purchased by a company are not all the same. Some are more important than others and require greater procurement attention.
Chapter 4
Management of Business Logistics, 7th Ed.

41. Materials Management: 2. Managing the Procurement Process in 4 Steps
1. Determine the type of purchase
New purchase
Straight rebuy
Modified rebuy
Chapter 4
Management of Business Logistics, 7th Ed.

42. Materials Management: 2. Managing the Procurement Process in 4 Steps
2. Identify levels of investment
Determine the necessary levels of investment of time and information.
The more complex the purchase, the more time needs to be spent and more information needs to be gathered to get it right the first time.
Chapter 4
Management of Business Logistics, 7th Ed.

43. Materials Management: Managing the Procurement Process in 4 Steps
3. Perform the procurement process
Do those activities that are necessary to effectively make a purchase and satisfy the user’s requirements.
4. Evaluate the effectiveness of the procurement process
Were the user’s needs satisfied?
Chapter 4
Management of Business Logistics, 7th Ed.

44. Materials Management: 2.Managing the Procurement Process
Supplier/Vendor Evaluation and Relationships
Maintaining a healthy vendor relationship is a critical part of a successful supply chain.
Developing a true partnership relationship with a firm’s vendors.
TQM begins with the vendors.
Chapter 4
Management of Business Logistics, 7th Ed.

45. Materials Management: 2.Managing the Procurement Process
Vendor Selection Criteria
Quality
Reliability
Capability
Financial
Vendor Location
Chapter 4
Management of Business Logistics, 7th Ed.

46. Materials Management: 4. Other Materials Management 5 Activities
1. Warehousing
Type of facilities required (such as open air …Chapt 8)
2. Production Planning and Control (forecasting, see Figure 4-7)
Coordinating product supply with product demand
3. Transportation
Vendor control
Modal choice (rail, water..)
Rush shipments
Inspection
Damage claims
Chapter 4
Management of Business Logistics, 7th Ed.

47. Materials Management: Other Materials Management Activities
4. Quality Control
Quality standards
did customer receive what was ordered?
Sample inspection
statistical QC from vendor to assure 100% quality
Chapter 4
Management of Business Logistics, 7th Ed.

48. Materials Management: Other Materials Management Activities
5. Salvage and Scrap Disposal
Value of scrap may be income to the firm.
Disposal must adhere to environmental regulations.
Chapter 4
Management of Business Logistics, 7th Ed.

49. Electronic Procurement
Disadvantages
Security of electronic messages
Lack of face-to-face contact
Chapter 4
Management of Business Logistics, 7th Ed.

50. Advantages of Electronic Procurement
Chapter 4
Management of Business Logistics, 7th Ed.

51. GHS Pictograms

52. Management of Business Logistics, 7th Ed.
Chapter 4
Management of Business Logistics, 7th Ed.

53. Management of Business Logistics, 7th Ed.
Chapter 4
Management of Business Logistics, 7th Ed.

54. Master Production Schedule (MPS)
Specifies what is to be made and when
Must be in accordance with the aggregate production plan
Aggregate production plan sets the overall level of output in broad terms
As the process moves from planning to execution, each step must be tested for feasibility
The MPS is the result of the production planning process

55. Bills of Material
List of components, ingredients, and materials needed to make product
Provides product structure
Items above given level are called parents
Items below given level are called children