Materials

Material Management !! You know that we are living in a Material world ,which consists of Only material and energy, having No beginning as well as end… Material is Nothing but unity of opposite forces Struggling every moment for a change and existence!!

Materials Management is not Rocket Science It is an art of Planning Organizing and Controlling Materials activities with scientific methods

Functions of Material Management 1. 2. 3. 4. 5.

6. 7. 8.

Materials Planning Purchasing In-coming Materials Check Materials Handling and Transportation Storage and Inventory Control Standardization and Cost Reduction Analyzing and reporting Scrap and surplus Disposal

IDIAN ECONOMY IS LPG ECONOMY Liberalized Privatized and Globalized. It means Competitive - Pressure on Margins It leads to a general trend of downsizing Automation and cutting cost in many industries…

There is a science for everything and only one best way of doing things.

So, every management want to Optimize the utility of resources like Man, Money Machine and Material With time and Technology

Though time is also a resource We can't purchase or store it. It will be free for usage But we can’t get back at any cost.

Since Material is the major Part of the total Expenses in most of the organizations It is quiet natural to attack it first..

Moreover If you cut the payroll cost employee will cry Profit Overheads * Materials

Labour

Interest

But if you cut material cost material will not cry… And it is very difficult to cut the overheads!

Respect the material ! Once in a hotel, the GM went for a round. He went to the kitchen then he found some thing wrong. He dropped one rupee coin in to the floor. Suddenly 2,3 staff came, one of them taken the coin and Given it to the GM. But he refused to take back the coin. The staff insisted “it is one rupee and it is your money, it should be there in your pocket. It is the right place for it” GM Replied “Its well and good. Have a look near the dust bin. There is a spoon, it worth around 80 rupees. Why don’t you show the same interest keeping that in to The Right place?”

Anybody will burn a bundle of Rupees 30000 ? But a maintenance staff may give a fluctuated Power Supply to an induction Cook top. Or A Production staff, may place the vessel on The same Induction cook top without water !

But The above three actions are equal… Yes, Burning of money!! Handle everything with care

Since Material is The major Part of Our total expenses It is important to Manage the same effectively

=

Use the materials what is exactly Required.

Squeeze out the Last drop out of a dried towel Measure everything even if you through it in to the river.

MESSURE WHAT IS IMPORTANT AND NOT WHAT IS CONVENIENT

P&L Of Vegetable Vendor:

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   

  

1 2 3 4……………………………….30 Days 500 500 500 500………………………Daily purchase 750 750 750 750………………………Daily sales 250 250 250 250………………………Daily profit Investment: Rs 500 Income: Rs 750x30= Rs.22500 Profit: Rs 7500 Return On Investment= 7500/500 X 100= 1500%

Lesson: Keep the materials moving !! Increase Velocity of Material Movement !!! Keep The Working Capital “WORKING”

What is Inventory ? Inventory is a stock of goods in any form like raw materials, work in progress or finished goods

Inventory Control

How to control? We can’t always control all the thousands of products kept in the store. We can use selective inventory control methods and analysis

ABC HML SDE SOS VED FSN

: : : : : :

Always Better Control High Value, Medium Value, Low Value Scarce, Difficult to Obtain, Easy to obtain Seasonal, Off-seasonal Vital, Essential, Desirable Fast Moving, Slow- , Non- moving,

In Most of the organization 80% of the consumption value is Represented only by 15 to 20% of the items, Better to control this A class items first

A-B-C ANALYSIS

100 90

Policies for A Items Only exact quantities to be procured Have more than one source Centralize procurement Individual postings , accurate records Continuous checks, low safety stock Reduce Lead Time: Regular follow up Very strict consumption control Very accurate requirement forecasting!

80

70 60 50

40 30 20 10 0

10 A

20 B

30

40

50

60

70 80 C % of total number of items

90

100

PHYSICAL STOCK VERIFICATION Use duly identified color codes -Search Free Follow Banking Method in postings Physical Issues FIFO method. Costing weighted average Methods. Verify stock of ten items daily random Verify stock of ten items fast moving Verify stock of every item monthly at the end

Important Vs Urgent If you are not doing some important works Then all your work will become urgent

Planning is an important thing….. Forecasting is a difficult art, especially if it relates to the future ! Perfect forecast is yet to be born !!” Mutual Cooperation is must with all the Internal Departments to forecast requirements. Whole is more than the sum of parts!

SUPPLY CHAIN MANAGEMENT

A supply chain in a manufacturing organization will comprise of a network of facilities to  Procure the material from the vendors  Transform the material to the end product  Distribute the finished product to the Consumer Think of a Supply Chain as a relay race with good speed by each runner and a great handoff and exchange of the baton between runners.

Green Purchasing: Re-duce, Re-use, Re-cycle !! *Establish a waste Reduction Programme *Buy Recycled, Repairable materials *Buy energy efficient equipment, materials *Reduce use of Plastics *Involve Vendors-Is it environmentally sound ? *Ensure Safety, Health & Environment * SA-8000-standards for purchasing coming soon

Standardization More the suppliers more the variations! As every supplier has a different process, Uses different raw materials & machinery, The products produced will be different. Two unreliable suppliers are worse than One Reliable supplier!. Overcome feeling of insecurity. Initiate Key Suppliers Account management Develop the reliable supplier !. Develop self-certified suppliers to reduce inspection levels.

Reports! Information should be a Proactive submission Rather than a reactive explanations !! Speak in the language of Business.. In terms of money ..

We know all the business managements are More concern about the Return on investment !!!!

Celebrate the material management day On April 23 every year

Thank you for your attention!