Quản trị kinh doanh - Material management

Material ManagementDefinitions It is defined as an organizational concept, which has the authority and responsibility of all activities, concerned with the flow of materials in the organization.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.Material management is a scientific technique, concerned with Planning, Organizing &Control of flow of materials, from their initial purchase to destination.Planning and controlling the flow of materials2AIM OF MATERIAL MANAGEMENTThe fundamental aims of the Materials Management function ,often called the famous 5 Rs of Materials Management, are acquisition of materials and services  : 1. of the Right quality 2. in the right quantity of supplies 3. At the Right time 4. At the Right place 5. For the Right costObjectives of MMFrom the management point of view , the key objectives of MM are;To buy at the lowest price , consistent with desired quality and serviceTo maintain a high inventory turnover , by reducing excess storage , carrying costs and inventory losses occurring due to deteriorations , obsolescence  and pilferageTo maintain continuity of supply , preventing interruption of the flow of materials and services to usersTo maintain the specified material quality level and a consistency of quality which permits efficient and effective operation4Classes of materials Raw materials:- These are materials that are used in the product which is in an unprocessed condition.Purchased Parts:- These are the items used in the assembly of the product.In-progress materials:- They are called ‘work in progress’ inventories. These goods require further processing.Finished materials:- These are fully manufactured goods, inspected and ready for delivery to the customers.Supplies:- These are consumable goods used in the process of manufacturing.5Company ObjectiveIncome = Revenue - ExpenseNeed to increase income with:Best customer serviceLowest production costsLowest inventory investmentLowest distribution costs How Materials Managementaffects company’s Profit Direct laborDirect materialVaries with volume soldOverheadDoes not vary with volume soldMaterials Managementand Profits (continued) Dollars % of Sales Sales Revenue $1,000,000 100Cost of Goods SoldDirect Material $500,000 50Direct Labour $200,000 20Overhead $200,000 20Total Cost of Goods Sold $900,000 90 Gross Profit $100,000 10Materials Managementand Profits (continued)Reduce Materials by 10% and Labour by 5% Dollars % of Sales Sales Revenue $1,000,000 10Cost of Goods SoldDirect Material $450,000 45Direct Labour $190,000 19Overhead $200,000 20Total Cost of Goods Sold $840,000 84 Gross Profit $160,000 16Profit has increased 60% Advantages of material managementIt eliminates unproductive handling of the materials like back-tracking, rehandling etc.Reduced operating costs and timely productionIt reduces idle machine capacity and thus ensures better turnover on investment.It helps in maintaining effective production planning and controlIt reduces considerably the idle time of the workers.10Manufacturing Planning and ControlPlanning and controlling the flow of materials through the manufacturing process through:Production PlanningImplementation and ControlInventory ManagementProduction PlanningTo meet the demands of the marketplaceEstablish prioritiesEnsure capacityActivitiesForecastingMaster PlanningMaterials Requirements PlanningCapacity PlanningFirm orders from knowncustomersForecastsof demand from estimatesAggregateproductplanMasterproductionschedule(MPS)Materialplanning(MRP)EngineeringdesignchangesBill ofmaterialfileInventorytransactionsInventoryrecordfileReports13Inputs to M R PImplementation and ControlPutting into action and achieving the plans(made by production planning)PurchasingInventory ManagementTo support production (Raw Materials) or as a result of production (Finished Goods)Provide a buffer against the differences in demand rates and production ratesHow much is enough? EOQMATERIAL HANDLINGWhat is material handling?Material handling is the movement, storage, management and guard of materials, goods and products during all the stages under manufacturing, distribution, consumption and disposal. Material handling is very diverse as it covers racks, shelves, multifaceted conveyor belts and automated storage and retrieval systems. The Ten Principles of Material Handling The Key to Greater Productivity, Customer Service and ProfitabilityTen Principles of Material HandlingSpace utilizationLife cycle costEnvironmentalAutomationSystemUnit LoadErgonomicWorkStandardizationPlanning20