Group MembersSaurabh

Sayli

Khushbu

Yuvraj

Nilesh

Sohail

Nitul

MATERIAL MANAGEMENT

Introduction

What do you mean by the term “Material”?

IntroductionMaterial is the central item & activity of any organization.

An Organization exists & works for material.

The main purpose of any organization is to make profit which gets generated due to material.

The International Materials Management Society takes a lead role in looking after activities in this field.

The Indian Institute of Material Management is working to promote excellence in Material Management in India.

Organization of Materials

The Materials department is generally having following subsections:

• Office & Administration activities.• Purchase.• Receiving the incoming material.• Stores & Warehousing.• Transport & internal material

movement.• Dispatching the semi-finished &

finished materials.

Objectives of Material Management

Economic Make or Buy.

Participating in development of new materials & products.

Favorable reciprocal relations

Development of good records.

Development of Personnel.

Development of good suppliers & maintain good relations.

Keep the department expenses low.

Purchase Material at Low rates.

Objectives of Material Management

Balancing & Achieving the Objectives.

Achievements bring Sacrifices

Effects of Business Changes.

Cutting operating costs.

Regulating Inventory.

Expansion of business by acquisitions.

Forecasts.

Interdepartmental Relations.

Product Improvement.

Standardization.

Place of Materials Department

Materials Department

Engineering Department

Production Planning

Product Design

Plant Management

Personnel

Industrial Engineering

Manufacturing Shops

Marketing Department

Place of Materials DepartmentRelationship with Materials Department

• Engineering Department• Production Planning• Product Design• Plant Management• Personnel• Manufacturing Shops• Marketing Department

Development of Materials Department

Minor activities such as receiving & shipping comes under this department.

It provides maximum specialized staff assistance to manufacturing & marketing in their physical distribution

problems.

It becomes a genuine value adding activity for purchased materials.

The purchase activities get grouped together under a single executive & along with other materials activities.

Materials Management activities are performed primarily along with other activities.

Role of Materials ManagerMust understand the inventory process exerting continuous pressure to keep stocks down.

Gets the job done through a process of evaluation, gradually assuming responsibility for all phases of materials management.

Three of the most important functions of materials manager:

• Purchase of materials.• Material movement.• Storage of materials.

Role of Materials Manager

He should be effective in his work.

A successful manager should achieve inventory control & supply material for manufacturing.

Production control is also important as manufacturing schedules are related to in-process & raw materials inventories.

Activities such as shipping & material handling are most participants in manufacturing cost, hence should be known by d manager.

Types of Organizations

Function Based Organization.

Location Based Organization.

Product or Project Based Organization.

Process Based Organization.

Types of Organizations

•Work is divided by function.

•Receiving purchase requisitions.

•Preparing the records for a buyer.

•Discussions & Negotiations.

•Contacting suppliers & following up.

•Actually places orders.•Preparing purchase

orders.•Filling the records.•Stores binning &

distribution.

Function Based

Organization.

Types of Organizations•Expands its operation at

number of places.•Every place need separate

material department.•Division of work by

location is desirable at some level.

•Division of responsibility by location is essential.

•Materials personnel can work more closely with the other departments in the factory.

Location Based

Organization.

Types of Organizations

•Buyers are assigned to some product or group of products.

•Information about the complete product & all types of components going in to the product is present.

•They can contribute well towards the changes in the product.

•It is for limited life of the project.

Product or Project Based

Organization.

Types of Organizations•The buyer or set of buyers

are experts in specific process or stage of manufacture.

•Responsibility passes from department to department.

•The process manager is responsible for all phases of material management in certain areas of the plant.

•Each material manager looks after his own requirements, managing his own inventories.

•He places his own orders & does follow up.

Process Based

Organization.

Functions of Materials Management

Make or Buy. Facilities Procurement.

Calculating Quantities for Scheduling.

Ordering of Material.

Packing the finished goods & storing &

dispatch.

Distribution of Material.

Inventory Control Activity.

Safety Margin.

Material Movement.

Cost Estimates.

Using Standard

Components.

Supplier Development.

Guiding Design

Decisions.

Introducing New

Materials.

Centralized & Decentralized Material Management.

Centralized Mater

ial Manageme

nt.

•The controls are better & the interdepartmental coordination is good.

•After company grows & becomes multi product & multi location, the functioning is kept centralized & caters to all the product groups.

•In this the company has 4 divisions operating independently. The general managers of respective product groups report to the President.

Centralized Materials Organization President

General Manager (A)

Sales

Design

Personnel

Manufacturing

General Manager (B)

Sales

Design

Personnel

Manufacturing

General Manager (C)

Sales

Design

Personnel

Manufacturing

General Manager (D)

Sales

Design

Personnel

Manufacturing

Finance Central Materials

Centralized & Decentralized Material Management

Decentralize

d Mater

ial Manageme

nt.

•Each group cells have their own materials management set up to get better control on the activities.

•Here the divisions of products have their own materials department.

•The General Managers have their own organizations & report to the President.

•The President is not responsible for any materials activity.

•They don’t have a common materials department.

Decentralized OrganizationPresident

General Manager

(A)

Sales

Design

Personnel

Manufacturing

Materials

General Manager

(B)

Sales

Design

Personnel

Manufacturing

Materials

General Manager

(C)

Sales

Design

Personnel

Manufacturing

Materials

General Manager

(D)

Sales

Design

Personnel

Manufacturing

Materials

Finance

Case Study of ECILEClL-An OverviewElectronics Corporation of India Ltd.(ECIL) is a Public Enterprise under the Department of Atomic Energy established with the purpose of supporting India’s Nuclear Power Programme and help the country achieve self-reliance in professional electronics. Over the years the company evolved itself into a multi-product and multi-disciplinary organisation with focus on Computers, Control Systems and Communications. In the post-liberalisation scenario, the compulsions of global competition on local soil guided its Vision, Mission and Objectives as follows:

• Vision.To help the country achieve self-reliance in Strategic Electronics.

• Mission.To strengthen the status as a valued national asset in the area of Strategic Electronics meeting the requirements of Atomic Energy, Defence, Space, Civil Aviation, Security and such other sectors of strategic importance.

• Objectives.• To strengthen the technology base and thereby the capability to combat

technology denials.• To promote creativity and innovation and realise higher levels of operational

efficiency through    actionable learning.• To attain and maintain world-class competitiveness by pursuing global

benchmarks.• To lay down plans and programmes for effective succession at senior

management level.• To consistently ensure a customer-centric organisational culture.• To achieve steady growth in business performance and generate reasonable

internal resources.

Case Study of ECIL

The Crisis The post-liberalisation period of 90s was characterised by intense competition from both the MNCs and private sector. The impact of the globalisation process and the sanctions in the wake of Pokhran-11 experiments have brought the company to the brink of sickness in 1998-99. ECIL suffered a loss of Rs.10 crore in 1997-98 and a substantial loss of Rs.60 crore in 1998-99. The net worth of the company was badly eroded and ECIL had to be reported to BIFR.

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