Materials Management is the process of supplying goods and services to an organization in such a way that it achieves its objectives. The objectives include procurement, storage and movement of the materials to achieve maximum profit.
As per definition, Material Management is the process of planning, procuring, processing and providing raw material in the right quantity, in the right place, at the right time, with the right cost for production purposes. It comprises of processes such as time management, cost management, schedule management, etc.
Types of Material Management
Material management if of different types:
1. Materials Requirements Planning
It is one of the most important steps in material management as the inventory of materials costs around 60% of the total investment. The amount of material utilized directly affects the profit earned by the organization. Lesser the amount of material used, the more the profit gained.
Nowadays, few industries are considering a new strategy to gain maximum profit. It is termed as Just in Time (JIT), which involves practically no inventory. However, it is not possible to avoid the inventory of materials required for production.
The profit gained by any organization depends on the efficient and economical purchasing of its various materials from the suppliers as around 60% of the total capital investment is done for the purchasing of the various materials. There is a simple rule: lesser the cost of purchasing material, more will be the profit gained.
3. Inventory Planning and Control
Inventory is the term used to denote various kinds of goods industry has at a particular time. It includes finished goods, goods ready for sale, goods used in production, etc. Nowadays, the company follows a simple strategy: materials are purchased and brought in the stores just before they enter the production stage or just before they are sold out. This cuts the cost of maintenance of inventory. For ideal material management, zero inventories are considered.
There are three types of inventories.
(i) Raw materials
(ii) Purchased goods
(iii) Finished parts and components
4. Flow and Supply of Materials
Material Management is a vital part of Supply Chain Management. During the distribution of materials to various production centers, their continuous supply must be maintained. Lack of inventories creates situations of stock-outs which lead to huge losses to the organization.
Poor storage of materials is also sometimes responsible for the disruption of material supplies. The material management department must have alternatives supply systems so that production work continues.
5. Quality Control of Materials
The quality of material used in production is of great importance. It is the quality of a starting material that determines the quality of finished goods. That’s why it is necessary to examine the quality of materials before purchasing. Durability, dimensional accuracy, dependability, high performance, reliability and aesthetic value are some of the parameters used for determining the quality of the material. Do you intend to shape your career in the field of material management? If so, then you can pursue courses offered by MIT School of Distance Education (MIT-SDE). Currently, this distance learning institute offers an 18-month Post Graduate Diploma in Management (PGDM) and a 24-month Post Graduate Diploma in Business Administration (PGDBA) with specialization of Material Management. The courses equip you with the right skills to execute material management strategies. So, apply for the course to gain a competitive edge.