A Modern Approach to Materials Management

Introduction to Materials Management The efficiency of any manufacturing organisation depends on the availability of component parts and materials in the proper quantity, quality, price, range and time. Failure in any of these areas increases costs and decreases profit as certainly as outmoded production methods or ineffective selling techniques. This simple but obvious point has only recently come to be properly understood. This book presents the principles, methods and strategies that represent the modern approach to materials management in all sectors of the economy. In analysing business operations, the phrase "Value-added concept1' is often used to characterise the difference between the cost of component materials and the selling price of the finished product. This difference in value represents the unique contribution of each organisation to the production process. Many companies produce component parts and materials for other firms manufacturing specialised products Remanded by the customers. On an average, a manufacturing firm buys slightly more than half of the rupee value of its sales. In other words, the value added is typically less than 50 per cent of its sales. Conversely, the average company purchases materials valued at more than half of what it sells. Therefore, a firm's profit is to a large extent determined by how effectively it procures and manages these materials. The organisational approach known as materials management has gained validity in recent years. Production and operations managers found it necessary to develop an organised body of knowledge related to planning, acquisition and utilisation of materials in the process of production and it has resulted in the discipline known as "mate-rials management". All activities involved in bringing materials into and through the plant are combined under one head known as "materials manager". By giving the materials manager overall authority, responsibility is centralised to assure that