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Unit III of PMM in Class BBA 5th Sem

The document discusses unit III notes on production and material management. It covers topics like material and its definition, objectives and importance of material management, functions and scope of material management, and components of an organization's material information system including forecasting, planning, purchasing, warehousing, and inventory control. The key goals of material management are ensuring the right quality and quantity of materials are available at the right time and from the right sources at optimal cost.

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Rahul Gupta
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170 views4 pages

Unit III of PMM in Class BBA 5th Sem

The document discusses unit III notes on production and material management. It covers topics like material and its definition, objectives and importance of material management, functions and scope of material management, and components of an organization's material information system including forecasting, planning, purchasing, warehousing, and inventory control. The key goals of material management are ensuring the right quality and quantity of materials are available at the right time and from the right sources at optimal cost.

Uploaded by

Rahul Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Unit III notes of Production and Material Management

Material:- Material is the basic component by which any goods can be produced.
Many things can be included in material such as raw materials, equipments,
loose tools etc.

Material Management:- Material management is the functioning of purchasing


and related activities so as to achieve the maximum coordination and optimum
expenditure in the area of materials.

OR

Materials management is a core function of supply chain management, involving


the planning and execution of supply chains to meet the material requirements of
a company or organization. These requirements include controlling and
regulating the flow of material while simultaneously assessing variables like
demand, price, availability, quality, and delivery schedules.

Objectives of Material Management:-

Primary Objectives Secondary Objectives


1. Low Price. 1. New Materials and Product.
2. High Inventory Turnover. 2. Economic Make or Buy decisions.
3. Continuity of supply. 3. Standardization.
4. Consistency of quality. 4. Product improvement.
5. Development of Personnel. 5. Economic forecasts.
6.

Importance of Material Management:-

Faster inventory turnover.


Continuity of supply.
Reduced lead time.
Less duplication of efforts.
Easy Material forecasting.
Improved Supplier relationship.
Personnel development.
Functions of Material Management:-
Material Management functions accomplish the main objective of making
available materials and services of right quality in the right quantity at the right
time from the right source at the right price.
Major functions of of materials management are:-
❖ Material Planning and Budgeting.
❖ Procurement of materials.
❖ Issue of Materials.
❖ Inventory control.
❖ Vendor Development.
❖ Material Handling.
❖ Disposal of scrap.
❖ Purchase analysis and research.

Scope of Material Management:-

● Planning of what is needed, how much, where and when to fulfill the
objective of the org.
● Procuring of the raw materials, parts, components or subassemblies to
meet the schedules on time from the required sources.
● Follow up or tracking to ensure that the plans and schedule are adhered to
expediting, record keeping, data collection and information feed back all
these facilitates Controlling.
● Receiving, incoming, inspection and storing and issuing of the raw
materials, component parts,sub-assemblies and work in progress required
by the manufacturing function comes under Storing.
● Movement, packaging, delivery of materials etc comes under handling.
● Distribution of the finished goods, warehousing, packing and shipping to
customer comes under distribution.
Organization’s Material Information System:-

The management information system can provide a manager the needed


information in the right form, at right time and right place.
The efficient functioning of an organization largely depends upon a continuous
process of information flow in which information is received, stored, processed
and exchangeḍ. An information system for materials management integrates
various functions such as forecasting, materials planning, purchasing,
warehousing and inventory management. Such an information system requires
the combined effort of people, equipment, processing facilities and the operating
procedures which are aimed at meeting the information requirements of the
material management system.

Material Information System consists of:-


❖ Forecasting Requirements.
❖ Material planning.
❖ Purchasing.
Creation of supplier data base.
Sourcing evaluation.
Supplier performance history.
Maintenance Of product specification.
Purchase order release
Order status
Purchase order follow up.
Analyzing price cost data..
Payment to supplier.
Invoices.
Order acknowledgment.
❖ Warehousing.
❖ Inventory Control.
Periodic valuation of inventory.
Inventory status in store ledger.
Reports of high or low stocks and reorder level.
ABC analysis.
VED analysis.
EOQ analysis.
Work in progress inventory status
Finished goods inventory status.

Integrated Management Information System helps in:-

1. Accuracy in reporting demand and inventory.


2. Reassuring fast response to changes in supply or price of materials,
changes customer taste and so on.
3. Measuring performance of functions such as purchasing, sourcing,
vendor rating and inventory control.

Standardization:- Standardization is the process of creating protocols to


guide the creation of a good or service based on the consensus of all the
relevant parties in the industry. The standards ensure that goods or services
produced in a specific industry come with consistent quality and are
equivalent to other comparable products or services in the same industry.

Simplification:-

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