Chapter 4

Material handling and

management

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Material Management - Definition

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.

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Objectives and importance
Efficient use of the working capital.
Lowering inventory investment and increasing the
inventory turnover.
Responding to the market changes related to any product.
Ensuring the cooperation of all departments.
Providing best services to the king of the market i.e
customer.

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 Principles of material handling
Least handling is the best handling.

Lengths and number of move to be minimized.

Unit loads

Minimize the distance.

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Classes 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.
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Functions of material management

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Materials-Quality & Quantity
Four factors affecting the purchase of raw materials are
1. Quality :- The suitably of an item to accomplish the
intended work. The raw materials should satisfy the
following requirements.
2.Quantity
3.Price
4.Delivery Date

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Value Analysis
 Definition:- It is a systematic study of every
element for it’s cost in a part, material or service to
make certain that it performs it’s function at the
lowest possible cost.
 Benefits of value analysis:-
i. Decrease in existing cost of the product or service.
ii. Unnecessary expenditure is identified and
eliminated.
iii. Product value improves for new materials and
processes.
iv. More profits.

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Purchasing
Centralized :- the purchasing Decentralized:-
procedure of materials for Different department
different department is done purchase their
together from one requirement separately.
purchasing department. This This is basically seen in
is seen in small large organizations.
organizations.
Advantages
Advantages  Flexible purchasing
 Efficient system system
 Bargaining capabilities  Procurement is faster
increased
 Good raw material obtained
at lower price

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How is the purchasing done????
Quotations :- It is a kind of an inquiry done to
know whether the vendor can supply the desired
material and at what price.

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 How is the purchasing done????
Tenders:-
It is a written letter or a published document
that is aimed at finding the price for procuring certain
materials.

Tenders are invited from recognized firms. A few

types of tenders are:
# single tender
# Open tender
# Closed tender or limited tender
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 Spell out of specifications &
Need recognition requirements

Official requisitions

Check specifications,
Specifications Purchase
prices/supplies
file records

Inquiry tender Select suppliers Supplier’s

record

Quotations & analysis prices and terms, negotiations, finalisation

Purchase order for supply

Suppliers’ acceptance
Follow-up
Purchasing cycle
and procedure 12
Contd ….

Delivery of materials

Checking of invoice Materials & reports,

with purchase order analysis

Payment made

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 Location of Stores :
 Store should be located adjacent to the manufacturing
area.

It depends up on nature and value of items to be stored

and
frequency
Objectiveswith
: which items are received and issued
 Minimum wastage of space
 Maximum ease of operation
 Minimum handling cost
 Minimum other operational cost

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Material handling system
Right Definition :
Material handling uses the right
method to provide the right amount of the
right material at the right place, at the right
time, in the right sequence, in the right
position, in the right condition, and at the
right cost.

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Material handling system
Involves handling, storing, and controlling
material
The raw materials, in-process materials and
finished goods are moved from one place to
another in the plant.
Adds value through time and place utility
Impacts space requirement, profits, quality,
safety, and productivity
On an average, 20% of production cost is spent
on material handling system

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Twenty Principles of Material Handling
1. Planning principle
2. System principle
3. Material flow principle
4. Simplification principle
5. Gravity principle
6. Space utilization principle
7. Unit size principle
8. Mechanization principle
9. Automation principle
10.Equipment selection principle
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Twenty Principles of Material Handling
11.Standardization principle System principle
12.Adaptability principle
13.Dead weight principle
14.Utilization principle
15.Maintenance principle
16.Obsolescence principle
17.Control principle
18.Capacity principle
19.Performance principle
20.Safety principle
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Handling of materials must be performed
 Safely
 Efficiently
 At low cost
 In a timely manner
 Accurately (the right materials in the right
quantities to the right locations)
 And without damage to the materials

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Material Handling Equipment
Five categories:
1. Industrial trucks
2. Automated guided vehicles
3. Monorails and other rail guided vehicles
4. Conveyors
5. Cranes and hoists

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Nonpowered Industrial Trucks
(Hand Trucks)

(a) Two-wheel hand truck, (b) four-wheel dolly,

(c) hand-operated low-lift pallet truck

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Powered Trucks

Capacities from 450 kg up to 4500 kg

Power sources include on-board batteries and internal combustion motors

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Automated Guided Vehicles
An Automated Guided Vehicle
System (AGVS) is a material
handling system that uses
independently operated, self-
propelled vehicles guided along
defined pathways in the facility
floor

Types of AGV:
 Driverless trains
 Pallet trucks
 Unit load AGVs

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 Driverless Automated Guided Train
First type of AGVS to
be introduced around
1954
Common application
is moving heavy loads
over long distances in
warehouses and
factories without
intermediate stops
along the route

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AGV Pallet Truck
Used to move palletized
loads along
predetermined routes
Vehicle is backed into
loaded pallet by worker;
pallet is then elevated
from floor
Worker drives pallet
truck to AGV guide path
and programs destination

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Unit Load Carrier
• Used to move unit loads from station to station

• Often equipped for automatic loading/unloading of

pallets and pans using roller conveyors, moving
belts, or mechanized lift platforms

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Overhead Monorail

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Conveyor Systems
 Large family of material transport equipment
designed to move materials over fixed paths,
usually in large quantities or volumes

1. Non‑powered :
Materials moved by human workers or by gravity
2. Powered :
Power mechanism for transporting materials is contained in
the fixed path, using chains, belts, rollers or other
mechanical devices

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Conveyor Types

Roller
Skate‑wheel
Belt
In‑floor towline
Overhead trolley conveyor

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Roller Skate‑wheel Belt

Overhead trolley conveyor

In‑floor towline
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Cranes and Hoists
Handling devices for lifting, lowering and transporting
materials, often as heavy loads
Cranes
Used for horizontal movement of materials
Hoists
Used for vertical lifting of materials
Cranes usually include hoists so that the crane-and-
hoist combination provides
Horizontal transport
Vertical lifting and lowering

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Hoist

Load

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Bridge Crane Gantry Crane Jib Crane

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Salvaging and Disposal of
Scrap and Surplus
The words ‘Scrap’ and ‘Surplus’ symbolize waste and to that
extent these account for the loss of profits.

Scrap is commonly used for waste of all kinds.

These occur for the following reasons:

 Mistakes in procurement
 Wrong planning decisions
 Wasteful processes in production
 Inevitable waste during the adjustment of the equipment
 Overall absence of efficiency

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Disposal
Disposal of scrap, waste and surplus
materials can be effected by several way :

Surplus material should be returned to the

original supplier. Alternatively a customer
who needs them should be explored.
As a social obligation, some material are
defected or broken before selling them as
scrap.

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Unit load, Pelletization and Containerization
 Unit load is a set of items (raw material, semi
finished parts, finished product) to be move
together, like:
 A set of cartons on a pallet
 A set of products in a container

 In a unit load, parts are

 In something (In a carton)
 On something (On a pallet)
 Grouped by something (wrapped, strapped)
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 Advantages of material management
• It eliminates unproductive handling of the materials
like back-tracking, rehandling etc.

• It reduces idle machine capacity and thus ensures

better turnover on investment.

• It reduces considerably the idle time of the workers.

• The quality of the materials is also maintained

through minimum human touches, elimination of
breakages, etc.

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Advantages of material management
Every inch of the factory space is
properly utilized.

The issue of materials is also facilitated.

It helps in maintaining effective

production planning and control.
Reduced operating costs and timely
production.

Greater job satisfaction on the part of

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 COST REDUCTION
“Cost cutting is no longer the solution to
sustainable profitability, the key to success
is finding creative ways to prevent cost.”

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DEFINITION
“Cost reduction is to be understood as the achievement
of real and permanent reductions in the unit cost of
the goods manufactured or services rendered without
impassing their suitability for the use that is
intended”- ICWA London.

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Achieving the goals of cost reduction
 Reducing the cost per unit.
 Increasing productivity.

How to reduce cost?

 Elimination of waste
 Improving operations.
 Increasing Productivity.
 Cheaper materials.
 Improved Standards of Quality.

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Cost Reduction Process
1) Analysis
2) Examination.
3) Developing Solution.
4) Selecting a solution.
5) Obtaining agreement.

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Areas of Cost Reduction
1. Material:
a) Design.
b) Purchasing.
c) Storage.
d) Transport.
e) Production.
2) Labour:
3) Overheads:
a) Increasing the production volume.
b) Extension of market and price differentials.
c) Size of business units.
4.Outsourcing
5.Sales and marketing
6.Energy
7.Production

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Implementing Cost reduction program
Set realistic goals

Develop cost reduction

program consulting all

Do an ROI analysis

Explore all options,

not only

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Advantages of Cost
A. To a particular concern
Reduction
 Improves profits.
 Improves financial position.
 Improves competitive
capabilities.
 Serves as an index of efficiency.
B. To the Industry
 One company serves as a trend setter for the other
companies.

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