Materials and Stores Management: Inventory Control & Logistics
Materials Management
1. Meaning of Materials Management
Materials management is the process of planning, purchasing, storing, and controlling materials in an organization to ensure their availability at the right time, in the right quantity, quality, and at the lowest cost. It covers the entire flow of materials from suppliers to the production department and finally to distribution. The main purpose of materials management is to maintain a smooth and uninterrupted production process while avoiding wastage, delays, and excessive investment in inventory.
2. Objectives of Materials Management
The main objectives of materials management are to ensure continuous production by making materials available whenever required, maintain optimum inventory levels, and minimize material costs. It aims to reduce wastage, avoid delays, and ensure proper handling and storage of materials. Another objective is to improve supplier relationships through timely purchasing and communication. Overall, it supports the organization in reducing cost, improving efficiency, and maintaining good quality in production.
3. Importance of Materials Management
Materials management is important because it directly affects production efficiency, cost control, and customer satisfaction. Proper materials management prevents production stoppages due to material shortages and avoids unnecessary overstocking, which wastes money and storage space. It helps reduce overall production costs, ensures better planning of materials, and improves the quality of the final product. It also supports better utilization of working capital and contributes to timely delivery of goods to customers.
4. Functions of Materials Management
The functions of materials management include forecasting and planning material requirements, purchasing raw materials at the best price, receiving and inspecting materials, and storing them safely. It also involves maintaining accurate stock records, issuing materials to different departments, and controlling inventory through various techniques. Additionally, materials management handles transportation, material handling, and the disposal of scrap, surplus, and obsolete items. All these functions help in the smooth and cost-effective flow of materials throughout the organization.
5. Materials Information System (MIS)
A Materials Information System (MIS) is a computer-based system that provides timely and accurate information related to materials, such as stock levels, order status, supplier performance, and lead times. MIS helps managers make quick and better decisions by giving real-time data on the availability and movement of materials. It reduces paperwork, prevents duplication of orders, improves coordination between departments, and increases overall efficiency in materials management. MIS ensures that the right information is available at the right time for effective material control.
6. Standardization
Standardization refers to establishing uniform standards for materials in terms of size, quality, design, and specifications. By using standardized materials, organizations can reduce unnecessary variety, improve quality control, and simplify purchasing and production processes. Standardization also allows the company to buy materials in bulk, which lowers cost and reduces storage problems. It helps in achieving greater consistency and efficiency in production.
7. Simplification
Simplification means reducing the number of unnecessary varieties, types, or sizes of materials used in an organization. It focuses on eliminating items that do not add value to the production process. Simplification helps reduce inventory costs, saves storage space, and makes material handling faster and easier. It also reduces confusion among workers and improves overall efficiency. By using fewer varieties of materials, the organization can achieve better control and lower operating costs.
8. Variety Reduction
Variety reduction is the process of systematically decreasing the number of different types of materials used in production. It aims to limit excessive variety in components, raw materials, and parts. This helps the organization achieve economies of scale, reduce purchasing costs, and simplify inventory management. Variety reduction also makes standardization easier and enhances coordination between purchasing, production, and stores departments.
9. Value Analysis and Value Engineering
Value Analysis and Value Engineering are techniques used to improve the value of a product by reducing its cost without affecting its quality, performance, or usefulness. Value Analysis is applied to existing products to identify unnecessary costs, while Value Engineering is used during the design stage to create cost-effective products from the start. These techniques focus on the functions of a product and try to find cheaper and better ways to achieve those functions. They help eliminate waste, improve efficiency, and increase customer satisfaction.
Stores Management
1. Meaning of Stores Management
Stores management refers to the systematic process of receiving, storing, protecting, and issuing materials within an organization to ensure they are available whenever needed. It ensures that materials are kept in proper condition, arranged systematically, and issued only with proper authorization. The main purpose of stores management is to maintain accurate stock levels, avoid shortages or excess inventory, and ensure the smooth functioning of production without delays. Effective stores management supports the overall efficiency of the organization by reducing material losses, avoiding waste, and ensuring timely material availability.
2. Objectives of Stores Management
The primary objectives of stores management are to provide a continuous supply of materials to all departments, prevent production stoppages, and maintain sufficient stock levels at minimum cost. It aims to protect materials from theft, damage, spoilage, and deterioration through proper storage methods. Stores management also ensures accurate record-keeping, efficient use of storage space, and quick retrieval of materials. Another objective is to reduce carrying costs and improve inventory turnover. Overall, it supports efficient production and contributes to organizational profitability.
3. Importance of Stores Management
Stores management is important because it directly influences the cost, quality, and continuity of production. Without proper stores management, materials may get damaged, lost, or delayed, leading to financial loss and production interruptions. Efficient stores operations help reduce inventory carrying cost, minimize wastage, and maintain quality of materials. It ensures timely supply of materials to all departments, improves planning and coordination, and reduces emergency purchases. Stores management also contributes to better utilization of resources and overall operational efficiency.
4. Functions of Stores Management
The main functions of stores management include receiving incoming materials, inspecting them for quality and quantity, and storing them safely in designated locations. It involves maintaining stock records, issuing materials to departments based on authorized requisitions, and continuously monitoring stock levels. Stores management also uses inventory control techniques to avoid over-stocking and under-stocking. It ensures proper material handling, safety measures, and periodic stock verification. Another important function is the disposal of scrap, surplus, and obsolete materials to prevent unnecessary storage costs and maintain clean storage space.
5. Stores Layout
Stores layout refers to the physical arrangement of materials, racks, shelves, and pathways within the stores area to ensure efficient storage and movement of materials. A good stores layout provides adequate space for receiving, inspection, storage, and issue of materials, while maintaining safety and easy accessibility. It ensures proper utilization of available space and reduces the time spent in locating materials. A well-planned layout includes clear entry and exit points, proper labeling, safe storage areas for hazardous materials, and sufficient lighting and ventilation. It increases productivity and reduces material handling costs.
6. Classification and Codification
Classification involves grouping materials according to their nature, usage, value, or characteristics so they can be stored and retrieved easily. Codification refers to assigning unique identification codes to each item to prevent confusion, duplication, or errors in storage and issue. A proper codification system makes it easier to identify materials quickly and maintain accurate inventory records. It also improves communication between departments and speeds up purchasing and issue processes. Both classification and codification make the entire stores operation more organized and efficient.
7. Inventory Control of Spare Parts
Inventory control of spare parts is required because spares are essential for maintaining machines and preventing breakdowns. Spare parts vary in importance, cost, and usage, so techniques like ABC analysis, VED analysis, and setting minimum-maximum levels are used to maintain proper stock. Inventory control ensures that vital and expensive spare parts are always available, while reducing excess stock of non-essential items. Effective spare parts management reduces downtime, improves maintenance efficiency, and controls inventory carrying cost.
8. Materials Logistics
Materials logistics refers to the planning, movement, and control of materials from the point of purchase to the point of consumption. It ensures that materials flow smoothly through various stages like transportation, receiving, storage, and internal movement. Effective logistics reduces delays, lowers transportation costs, and improves material availability for production. It also involves route planning, scheduling, and coordination between departments to ensure timely movement of materials.
9. Warehousing Management
Warehousing management involves storing materials in a systematic and safe manner to protect their quality and ensure easy access. It includes the use of proper storage methods, handling equipment, and safety measures. Warehousing management keeps accurate records of materials stored, ensures regular stock verification, and maintains cleanliness and order in the warehouse. It helps reduce loss due to damage, maintains material quality, and ensures smooth issue of materials for production or distribution.
10. Materials Handling
Materials handling refers to the movement, lifting, and shifting of materials within the stores using tools like trolleys, forklifts, conveyors, and cranes. Its main purpose is to transport materials safely, quickly, and without damage. Good material handling reduces physical effort, saves time, and minimizes material damage during movement. It also ensures safety for workers and improves the overall efficiency of stores operations by speeding up the receiving and issue processes.
11. Traffic and Transportation
Traffic and transportation involve selecting the most suitable mode of transport, planning routes, scheduling deliveries, and ensuring safe and timely movement of materials from suppliers to the organization and from the organization to customers. Effective transportation management reduces freight cost, prevents delays, and ensures smooth flow of materials in the supply chain. It also includes documentation, unloading, and coordination with transport agencies.
12. Disposal of Scrap, Surplus, and Obsolete Materials
Disposal of scrap, surplus, and obsolete materials involves identifying materials that are no longer useful for production and disposing of them in a systematic manner. Scrap includes production waste, surplus refers to excess stock, and obsolete items are outdated or unusable materials. These items must be disposed of through auction, sale, recycling, or vendor return to recover value and free storage space. Proper disposal reduces clutter, saves storage cost, and keeps the stores area clean and efficient.