This is the purview of materials management. Materials management was first practiced in manufacturing undertakings. Over time even servicing organizations began to feel the need for this control. Today even non-trading organizations like hospitals, universities etc. have realized the importance of materials management. There is a rise in demand for professionals who specialise in materials management, owing to which the number of students choosing to study operations management courses in India is also rising.
The objective of materials management is to identify avoidable expenses on materials or any loss due to wastage of materials which can raise the cost of production. Materials management attacks materials cost on all fronts and optimizes the overall end results. Materials management includes controlling the type amount , location, and turning off the various commodities used in and produced by the industrial enterprises. The control of materials must be such that it ensures maximum returns on working capital.
In its essence all functions that start with the procurement of materials and end with the completion of manufacturing are under the scope of material management.
The importance of material management is as follows:
1. With effective material management, total costs are maintained at a reasonable level. Proper storage of materials also contributes to reducing their wastage.
2. Materials management also impacts the cost of indirect materials. Sometimes the cost of indirect materials can also drive up the total cost of production if there is no control over such materials.
3. The equipment is optimally utilized as breakdowns due to the late supply of materials is avoided.
4. The wastages of materials at the storage stage as well as their movement is kept in check.
6. The supply of materials is prompt and late delivery instances are reduced to almost none.
7. Material investments are kept under control in order to avoid overstocking.
Material management includes all aspects of material costs, supply, and utilization. The following are some functional areas that are involved in material management:
3.Shipping and transportation
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