MATERIALS MANAGEMENT
PROCESS & FUNCTION

DEFINITION & SCOPE:
We can define Materials Management as the function responsible for the co-ordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a pre-decided service to the customer at a minimum cost. From the definition it is clear that the scope of Materials management is Vast. We can broadly identify the following functions: -

MATERIALS PLANNING AND CONTROL:
Based on the patients inflow, forecast, the materials planning and control is done. This involves estimating the individual requirement of materials, preparing materials budget, forecasting the levels of inventories, scheduling the orders and monitoring the purchase and issue.

PURCHASING:
This includes selection of sources of supply, finalisation of terms of purchase, placement of purchase order, follow up, maintenance of smooth relation with suppliers, approval of payments of suppliers, evaluating and rating suppliers.

STORES AND INVENTORY CONTROL:
This involves physical control of materials, preservation of materials, minimisation of obsolescence and damage through timely disposal and efficient handling, maintenance of stores records, proper location, and stocking. Store is also responsible for the physical verification of stocks and reconciliation them with book figures. The inventory ordering quantities, setting stock level, lead time analysis and reporting.

CORPORATE POLICY:
General corporate policies are laid down in order to achieve the corporate goals. Some of the important goals are:-

To achieve a specific net profit.
To achieve a specific target.
To increase the capacity utilization.
To obtain a fixed return of investment.
To improve the corporate image.

Based on the corporate goal, broad policies are laid down. The top management expects that each department must work towards the organization objectives. They expect individual departments to directly contribute to the objectives through well defined policies and plans of action. Policy should be spelled out in the following areas:-

Organisation
Purchasing
Stores
Policy Manual

POLICY MANUAL:-
In view of the complex nature of the materials management function and its important contributions to the over all organizational objectives, it is desirable to compile a policy manual covering all aspects of materials management. The manual is generally prepared with a note from the Chairman of the organization emphasing its importance. Such a policy manual will be circulated to all divisions up to the middle management level so as to ensure that policies and procedures are consistently followed leading to the achievement of the corporate objectives. The policy manual familiarizes the materials management department with the procedure and guide lines to be observed. Periodical revision of the manual needs to be undertaken to keep it realistic and responsive. A sample policy manual is shown in the exhibit.

ORGANISATION AND CONTROL:-
The inter-related functions of the materials management are normally looked after by individuals. As the activities expand, the functions of each individual become more and more specialized. The integrated materials management concept requires central co-ordination of all these inter related activities. Therefore the internal structuring of the various functions as well as the relationship of the materials management divisions with the other divisions, technical, financial and marketing in the over all organization becomes critical. The materials management function ought to be headed by a competent professional who must be a member of the top management team as managing materials is a critical function.

STRUCTURE OF THE MATERIALS MANAGEMENT DEPARTMENT

INTER-DEPARTMENT RELATIONSHIP:-
The materials management department will have to work in close co-ordination with all other departments. Only an atmosphere of mutual trust will ensure that these departments will work towards the total organizational objectives. The finance department also has to work in close co-ordination with materials in anticipation funds requirements, payment of bills to suppliers, insurance and so on. In many organization, formal committees consisting of executives drawn from marketing, production, finance and materials management department are formed to finalise periodic sales targets, production programs total budget, materials budget etc.