Slide 1: MATERIAL CONTROL
MATERIAL PURCHASE PROCEDURE MATERIALS MATTER MORE : MATERIALS MATTER MORE Historically, the five M’s of an industrial organisation viz. Men, Money, Machines, Materials, and methods have shifted their position from time to time in their relative importance.
Material as an input in production system started receiving attention of the industrialists 1900 onwards. Earlier to this material were taken for granted as they presented no major problem with regard to either supply or cost. Since the beginning of 20th century materials have been occupying a place of importance among the M’s and this will continue to be so in the years to come. Slide 3: MATERIALS MATTER MORE The amount spent on material is increasing in relation to the expenditure on other inputs.
Materials offer considerable scope for reducing cost and improving profit.
Materials form an important form of current assets in any organization. The return on investment depends a great deal on the manner of utilization of materials.
Materials add value to a product.
Material contribute to the quality of end product.
Conservation of materials and their availability for posterity is one of the planks of social for responsibility of management.
Exploring new source of supply is a challenge for material management executive. Slide 4: OBJECTIVES OF MATERIAL MANAGEMENT Optimum investment in inventory is the prime objective of material management.
High inventory Turnover
Low cost Acquisition and Possession
Continuity of supply
Consistency of quality
Low payroll cost
Favourable supplier Relation
Development of Personnel
Good records Slide 5: OBJECTIVES OF MATERIAL MANAGEMENT Secondary Objective
New material and products
Economic Make or buy
Acquisitions Slide 6: IMPORTANCE OF MATERIAL MANAGEMENT Lower prices for material and equipment
Faster inventory turnover
Continuity of supply
Reduced lead time
Reduced transportation cost
Less duplication of efforts
Elimination of buck-passing
Reduced materials obsolescence
Improved supplier relationship and better records and information
Better interdepartmental cooperation
Personnel development STRUCTURE OF PURCHASE ORGANISATION : STRUCTURE OF PURCHASE ORGANISATION Managing Director Director HRM Director Finance Director Production Director Materials Director Marketing Purchase Executive Transport Executive Material Planning & Control Executive Stores Executive Vendor Development Executive MATERIAL PURCHASE PROCEDURE : MATERIAL PURCHASE PROCEDURE Recognition of Need
Description of need
Selection of source
4.Prices and availability are determined
5.Purchase order is prepared and sent out to the supplier
6.Acceptance of the purchase order is obtained from the supplier
7.Follow up is done by the purchasing department to ensure timely delivery of the materials
8.Checking the invoice and approving it for making payment to the supplier