Scope of Materials Management
Materials management is typically comprised of four basic activities:
1. Anticipating materials requirements.
2. Sourcing and obtaining materials.
3. Introducing materials into the organization.
4. Monitoring the status of materials as a current asset.
Functions performed by materials managers include purchasing, inventory control of raw materials and finished goods, receiving, warehousing, production scheduling, and transportation. The definition of materials management views the activity as an organizational system with the various functions as interrelated, interactive, subsystems.
The objectives of materials management are to solve materials problems from a total company viewpoint [optimize] by coordinating performance of the various materials functions, providing a communications net work, and controlling materials flow.
The specific objectives of materials management are closely tied to the firm's main objectives of achieving an acceptable level of profitability or return on investment (ROI), and remaining competitive in an increasingly competitive marketplace. The major objectives of materials management are low costs, high levels of service, quality assurance, low level of tied-up capital, and support of other functions.
Materials management encompasses a variety of logistics activities. The primary differences between the process of materials management and that of finished goods distribution are that the items handled in materials management are incoming finished goods, raw materials, component parts, and subassemblies to be further processed or sorted before being received by the final customer. The recipient of the materials management effort is the production or manufacturing group and oilier internal customers, not the final customer.
Integral aspects of materials management include purchasing and procurement, production control, inbound traffic and transportation, warehousing and storage, management information system (MIS) control, inventory planning and control, and salvage and scrap disposal.