Materials Management and Material Planning

Materials Management refers to planning, organizing, and controlling the activities related to the purchase of materials, transportation, and storage.  The material management begins with the supplier and ends with the consumption of the material.   

The major functions of materials management include purchase, storage, and movement of material. 

The main Objectives of materials management are:

• Optimum investment in inventory
• Obtaining materials at the least possible price
• Continuity of supply

Importance of Materials management

• Lower prices for materials and equipment
• Faster inventory turnover
• Continuity of supply
• Reduced transportation costs
• Less duplication of efforts
• Reduced materials obsolescence.
• Improved supplier relationships and better records and information.
• Better interdepartmental cooperation.
• Personnel development

Materials Planning 

Materials Planning is the scientific method to determine purchase, transportation, and storage of raw materials, components, spares and other items for efficient production process within economic investment policies.

Importance of materials planning

• Materials planning ensures efficiency in materials management.
• Materials planning and coordination ensures optimum loading and avoids over-ordering or under ordering of materials.
• Effective material planning avoid rush orders which cause high cost.

Factors influencing materials planning

• Macro factors: price trends, imports policy of the govt., govt rules and regulations, seasonality.
• Micro factors: corporate objectives, working capital, communication system, delegation of authority