Why Material Management Is Important For Every Company
Material Management is a core function of all manufacturing companies. If a company is not effective in its materials management, it will be very challenging for it to be cost effective in the process of manufacturing goods or services. Organizations should have good Material management strategies.
Effective material management is essential and important in order to achieve the following targets:
(1) provide the best type of services to the customers,
(2) produce at maximum efficiency of the operating unit and
(3) managing inventories at pre-determined levels to stabilize investments in inventories.
In order to be successful in effective material management- that needs the development of a high-end and integrated and coordinated system involving budgeting, forecasting, procurement, receiving functions, warehousing, manufacturing, distributing and actual sales. Material management should consider both the theory of cost management and management of inventories and the practical mechanism of cost calculations and record-keeping. A proper program manager may do this.
Costing of materials offers some important, often difficult , and sometimes highly controversial questions regarding the costing of materials used in manufacturing and the cost of ending inventory remaining to be used in a future period. In financial accounting, the subject is usually posed as a problem of inventory valuation; in cost accounting, the primary problem is the determination of the cost of various materials used in manufacturing and a proper charge to the cost of goods sold. The discussion of material management deals with-
1. Procedures for materials procurement and use
2. Materials costing methods
3. Cost of materials in closing inventory at the end of a period
4. Costing procedures for scraps, spoiled goods, and defective works
Production manager prepares production schedules to perform in the future for example in the next day. Production schedules are set up on the basis of orders received or expected demand for products in the market. And make sure that each type or part of the material and provided so as to produce smooth.