Materials management is the recent additions to management. No product can be produced without raw material. In few cases raw material constitutes upto 70.75% of the total cost. Hence, the cost structure, and profitability of the enterprise depends to a large extent on efficient materials management.
Meaning of Materials Management
In common parlance, material management comprises all the activities relating to:
- (i) Purchasing
- (ii) Store-keeping
- (iii) Inventory control.
According to AK. Shah the science of materials management consists the following fundamental activities :
(i) Purchasing. It relates to the procurement of raw materials, inter-mediate products, components and supplies including the finished products. Spare parts and tools for the business is also included.
(ii) Materials handling. It deals with art and science involving the moving, packaging and storing of substances in any form.
(iii) Management and control of inventories. It deals with laying down of policies to be allowed for the holding stocks of raw materials and finished products and the implementation of this policy in the business.
Aims and Objectives of Materials Management
The aims of efficient storage and materials management are to ensure the maximum effective utilization of money, machines, manpower and space.
According to Experts,
With increasing competition, rising cost of labor, equipment, raw-materials, plant and facilities, distribution and selling, materials handling is one of the chief areas of activities for combating costs to bring the cost of finished product.
An efficient materials management ensures uninterrupted supply of raw materials to the production system. It results in improved production capacity of plants, saving of labor, time, reduction in materials inventory, reduction in required space for processing of products, reduction in damage to materials, minimum interruption in production and reduction in fatigue of the workers and greater job satisfaction with safety to them. It reduces the cost and leads to rich dividends. For our country it will reduce the imports also.