Materials of Logistics in Management Essay

The efficiency of some(prenominal) manufacturing organisation depends on the availability of cistron parts and materials in the proper quantity, quality, price, range and time. Failure in both of these areas increases tolls and decreases profit as certainly as outmoded takings methods or ineffective selling techniques. This simple but obvious rase has only recently come to be properly understood. This book presents the principles, methods and strategies that illustrate the modern approach to materials wariness in all sectors of the economy.In analysing blood line operations, the phrase Value-added concept1 is often used to characterise the difference between the live of component materials and the selling price of the finished intersection. This difference in revalue represents the unique contribution of each organisation to the takings serve up. Many companies mature component parts and materials for other pisseds manufacturing specialised carrefours Remanded by the customers. On an honest, a manufacturing firm buys slightly more than half(a) of the rupee value of its sales. In other words, the value added is typically less than 50 per cent of its sales.Conversely, the average company purchases materials valued at more than half of what it sells. Therefore, a firms profit is to a big(p) extent determined by how effectively it procures and manages these materials. The organisational approach known as materials focussing has gained validity in recent years. Production and operations conductors found it necessary to develop an arrange body of knowledge related to planning, acquisition and utilisation of materials in the process of deed and it has resulted in the discipline known as mate-rials management. all(prenominal) activities involved in bringing materials into and through the plant are combine under one dealer known as materials manager. By giving the materials manager b fossil oilersuit authority, responsibility is centralised to a ssure that the overall live of materials is kept at the lowest possible level. The basic precept for this organisational change is to overcome the problems of conflicting objectives. For cample, purchase departments come to to ensure continuous supply of component materials may conflict with he parentage laterality departments objective to minimise inventory levels or the objective of shipping in full car consign lots.Today organisations view procurement as a professional exertion including activities involved in obtaining materials at minimum cost, transporting them and providing storage and moving toward the production process. It also includes economic analysis of supply (i. e. , purchase economics), demand and prices and the legal opinion of international events that affect materials. * evolution of materials management Historically, the five Ms of manufacturing firms viz. workforce, Materials, Machines, Money and Methods have shifted their positions from time to time i n their relational importance.In the early days of industrialization, the way was on men (labour) as they were the main source of productive power. Over a period of time, the stress shifted towards machines, which became the main source of industrial power after the Industrial Revolution. As the methods of production became more and more complex due to the increased customer demand for sophisticated products of high quality, there was greater need of businesslike management to manage the complex production systems.In the early 1920s, get and maintaining stock of materials was the responsibility of purchasing managers or chief controllers of purchasing and stores in many industries. During and immediately after World War II the focus shifted on various functions associated with materials such as purchasing, receiving, inspecting, storing, preserving, handling, issuing, account statementing, transporting and disposing surplus and obsolete materials. These functions assort under one common head known as materials manager and the department responsible for all these activities came to be known as materials management department.But the head of materials management department performed a module function to support the production department and had to report to the production head (director of production) in the organizational hierarchy. The oil crisis of the 1970s changed the priorities of industries all over the world. The horrid hike in oil prices and the heavy budget allocations on oil made the industries to control their expenditure on the enters, mainly materials of all kinds because of the large scope to reduce the expenses on materials.Since the beginning of 20th century, materials have been get more and more attention and will continue to do so in the future also. Now a days material has* depart an important and inevitable input of a production system since the cost of materials and cost on materials (cost incurred in purchasing and storing the materials) put together account for 50 to 85% of the production cost depending on the nature of the product and the type of the production system. Modern manufacturing organisations adopted systems approach to management, which resulted in the integrated materials management concept.All functions related to materials such as materials planning, purchasing, storing and inventory control were integrated under materials management function. The position of the head of the integrated materials management department was elevated to be on par with heads of other operational areas viz. production, finance and human resources. * importance of materials in manufacturing organisations Materials are any commodities used directly or indirectly in producing a product or service such as raw materials, component parts, assemblies and supplies. In the manufacturing organisations, the important inputs are referred to as 5 Ms viz. Men (Labour), Machines, Money, Materials and Methods.The relative im portance among these five Ms have shifted from time to time. In the beginning of industrialisation the focus was on machines, men (labour) and methods, but from round 1970 onwards the emphasis is on materials. Material is an important and inevitable input gi J production system since the cost of materials and cost on materials (cost incurred in purchasing and storing the materials) put together account for 50 to 85* of the production cost depending on the nature of the product and the type of the production system * importance of materials managementManagement of materials in most organisations is authoritative to their success because the cost of purchasing, storing, moving and shipping materials account for over half of the products cost. Improving productivity is a crucial instrument in facing the challenge of competition and this involves driving down the cost of all aspects of business activities. Since there is maximum scope of cost step-down in the area of materials, doin g the job of efficient and effective management of materials is seen as the key to higher productivity.