Material management is an integral part of any manufacturing unit because in the case of manufacturing concerns majority of the cost is related to materials only and that is the reason why a manufacturing company should have proper material management in place. Materials management in simple words refers to the effective utilization and management of materials entering into the manufacturing unit in the form of raw materials so that there is minimum wastage and maximum utilization of material by the company. In order to get a better idea about this concept one should look at some of the important features of material management –
Characteristics of Material Management
Material Management leads to Uninterrupted Flow of Materials
The first and foremost feature of material management is that it should ensure that there is an uninterrupted flow of raw materials so that there is no stoppage of production in the company due to lack of materials as there are many instances where the company has a good order book but to bottlenecks of production it is not able to complete the orders on time leading to loss of business as well as the credibility of the company. In simple words just like the heart of a human body can never stop as will lead to the death of an individual in the same way flow of materials should never stop as it will lead to stoppage of production activity which in turn can be disastrous for the company in the long run.
Minimum Wastage due to Material Management
In the case of materials chances of wastage are very high due to a variety of factors like poor handling of materials, substandard material, lack of knowledge about the storage of materials and so on which in turn results in lots of loss for the company during the production stage and that is where material management can play its part by ensuring that there is minimum wastage and maximum utilization of resources available with the company.
Avoiding Locking of Capital
Materials management should ensure that there is no locking of capital in the form of excess material than required for production because many times there are situations when the company has excess raw materials but no orders which in turn results in unnecessary locking of capital in the form of dead stock making the working capital management a headache. In simple words just like excess of vitamins and minerals in the body will do more harm than good in the same excess of raw materials than required for production will do more harm than good for the company’s far as liquidity position of the company is concerned.
Relationship with Suppliers
In the case of manufacturing, units company is dependent on suppliers as far as the supply of raw materials is concerned and that is the reason why having a good relationship with suppliers is an integral part of the material management as no company can afford to have poor relations with its suppliers unless the company itself has direct access to the raw material. In simple words just like in the case of marketing poor relationship with customers can hurt the sales of the company in the same way in the case of production poor relationship with suppliers can hurt the production as well as sales of the company.
Negotiation
In the case of material management, the role of the manager is not limited to procurement and management of material only rather it also requires negotiation on the part of the manager to ensure that the company gets the best possible materials at competitive prices which in turn will ensure that production costs are low resulting in higher profit margins for the company.
Transportation and Handling Aspect
In the case of materials management the responsibility of the material manager does not end with placing od orders rather, it continues until the finished product is sold to the consumer and hence aspects like transportation of raw materials from supplier to company and from company to the consumer is part of material management only, besides proper handling of materials is also the responsibility of the material manager making the whole process of material management comprehensive management of materials.
As one can see from the above that material management has some important features and that is the reason why any manufacturing company should carefully look into this aspect so that the company does not have to face any problem due to inefficient use of raw materials.