Materials Management Flashcards
Materials management
Involves managing the use, storage and delivery of materials to ensure the right amount of inputs (provide examples of scenario) is available when required in the operations system.
What materials management involves
Receiving materials
Storing materials safely
Identifying ongoing materials requirements by ensuring timely purchase of materials and by predicting what materials will be required in the future.
Reducing holdings of surplus stock.
Controlling the release of materials into the production process.
3 stages of Materials planning
Production plan
Master production scheduling
Materials requirements planning
Master production schedule
Master production scheduling details what is to be produced and when. It is a schedule linked to speci c delivery dates or contracts for delivery in the future. Inability to meet this schedule may have serious business implications. It is important, therefore, that the productive capacity of the organisation has been correctly assessed. A business cannot increase its rate of production without increasing the amount of necessary inputs, as Boeing has found (see the ‘Did you know?’ feature). Decisions such as upgrading plant and equipment or employing additional staff may be related to ongoing problems in meeting this schedule.
A master production schedule should include
What goods and services are to be produced
The volume of goods and services to be produced
The production methods to be used
When and where production will take place
Staff required
Materials requirement plan
Materials requirements planning (MRP) is completed after the organisation has a clear understanding of the quantities to be produced and the time frame involved. It is an itemised list of all materials involved in production to meet the speci ed orders.
A materials requirement plan should include
• lead times required by suppliers; that is, whether items need to be ordered
weeks or months in advance
• the exact number of inputs to complete the task
• the amount of stock (inventory) on hand
• purchasing procedures; for example, whether the organisation wishes to take
advantage of bulk purchasing discounts offered by suppliers.
The just in time approach, 2 advantages and disadvantages
A common strategy used by many organisations in Australia is the just in time (JIT) system of inventory control already mentioned on page 120. This approach makes sure that the right amount of materials arrive just as they are needed for production. It can reduce storage costs and reduce the risk of any waste occurring in storage, thus increasing competitiveness. However, supplier deliveries must be reliable, and materials must be received at the appropriate time. Dell products are made to order and they have good relationships with suppliers is so supplies can be delivered every 2 hours, once a good is ordered, resources are then ordered and delivered and put into production straight away.
Advantages and disadvantages of having a large inventory, large inventory
Many organisations have large amounts of materials on hand to complete pro- duction. This is referred to as stock or inventory. A large inventory is held by an organisation to ensure that materials do not run out; however, this represents a cost to the organ- isation. Stock taking up storage space for lengthy periods can mean that the organisation misses the opportunity to invest money in other places. Materials can also have a ‘use-by date’, which means that they could become unus- able after a period.
Advantages and disadvantages of having a small inventory
Some large-scale organisations (LSOs), such as Ford, reduce costs by having fewer materials held as inventory. Its ef cient handling of materials keeps costs down, but when materials don’t arrive on time (as in the case of the supplier in voluntary receivership) the consequences can be devastating.
Materials handling
It refers to the handling of goods in warehouses and at distribution points. Adequate materials handling procedures and techniques can result in a more ef cient production process and cost savings. Proper handling can also reduce accidents, breakage and spoilage.
Advantages and disadvantages of having a large inventory, large inventory
Many organisations have large amounts of materials on hand to complete pro- duction. This is referred to as stock or inventory. A large inventory is held by an organisation to ensure that materials do not run out; however, this represents a cost to the organ- isation. Stock taking up storage space for lengthy periods can mean that the organisation misses the opportunity to invest money in other places. Materials can also have a ‘use-by date’, which means that they could become unus- able after a period.
Advantages and disadvantages of having a small inventory
Some large-scale organisations (LSOs), such as Ford, reduce costs by having fewer materials held as inventory. Its ef cient handling of materials keeps costs down, but when materials don’t arrive on time (as in the case of the supplier in voluntary receivership) the consequences can be devastating.
Materials handling
It refers to the handling of goods in warehouses and at distribution points. Adequate materials handling procedures and techniques can result in a more ef cient production process and cost savings. Proper handling can also reduce accidents, breakage and spoilage.
Production plan
A production plan is an outline of the activities undertaken to combine resources (inputs) to create goods or services (outputs).The organisation needs to decide what goods or services to produce, how to produce it and in what quantity.
