Materials strategies Flashcards
Material management
Is about managing the way materials are received and stored within a business. Businesses need to ensure they have the right amount of materials on hand so production can meet demand.
The operations manager needs to ensure that materials:
- Arrive at the right place
- Arrive on time
- Arrive in the right quantities
- Arrive with the desired
The operations manager needs to consider how much to purchase based on a number of factors including:
- Having enough materials on hand for production to flow continuously
- The cost of purchasing materials and having them delivered
- The storage required and available
- Are the materials likely to go to waste while being stored.
Forecasting
Forecasting is a planning strategy where past data and trends are used to predict future demand so informed decision can be made around materials. Forecasting can help a business prepare for the quantities they need to produce to meet the forecast demand.
• Some ways of forecasting include:
o Looking at past data
o Looking at market trends
o Assessing business info (eg new marketing campaign launch)
• There are 2 types:
o Qualitative: Gathers information based on the opinions of people through market research and open ended questions on questionaries.
o Quantitative: Makes use of data in numerical form eg past sales
Efficiency and effectiveness of forecasting
Efficiency
Improves productivity because production does not need to wait. Reduces overstocking which reduces wastage
Effectiveness
They can ensure they have enough materials on hand to meet the production needs, ensuring consumer demand is met.
Advantages and disadvantages of forecasting
Advantages:
• Can anticipate seasonal changes and adjust orders to save on costs and wastage.
• Can help to prevent overordering taking up storage space
Disadvantages:
• The “running backwards looking over your shoulder” unexpected events can still catch you out
• Requires a lot of time to anticipate, track and analyse all potential impacts on supply chain.
Master production schedule
Outlines what is going to be produced, in what quantities and when it is going to be produced. This gives the materials manager an indication of what materials will be required to meet the schedule.
Efficiency and effectiveness of master production schedule
Efficiency
Helps the business plan the exact amount of materials needed so the correct materials can be ordered- preventing overproduction and reducing wastage
Effectiveness
Enables the business to have a clear picture on what needs to be produced to meet customer orders.
Advantages and disadvantages of master production schedule
Advantages:
• Easy for new staff to learn routine
• Very clear to all staff of processes and their sequence
• Very good for standardised products
Disadvantages:
• Hard to account for every situation
• Not very flexible
• Initially time costuming and expensive to track and record
Materials requirement planning
Is an itemised list of all materials needed to meet specific orders. To successfully plan the required materials, the operations manager must:
• Consider stock already on hand
• Lead times (how long it takes for the materials to arrive
• Number of materials required to meet the orders.
The aim is to minimise storage costs, wastage and order the materials with sufficient time to be delivered.
Efficiency and effectiveness of Materials requirement planning
Efficiency
Prevents overstocking, reducing wastage
Effectiveness
Ensures production has a continuous flow without waiting for materials, enough materials on hand to meet demand
Advantages and disadvantages of Materials requirement planning
Advantages:
• Reduction in wastage
• Reduction in storage space taken up
• Accurate ordering of the quantities of material required which avoids excess storage and therefore reduces expenses
Disadvantages:
• Initially expensive to set up a dedicated system which can accurately track materials through the site.
• Time consuming
Just in time (JIT)
A strategy that ensures the right amount of materials arrive only as they are needed for production. This ensures there is very little stock on hand and the exact amount of materials arrive only as they are needed.
• Saves money on storage and minimised the issues that come with larger storage, however if materials don’t arrive on time, production will slow or halt.
Efficiency and effectiveness of just in time
Efficiency
Reduces storage costs, reduces wastage
Effectiveness
Advantages and disadvantages of Just in time
Advantages:
• When working perfectly should be able to minimise all waste
• No raw materials wastage
• No storage space required
Disadvantages:
• Hugely reliant on suppliers to deliver on time, failure to do this very quickly shuts down the whole production line.
• Delivery costs may increase due to more frequent deliveries
