Material Management Case Study

MODULE 3 Materials Management

Module Description

This module describes the concept of materials management. It creates understanding of purchasing management as a function of materials management. Moreover, it explains how purchasing process is carried out.

This module explains the other functions of materials management such as stores management and materials handling. Subsequently it explains the protection and prevention measures of a store.

By the end of this module, students will be able to describe the objectives, functions and role of materials management in production management. Students will be able to demonstrate the process of purchasing. Moreover, they will be able to classify the material handling equipment. Furthermore, they

Learning Outcomes

At the end of this chapter, you are expected to:

• Describe how materials can be managed

• Explain the role of materials management in effective functioning of production process

• Classify the functions of material management

• Demonstrate the various functions involved in the purchase management process

Exhibit 3.1.1: Material Management at Dow Chemical

MRP provides the Right Formula for Dow Chemical

As project manager in the business operations planning group. Kenneth Steele knew the problems and some potential improvements for Dow Chemical’s decentralised methods for materials management. Each of Dow’s commercial business units was organised along product lines resulting in many independently managed inventory and distribution systems. Incoming shipments of materials for production and outgoing shipments of products for customers were frequent. Moreover, these materials flows were not coordinated among the business units. The result was complex and expensive logistics. Dow sought a system that would integrate materials and distribution

(1992). Production and Operations Management (5th Ed.). Delhi: PHI Learning Private Limited.

Materials are the commodities that are used directly or indirectly for producing goods or service, such as raw materials, parts of a component, components and assemblies. Materials management is a discipline of production management that concerned with the planning, purchasing, storing and distribution of the materials in an efficient manner. It is responsible for the flow of materials from supplier through production to customer, in order to minimise costs and to provide better customer service.

Management of materials in most companies is crucial to their success because the cost of buying, storing, moving, and shipping materials accounts for over half of a product’s cost. One of the meaning of productivity is driving down the cost of production. Materials management is increasingly seen as the key to higher productivity in many of the