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Unit 4: Material Control

Cell 1 contains vital and high cost items like defibrillator. It must be noted that a material manager Notes
has to comprehensively supervise category 1 items since an item may be a low cost one but
critical for patient care. (oxygen regulator)
Category I items: These items are the most important ones and require control by the administrator
himself.
Category II items: These items are of intermediate importance and should be under control of the
officer in charge of the stores.

Category III items: These items are of least importance which can be left under the control of the
store-keeper.
The grouping will essentially depend upon the strategy of management and the environment of
functioning. However these simple techniques can be effective in material management system.
Items with high criticality (V), but required in small quantity (A) should receive highest priority.
Items with low criticality (D) and which are required in big quantity should receive least
priority.

4.3 Material Purchase and Storage

Material cost is a major portion of production cost. This material cost can significantly be reduced
by acquiring the right quantity, of the right quality, for the right price, at the right time, and from
the right sources. Decision of the manager of purchase with respect to each of these aspects will
have a significant effect not only on the regularity in production but also on both the quality of
the end product and the cost of materials, cost of production, cost of sales and therefore, on the
profit and profitability. Hence, purchase function plays a pivotal role. In this regard, the top
management of the organization has to take an important decision.

Purchase Procedure

A systematic and well-defined procedure is to be followed to make the purchase of materials
as any lapse in the procedure may result in the stoppage of production whose ill-effects are
incalculable. The purchasing department follows the following purchase procedure:
(i) Purchase Requisitions (Indenting for Materials): The purchase department initiates actions
for the purchase of materials only after the receipt of purchase requisitions from the store-
keeper. The purchase requisitions are prepared by the officers who need the materials for
production and other activities of business and will be sent to the purchase department
for making purchases. Of the parties who prepare the purchase requisitions, store-keeper
is the important functionary. Further, he prepares the purchase requisitions on the basis
of bills of materials received from the competent authorities. If the materials listed in the
bill of materials are not available in the store in adequate quantity, the store-keeper will
prepare the purchase requisition.
On the basis of the stock levels and/or bills of materials, the store-keeper prepares
the purchase requisition in triplicate copies. The original copy is sent to the purchase
department, duplicate copy to the production control department and the third copy to be
retained in the stores department itself for its office record.

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