Page 12 - DMGT525_MATERIALS_MANAGEMENT

Unit 1: Materials Management: An Introduction

9. Reduction in the materials cost by about 5 per cent is always possible through a/an Notes
………………. of materials.
10. In the manufacturing industry …………….. constitute the largest percentage of the costs of
management of materials.

1.4 Materials Management in Other Areas of Management Functions

Materials management as a company’s supply system has manifold interdependencies with its
neighbour function and is thus of great importance in industrial management. It must therefore
be the business maxim of materials management to make as optimum contribution of the
company’s profits by goods cooperation with its neighboring departments. Costs for materials
and overheads can be effectively reduced just as much inventories by means of cooperation and
sufficiently intensive communication. Only in this way can the interface problems between
Materials Management and its neighbour functions be solved, which exist in a company regardless
of how responsibilities are divided up. This of course presupposes a climate of mutual trust,
understanding, and recognition of the achievements of the other functions and also consensus as
to common goals instead of departmental egoism.

1.4.1 Materials Management and Design/Development

Good cooperation is absolutely necessary between Materials Management and design
development in the interest of advantageous materials costs and low level of capital being tied
up in inventories. Measures taken by design and development determine the structure of a
company’s materials and parts requirements and hence materials and parts requirements and
hence material costs as well to a quite considerable extent. Cooperation between materials
management and design/development is therefore necessary in several respects:
 To coordinate product development and supply;

 In alteration service;
 In buying new assembly parts;
 In carrying out value analysis;

 In the setting of norms, standardization and analysis of the materials and part purchases;
 In quality control;
 In determining component parts to be used;
 In formulating enquiries to suppliers;
 In making or buying decisions; and

 In updating the bills of materials.

1.4.2 Materials Management and Production

The task of materials management and production are closely related. Derived from marketing,
it is in production where materials requirements originate and it is up to materials management
to cover the requirements.
The two functions overlap within the spheres of scheduling, production program planning and
production control i.e. in those sub-functions which are also assigned in different ways
organizationally within the company to materials management and production.

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