Page 135 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes 1. Procurement or Purchasing: It usually initiates the flow of materials by sending a purchase
order to a supplier. This means that procurement has to find suitable suppliers, negotiate
terms, set conditions, organize delivery, arrange insurance, authorize payment, and do
everything needed to get materials into the organization.
2. Inward Transport or Traffic: It actually moves a material from suppliers to the
organization’s receiving area. Important decisions concern the mode of transport, policies
for outsourcing, choice of transport operator, safety and legal requirements, etc.

3. Receiving makes sure that materials delivered correspond to the order, acknowledges
receipt, unloads delivery vehicles, inspects materials for damage and sorts them.
4. Material Handling moves material from receiving and puts them into stores. It is
responsible for all movement of materials in the organization.
5. Warehousing takes care of the materials held in stock until they are needed. It makes sure
that materials have right conditions, treatment and packaging to keep them in good
condition.
6. Order picking finds and removes materials from stores.

7. Outward transport takes material from the departure area and delivers them to customers.
8. Communication: Alongside the physical flow of materials, is the associated flow of
information. Coordinating the flow of information can be very difficult, and logistics
managers are often considered to process information rather than moving goods.

Self Assessment

Fill in the blanks:
16. ………………… usually initiates the flow of materials by sending a purchase order to a
supplier.
17. …………………. takes material from the departure area and delivers them to customers.

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Case Study Managing Inventory Assets for an Online Retailer

Grow into the space you’ll need

Whether you start with a tiny shelf in your attic, or a large warehouse, remember that as
your business grows, you’ll need more space for your inventory.
“I have a wall full of shelves in the attic above my apartment,” says Ken Weinstein,
co-owner of the Numero Group, a Chicago-based compact-disc label that collects and
reissues obscure but high-quality music in a variety of genres. “I pay $25 extra rent per
month, and our entire catalogue is stored up there. I’ve still got a lot of room left on the
shelves for more, though.”

Sam Meyer’s business is different. “We started out as a retail outlet, so my dad decided to
buy a building,” says the St. Louis-based co-owner of Fog Hollow, one of the largest mail-
order suppliers of new and used motorcycle parts in the U.S. “By looking in areas that
were somewhat depressed, he found our first warehouse for less than $50,000 in the early
1980s. So, we had a lot of space to grow into for a long time.”
Contd...

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