Page 16 - DMGT525_MATERIALS_MANAGEMENT

Unit 1: Materials Management: An Introduction

Matrix is designed and developed by a British software house, Pinnacle Business Solutions, Notes
and is the result of a unique partnership between materials management, information
technology and financial management professionals. It is a product that utilises the latest
technological advances, including Internet and e-mail facilities, but is widely recognised
as being ‘business-driven not technology-led’.

Questions
1. Study and analyze the case.
2. Write down the case facts.
3. What do you infer from the case?

Source: http://www.absolute-it.com/aboutus/casestudies/CSPage.aspx?PageID=39

1.5 Summary

 Materials management is a specialized area of management which concerns itself with the
management of Material Resources.
 Materials management is an essential business function. It is concerned with planning,
acquisition and flow of materials within the supply chain.
 The objective of materials management is to contribute to increased profitability by
coordinated achievement of least materials cost.

 The parts that go into making of end products can come from two sources: in-house
production or purchase from outside.
 Materials management’s considerable effect on profits demands that its objectives be
derived from the general business objectives “maintaining competitiveness” and
“satisfactory profitability”.

 Materials add value to a product. The margin between the values of raw materials and the
finished products is known as the value added by production.

 Materials management determines three cost categories within the company which, in
most cases, have a substantial effect on company profits. These costs are: material cost,
capital cost & overhead cost.

 Materials management as a company’s supply system has manifold interdependencies
with its neighbour function and is thus of great importance in industrial management.
 Costs for materials and overheads can be effectively reduced just as much inventories by
means of cooperation and sufficiently intensive communication.
 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.

 Integrated materials management is oriented towards fulfilling the customer orders
obtained by the sales department, at the lowest possible cost.
 Connections between materials management and the finance and accounting departments
arise as a result of the fact that materials management is mostly responsible for the
greatest bulk of costs within a company and has a considerable influence on the level of its
current assets.

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