Page 179 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes process in all the cases is to formulate norms for each of the characteristics and compare the
actual performances with the norms. It should be emphasized, in this context, that it will not be
possible to act norms for subjective characteristics.

Did u know? The subjective characteristics are source development, training and manpower
development as well as morale in materials department, exception reporting, good buyer-
seller relations, satisfaction to the user, materials managers’ knowledge of processes and
products, attitude to modern techniques of materials management and development of
manuals and procedures. The objective criteria include the frequency and intensity of
stock outs, ratios involving inventory.

Example: Sales to inventory and value of obsolete items, consumption to inventory
carrying cost, transport cost, costs of acquisition, use of codification and value analysis, variety
reduction and standardization.

Self Assessment

Fill in the blanks:
7. The …………...........….. of evaluation, obviously, depend on the corporate objectives,
company culture, functions of materials management, evaluation process of other
departments, etc.

8. The process in all the cases is to formulate norms for each of the characteristics and
compare the …………...........….. with the norms.

13.4 Reporting and Evaluating

The evaluation of the materials function is usually done by the top management on the basis of
periodic reports emanating from the materials wing. Mere facts reflect what has happened,
whereas the reports would give the summary of the working of the purchasing function.

!
Caution The report should be written in a simple language, clearly and briefly.
Reporting is a communication which helps in setting things right and goes a long way in
efficient functioning of the department. Besides establishing an effective communication,
reporting is the means for collection and dissemination of data. This process is a two-way traffic,
weekly reports containing the value of purchases, stock status, stock-outs, etc., usually meant for
the middle-level executives, are common in many organizations. Monthly and annual summaries
of the report with special emphasis on long-term aspects, such as effects of cost reduction achieved,
source development, vendor rating, value analysis, are found to be useful documents for the
management.
In order to take suitable remedial corrective measures and to improve materials activities in the
organization, the reports should be submitted at the appropriate time - viz. monthly reports in
the first week of the following month and an annual report in the first month of the following
year. Wherever necessary, diagrams, charts, graph, tables and comparative statements with
adequate explanatory notes should be made in the reports. The frequency and content of the
reports depend upon the level to which it is intended. Quarterly and annual reports with specific
recommendations on future are intended for top management, while the monthly reports with

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