Page 187 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes overall organizational planning and hence it is always a sub-plan of the broad organizational
plan. The main function of materials planning is forecasting and initiating for procurement of
materials.

14.1 Role of Computers in Materials Management

Materials management is an important and specialized function existing in all industries and
utilities. Although the store management and purchasing functions have coexisted for a long
time, the need to integrate and streamline these functions, as well as planning them on a scientific
management basis is considered increasingly important and urgent. Computers can be used to
look after their resources optimally and aggressively. Future trends will see the emphasis on
shift from the mainframe computer to the microcomputer, from traditional inventory monitoring
to materials and capacity planning based on decision support systems, and from centralized
processing to distributed processing at the microcomputer level.
For Materials Management computers software is tailor-made as per the requirements of a
particular manufacturing organization. Usually materials management information system
comes under Transaction Processing system (TPS) e.g. Tally is a Transaction process system for
financial accounting. Besides for decisions connected to materials management managers also
use Decision Support System (DSS) along with TPS. Obviously all information systems (under
management information system) require computers to process.

MRP 1

Chronologically Materials Requirements Planning (MRP1) came in the late 1960s, initially with
fixed period lead-times (“bucketed” systems). This was the scheduling engine required for
Period Batch Control, which utilized the Bill of Material within it and the scheduling rules
(periods) to produce a schedule for the preceding stages, using the example above, five weeks in
advance. At this time computers began to be used commercially to generate the schedule for the
preceding stages, five weeks in advance. Later variable lead-times (“bucket-less” systems) and
safety stocks were accommodated.

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Caselet Indiana Electronics

/s Indiana Electronics is a small firm located at Bhiwadi near Gurgaon. Its
major product line is the electronic system for automobiles and M/s Maruti
MUdyog Ltd. Gurgaon is its major customer.

With competition getting tougher for M/s Maruti Udyog Ltd., they are forced to contain
the prices of all their raw materials. So, M/s Indiana Electronics too cannot escape and
have to give a cost reduction consistently to M/s Maruti Udyog Ltd.

The top management of M/s Indiana Electronics decided that the firm is ideally suited to
implement MRP in its planning and controls. Several organisational changes were brought
about. A Materials Management Department was created to include Purchasing, Production
control, Traffic, Inventory Management and Warehousing operations. The implementation
and effective operation of an MRP system came within its purview.
Another change brought about was the Buyer-Planner concept, i.e. an MM executive would
be responsible for both buying and planning functions. The number of materials handled

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