Page 190 - DMGT525_MATERIALS_MANAGEMENT

Unit 14: Computers in Materials Management

4. The inherent weakness of computers is that it is notoriously difficult to change computer Notes
…………………..... quickly and reliably.
5. Another trap that the software suppliers have fallen into is to add …………………..... to the
configuration process.

14.2 Electronic Computer

Data have to be stored in terms of the suppliers, products, price and locations. As the volume
grows, manual handling will become tedious and time consuming. It has been found from
experience that one to two per cent of the total, turnover is spent on processing data in all areas
of management, in large companies. Since, there are a large number of computer installations,
computer time can be purchased from them instead of each organization possessing computer.
The computer can be used to hold a supplier file, an arc file and a stock ledger. Based on regular
updating on the stock and control limits, the computer can initiate follow-up action during the
periodic review. Computers can be programmed to trigger purchase orders and also to initiate
follow-up action on outstanding orders. The computer can be programmed to analyze the
conjuration data and price data to forecast future behaviour.
The greatest improvement derived from an integrated computer information system is the
replacement of paper work by organic data. Clerical processes, including tedious and erroneous
computations are absorbed by computerized system to make more time available for decision
making, planning and control. A memory system replaced perpetual inventory system and bin
cards. Inventory is more scientifically planned to enable lower stock levels, to be maintained
with the risk of stock-outs: up-to-date balances are produced more rapidly. Late deliveries and
stock-outs are reduced, resulting in better planning of cash outflows.
The computer also provides output, including inventory state reports, stock records, usage
analysis, movement analysis, obsolete item control, waste or loss indicators, recomputation of
economic order quantity, preparation of purchase requisitions, purchase orders, call requirements,
purchase price changes, redundant inventories, etc. For this purpose a proper feasibility study is
needed, even before acquiring a computer system. The expectations as represented by computer
salesmen must be thoroughly investigated and a proper cost benefit analysis must be carried
out. Over-expectation is the biggest pitfall in electronic data processing, as the computer has
been pictured as the panacea for all managerial and operational ills.

Self Assessment

Fill in the blanks:
6. ……….................... have to be stored in terms of the suppliers, products, price and locations.
7. The computer can be used to hold a supplier file, an arc file and a …………. ledger.

8. Computers can be programmed to trigger ……….................... orders and also to initiate
follow-up action on outstanding orders.
9. The greatest improvement derived from an integrated computer information system is
the replacement of paper work by ……….................... data.
10. A memory system replaced perpetual ……….................... system and bin cards.

14.3 Integrated Computer System for Materials Management

The present use of computers in materials management is only to make computations easier and
faster. The integrated computer system should be utilized for the sake of an integrated information

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