Page 191 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes system which would result in the smooth operation of the materials functions. The main objective
of such an integrated system should be accuracy in reporting demand and inventory. The
integrated system also ensures a fast reaction to environmental changes—changes in either
supply or price of materials or changes in customer taste and measurement of functions such as
inventory, purchasing and vendors. The normal flow of information regarding materials in an
organization is depicted below with detailed explanation of list of activities.
A computer can easily maintain this information flow with basic data, coming from production
planning, design and maintenance departments and environmental information coming from
purchase and sales departments. It can give back the formation of inventory records to the
production planning department, can send purchase requisitions to the purchase department,
remind purchase department for follow-up and place direct purchase orders for standard repetitive
items. It can update the past record file with revised consumption figures for items, and can
check the actual consumption against the bill of materials and debit material cost incurred to
user departments. On the basis of record and basic data, the computer can formulate inventory
levels.

The distinct advantages of an integrated computer system are: that it involves the line personnel
and provides timely and quick information on the materials position. It is also used for
operational convenience and not for mere calculations. Studies conducted in India and abroad
indicate that computers have been fruitfully used in organizations where the primary objective
of the computer system is operations management. The use of computers for only computations
is probably the reason why businessmen are not sure of their worth.
Integrated Management Information Systems using computers are applicable in the following
areas. The list is only illustrative and not exhaustive:
1. Long-term production schedule.
2. Short-term production schedule.

3. Materials manual.
4. Requirement of non-stock items from user departments.
5. Information regarding lead time, supply position (shortages), price trends, anticipated
price changes, etc.
6. Production schedule handed over to production department.
7. Materials requisition from the production to stores.
8. Materials supplied from stores to production.

9. To and fro information between stores and inspection.
10. Information regarding receipts from the stores.
11. Date regarding issues from stores.
12. Due dates of supply from purchase department.

13. Information to purchase department for follow up of supplies.
14. Purchase requisition to purchase department.
15. Purchase order.
16. Materials from suppliers to stores.

17. Previous year’s consumption data.

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