Page 79 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes Supply chain management, as explained above, has evolved along two parallel paths:
1. The materials and supply management emphasis from industrial buyers, and
2. The transportation and logistics emphasis from wholesalers and retailers.
For the manufacturing firm, the supply chain management focus is on the impact of high levels
of inventories on manufacturing and storage costs. For the wholesaling and retailing industries,
the supply chain management focus is on location and logistics issues more often than on
manufacturing.
Sharing information with supply chain partners through EDI and the Internet has enabled firms
to integrate stocking, logistics, materials acquisition, shipping, and other functions to create a
more proactive and effective style of business management and customer responsiveness starting
out from the source of raw materials right up to the user of the final product.
One major change that has taken place is in the manner in which management now treats
functions and processes. From the functional view, i.e. viewing it as a departmental activity;
management studies started looking at these functions as parts of business processes.
What are the differences between a function and a business process? The distinctions between
functions and processes are explained below.
A business function is:
 A group of business activities that together completely support one aspect of furthering
the mission of the business.
 It is ongoing and continuous.
 It reflects the organizational component responsible for the activities.

 It is concerned with what has to be done to operate the business.
A business function does not include how the work is carried out.

Example: Purchasing, stores, receipt, materials management, etc.
In contrast, a business process is:
 A task or group of tasks carried out to furthering the mission of the business.
 It is executed repeatedly.

 It has a beginning and an end.
 It is only concerned with what has to be done.
 It is described in terms of inputs and outputs.
A business process addresses the question of how work is organized and managed across the
organization i.e. grouping similar activities together. A business process does not include the
organizational component responsible.

Example: Aggregate Planning, Material Requirement Planning, Supply Chain
Management, etc.
Supply chain relationships can be quite complex. Instead of the process view, we will start with
the functional view. It is easier to understand the workings of Supply Chain Management if we
start with this traditional view of supplier-buyer relationships as reflected by the materials
function.

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