MATERIALS
MANAGEMENT
Presented by: Group 7 from
BSCPE 41001
I. Introduction to
Materials Management
Materials management is a core
function of supply chain
management. It involves planning
and executing supply chains to
meet material requirements,
control flow, and assess variables
like demand, price, and quality.
Objectives of Materials Materials
Management
The Five Rs of Materials Management:
•Right material
•Right time
•Right amount
•Right price
•Right sources
II. Sourcing Strategies for
Materials and Components
1. Single vs. Multiple Sourcing:
Single Sourcing: in single sourcing, a company
relies on one supplier for a specific material or
component.
Multiple Sourcing: in multiple sourcing, a
company uses several suppliers for the same
material or component.
•Single: Easier management, riskier.
•Multiple: Reduces risk, more complex.
2. Supplier Relationships
Building strong relationships with suppliers is
vital for ensuring that materials are delivered
on time and meet the necessary quality
standards. Companies often form strategic
partnerships with key suppliers, fostering long-
term relationships built on trust and mutual
benefit
Strategic Partnerships
A long-term, collaborative relationship with a supplier where
both parties work together to improve performance, quality,
and innovation.
3. Just-In-Time (JIT)
Sourcing
JIT sourcing is a strategy where materials and
components are delivered exactly when they
are needed in the production process,
reducing the need for excess inventory.
Benefits and Challenges:
• Materials delivered exactly when needed.
• Reduces inventory cost but increases
reliance on suppliers.
4. Ethical and Sustainable
Sourcing
Ethical sourcing involves procuring materials in a
manner that respects workers' rights, environmental
standards, and legal requirements, avoiding
exploitation and environmental harm.
Sustainable sourcing aims to reduce the
environmental impact of production by using
renewable resources, minimizing waste, and
choosing suppliers with eco-friendly practices.
Importance of Ethical and Sustainable Sourcing
Corporate Responsibility
Regulatory Compliance
Reputation
III. Inventory Management
Types of Inventory:
•Raw Materials: These are the basic inputs that a
company needs for production. Raw materials vary
depending on the type of product being made.
•Work-in-Progress (WIP): These are items that are in
the production process but not yet completed. WIP
inventory includes materials, labor, and overhead
costs that are partially finished.
•Finished Goods: These are the completed products
ready for sale to customers. Once an item has gone
through all production stages, it becomes part of the
finished goods inventory.
INVENTORY
CONTROL
TECHNIQUES
1. Economic Order Quantity (EOQ)
EOQ is a formula used to determine the optimal order quantity that
minimizes total inventory costs, which include ordering and holding
costs.
Formula:
EOQ = √((2DS) / H)
Where:
D = Demand rate(units/year)
S = Ordering cost per order
H = Holding cost per unit per year
2. ABC Analysis
ABC analysis is an inventory categorization technique that divides
items into three categories based on their importance:
A items: High-value items with low frequency of sales but crucial for
the business.
B items: Moderate-value items with moderate sales frequency.
C items: Low-value items with high sales frequency but less impact
on the business
3. Safety Stock
Safety stock is extra inventory kept on hand to prevent stockouts
caused by fluctuations in supply or demand. It acts as a buffer to
protect against uncertainties in the supply chain.
Formula:
Safety Stock = (Maximum daily usage × Maximum lead time) −
(Average daily usage × Average lead time
Role of Technology in Inventory
Management
ERP Systems:
Real-time tracking
Automated inventory management
Data integration across departments
IV. Quality Control
Quality control (QC) refers to the
processes and procedures used to
ensure that the products or materials
a company receives from suppliers
meet predefined standards. QC is
critical in materials management
because the quality of raw materials
directly impacts the quality of the
final product
QUALITY CONTROL
METHODS
1. Inspection
Inspection is a basic quality control
method involving visual or manual
checks of materials at different stages
to meet required specifications.
Types of Inspection:
Pre-Production Inspection
In-Process Inspection
Post-Production Inspection
2. Testing
Testing involves more detailed analysis than
inspection. Materials are subjected to specific
conditions (e.g., temperature, pressure, or
stress) to ensure they will perform correctly in
the final product.
Types of Testing:
Destructive Testing
Non-Destructive Testing (NDT)
3. Certification
Certification refers to the formal approval or
verification that a material or supplier complies
with established quality standards. Certifications
may be provided by third-party organizations or
by internal company departments after thorough
testing and inspection.
Common Certifications:
ISO 9001: A global standard for quality
management systems (QMS).
CE Mark: Indicates that a product meets
EU safety, health, and environmental
protection standards.
V. Conclusion
In conclusion, materials management is a
crucial function in any organization, as it
directly influences the overall efficiency,
cost-effectiveness, and product quality.
Each aspect of materials management,
from sourcing to quality control, plays a
vital role in ensuring that production runs
smoothly, costs are minimized, and
customer demands are met.
Conclusion
These are key functions in any organization, as they
directly affect overall efficiency, cost efficiency,
and the quality of products:
Sourcing Strategies
Inventory Management
Quality Control
QUIZ TIME
1. Is a core function of supply chain management,
involving the planning and execution of supply
chains to meet the material requirements of a
company or organization.
A. Materials Management
B. Inventory Management
C. Engineering Management
D. Quality Control
2. A company that relies on one supplier for a
specific material or component.
A. Single Sourcing
B. Multiple Sourcing
C. One-to-one Sourcing
D. One-to-many Sourcing
3. A company that uses several suppliers for the
same material or component.
A. Single Sourcing
B. Multiple Sourcing
C. One-to-one Sourcing
D. One-to-many Sourcing
4. A long-term, collaborative relationship with a
supplier where both parties work together to
improve performance, quality, and innovation.
A. Strategic Partnerships
B. One-to-one Sourcing
C. Secret Technique
D. Strategic Relationships
5. Is a strategy where materials and components
are delivered exactly when they are needed in the
production process, reducing the need for excess
inventory.
A. Just-In-Time (JIT) Sourcing
B. Maybe-This-Time (MTT) Sourcing
C. One-to-one Sourcing
D. One-to-many Sourcing
6. Is the process of ordering, storing, tracking,
and managing a company's inventory, which
includes raw materials, work-in-progress(WIP),
and finished goods.
A. Materials Management
B. Inventory Management
C. Engineering Management
D. Quality Control
7. Refers to the processes and procedures used
to ensure that the products or materials a
company receives from suppliers meet
predefined standards.
A. Materials Management
B. Inventory Management
C. Engineering Management
D. Quality Control
8. It involves visually or manually checking
materials to ensure they meet the required
specifications.
A. Inspections
B. Testing
C. Checking
D. Analyzing
9 . Refers to the formal approval or verification
that a material or supplier complies with
established quality standards.
A. Materials Approval
B. Clarification
C. Letter of Approval
D. Quality Approval
10. Materials are subjected to specific conditions
(e.g., temperature, pressure, or stress) to ensure
they will perform correctly in the final product.
A. Beta Testing
B. Alpha Testing
C. Testing
D. Analyzing
THANK YOU
