Material flow

Managing Material Flow

TC/IS/2011/MS/118Logistic ManagementDepartment business and Management StudiesTrincomalee Campus

Objectives of the chapters…• To identify the material management and its aspect and

activities.• To identify the major objectives of material management.• Forecasting .• Total Quality Management.(TQM)• Measurement of material management performance.• To identifying the Material Management Improvement

System.

‘’ Administration of raw materials, subassemblies, packaging material and in-process inventory ‘’

Material Management

Material Management Activities

Sourcing and obtaining materials

Introducing material in to the organization

Monitoring the status of materials

Anticipating material requirements

Major Objectives of Material Management

Company Objectives

Objective of the material management

Low cost High level of service

Quality assurance

Low level of tied-up cost

Support of other

functions

Aspect of Material Management

Purchasing and procurement

Production control

Inbound logistics

Warehousing and storage

Management information system

control

Inventory planning and control

Salvage and scrape disposal

Forecasting

‘’ Predict the future through quantitative or qualitative method or combination of both ‘’

- Customer satisfaction- Product efficiency- Superior negotiation- Pricing and promotion

management

- Stock out- Safety stock

needs

Forecasting Techniques

Demand forecast

Supply forecast

Price forecast

Long-term forecast

Midrange forecast

Short-term forecast

Total Quality Management

‘’ Application of quantitative and Human resource to improve the material services supplied to an organization, all the process within the organization and the degree to which the needs of the customer are met ‘’

Measuring the Performance of Materials Management

Service level

Inventory level

Price level of materials

Order cycle time, fill rate, number of production delays

Slow moving inventory, inventory turnover

Material Management Improvement System

Kanban / Just-in-time

( JIT )

MRP system- MRP I (Material Requirement Planning )

- MRP II (Manufacturing Resource Planning)

DRP system- DRP I (Distribution

Requirements Planning )

- DRP II (Distribution Resource Planning)

Kanban / Just-in-time

( JIT )

‘’ Production strategy that reduce manufacturing costs and to improve quality markedly by waste elimination and more effective use of existing company resources ‘’

JIT II concept Apply JIT concept to the purchasing function.

• Improved inventory turn.

• Bettor customer service.

• Decreased warehouse space.

• Improved response time.

Benefits and Problem of JIT

• Production scheduling.

• Supplier production schedule.

• Supplier locations.

Material Requirements

Planning (MRP I)

‘’ Computer based production and inventory control system that attempts to minimize inventories while maintaining adequate material through production process ‘’

Advantages and Disadvantages of MRP I

• - Improved business results and manufacturing results.

• Better manufacturing control.

• More accurate and timely information.

• Less inventory.• Optimize material

acquisition cost.• Higher

transportation bills and unit cost.

• Delivery problem and material shortage.

• Use of standard software package.

Advantages

Manufacturing Resource

Planning (MRP II)

‘’ Set of activities involved in planning and control of production operations ’’.

• Inventory reduction.• Minimize workforce

overtime.• Reduction in

purchasing cost.• Improved consistency

in customer delivery process.

Distribution Requirement Planning (DRP I)

Distribution Resource Planning (DRP II)

‘’Extension of (DRP I) and drive distribution schedule , control bill of material ‘’.

‘’Application of MRP principals to distribution environment and integrate distribution needs’’.

Uses of DRP generated information

• Coordinate the replenishment of SKU.• Select transportation modes, carriers, and shipment

sizes.• Schedule shipping and receiving labour.• Develop a master production schedule for each SKU.

Summary …

Material Management• Introducing• Anticipating• Sourcing and obtaining• Monitoring

Objectives

• Low cost.• High level of service.• Quality assurance.• Low level of tied up

capital.• Support other function.

Forecasting

Aspect

• Purchasing and procurement.• Production control.• Inbound traffic and

transportation.• Ware housing and storage.• MIS control.• Inventory planning and

control.• Salvage and scrap disposal. Ju

st-in

-tim

e (

JIT )

MRP

I , M

RP II

DRP

I , D

RP II

Total Quality Management