Definition of Material Management and its Scope – One of the most important elements in a Production System is Material. Without Material, Production is not possible to produce the desired finished product or final product.
Material is basically an object that is needed to make something, for example, to make a shirt then the production will need material such as cloth, yarn, and buttons while to produce cellphones the raw materials are electronic components such as transistors, ICs, Resistors, LCDs and so on.
In the Production System, Material is input or input used to process into finished goods, the material referred to here can be either raw material or material that has been processed before it is used for further production processes.
In manufacturing companies, Materials need to be handled professionally in order to make the most optimal contribution to the company. The branch of Management Science that handles Materials in a company is called Material Management.
By definition, what is meant by Material Management is a function that is responsible for coordinating planning, sourcing, purchasing, storing, and controlling material optimally so that it can meet customer needs. Material Management can also be interpreted as a scientific technique related to planning, organizing, and controlling the flow of material from initial purchase to arriving at its destination.
Material Management Scope
From the above definition, we can draw conclusions about the scope of Material Management which includes Material Planning and Control, Purchasing, Storage Management, and Inventory Management.
The following is a brief explanation of some of the scope of Material Management:
1. Material Planning and Control (Material Planning and Control)
The first Material Management Scope is Material Planning and Control. The materials needed will be planned and controlled based on Sales Forecast or Estimated Sales and Production Planning. Material Planning and Control involves estimating the needs of each material, preparing material budgets, forecasting inventory levels, scheduling material orders and monitoring performance related to production and sales.
Pleas to also read: Understanding MRP (Material Requirement Planning) and Purpose of Implementation.
Scope of Purchasing includes the selection of sources of supply, making purchases through the issuance of Purchase Orders (PO), following the development of the purchase until the material arrives at its destination, maintaining good relations with suppliers, approving payments to suppliers, evaluating and evaluating the performance of each supplier.
Please to also read: Understanding Purchasing and Purchasing Procedures.
3. Store Management
Storage Management or Store Management includes physical supervision and control of material, maintaining and maintaining the area or place of storage, minimizing obsolescence and damage to materials through efficient handling, recording the amount of inventory and placing the material in an appropriate place.
The Deposit Management is also responsible for verifying the physical condition and quantity of the material and matching it with the amount recorded in the books. Store or Storage plays a very important role in a Manufacturing company.
4. Inventory Management
In a Production System, Inventory is defined as idle resources for an enterprise. Inventories can be finished goods that are stored and ready to be sold or semi-finished goods that will carry out the next process or are still in the form of raw materials.
The time interval from purchasing materials to being transformed into finished goods ready for sale will vary from company to company depending on the production time cycle. Therefore, it needs a sufficient amount of material inventory to be used as a buffer or buffer so that production can run smoothly without any disruption due to material shortages.
Please to also read: Understanding Inventory Management and Costs.