Materials Management

Topics: Material requirements planning, Material, Procurement Pages: 53 (10915 words) Published: October 23, 2009


Materials are an important determinant of the total cost of production, as it constitutes around 50% to 60% of total cost. Materials as our input in production system are receiving attention of the industrialists from 1900 onwards. Since the beginning of 20th century, materials have been occupying a place of importance among the M’s of Materials, Money, Man, Machine and this will continue to be so in the years to come.

Materials management is one of the areas covered by the whole process of management. The effective use of all manpower is looked after by the personnel management. But for a balanced growth and efficient running of the enterprise, it is necessary that materials cost, materials supply and materials utilization are so controlled that they lead to ➢ The maximization of production,

➢ The reduction in the cost of production and distribution, ➢ The maximization of the margin of profit.

Materials management helps in reduction materials cost, preventing a large amount of capital being locked up for a longer period and improving the capital turnover ratio.
Materials management today is a distinct area of industrial management and plays a vital role in production and productivity. This concept aims at cost reduction, as a result of integrated approach towards the management of materials at all stages viz., planning, purchasing, receiving, stocking and disposal.

Materials management is concerned with the planning and programming of materials and equipments, market research for purchase, pre-design value analysis, procurement of all materials including capital goods, raw materials, components and assembles, finished material, packaging and packing of material, inventory control etc.

Materials management is a body of knowledge which helps the manger to improve the productivity of capital by reducing materials costs, preventing large amounts of capital being locked up for long periods and improving the CTR (capital turn over ratio).

Materials management involves number of issues like the

➢ Determination of quantity and quality
➢ Purchasing
➢ Store issuing and dispatching etc.


The materials management concept began to be used only from 1940’s. Earlier to this, the activities were known as purchasing, inventory control and store keeping, each independent of the other.
The Indian Institute of Materials Management (formerly Indian association of materials management) was founded in 1967. Over the year it has grown in status and is now a charter member of the International Federation of Purchasing and Materials Management (IFPMM).

Materials management is more confined to manufacturing sector to service sector. This is for the simple economic reason, because every manufacturer is a converter of raw materials into finished products.

The concept of materials management is losing its significance’s as the manufacturing sectors itself is receding in importance paving way for service sector. This is particularly true in rich economies like the U.S.A.

The picture in our country is different our economy has moved from primary sector towards secondary sector. It may be a few decades hence our economy will shift form secondary to tertiary sector. As long as industrial sector is predominant, materials management will continue to receive the attention of planners, executives and academicians.


Bailey and Farmer define materials management as “the management of the flow of materials into an Organization to the point where those materials are converted into the firm’s end product.”

According to Ammer, materials management is “the process by which an Organization is supplied with goods and services that it needs to achieve its objectives. The materials management begins with the suppliers and ends when the material is either consumed or incorporated to some product. The...
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