Objectives of materials management, Project Management

Objectives  of Materials Management:

1. Low  prices: Obtaining  the least possible  price  for purchased materials is the  most  obvious  purchasing  objectives and certainly one of the most important. If  the purchasing  department reduces the prices of the items  it buys  operating  costs  are reduced and profits  are enhanced.

2. High  Inventory  Turnover: When inventories are low in relation to  sales  less capital  is tied up  in inventories. This in turn  increases the efficiency with which  the company  capital  is utilized so  that  return on investments is  higher.

3. Low  cost  Acquisition and Possession: If  materials are handled and stored  efficiently  their  real cost is  lower. Acquisition  and possession  costs  are low  when  the receiving  and stores  departments  operate  efficiently.

4. Continuity of Supply : When  there are disruptions   in the  continuity of supply excess costs  are inevitable.  Production  costs go up excess expediting and transportation  costs  are likely  and  so on.  Continuity of supply is particularly important for highly automated processes where costs  are rigid and must  be incurred even when production stops  because of unavailability  of materials.

5. Consistency of Quality: As pointed  out earlier quality of the end  product depends  on materials  that go  into it  when materials purchases are homogeneous and in  primitive stage( e, g, sand  and gravel) quality is rarely a problem  for purchases  personnel.

6. Low  Payroll Costs :The objective of low payroll costs is  common  to every  organization. The  lower  the payroll  the higher the profits all other factors being equal. But  because  no department can do  its job without  a payroll  the objective of low payroll must be  viewed in its  proper  perspective.

7. Favourable Supplier Relationship :Maintaining  cordial  relations with  suppliers  benefits  the  buying company  in more  than one  way. In the first  place  a company with  good reputation in  supplier  relations is more likely  to attract customers  than the one  with a bad name. Secondly the product  development  and research  efforts  of suppliers are passed  on the  company  provided the latter  maintains good  relations with the  former.

8. Development of Personnel: If  you want  to plan for  year plant corn. If  you want to plan  for 30 years plant  a tree. But  if you want  to plan  to  for 100 years plant  men. So  goes  a Chinese proverb.  Every head  of every department should  understand this saying and take personnel  interest in  developing  the personnel working  under him.

9. Good Records: Good  records are considered a primary objective  of materials  management: particularly in the  procurement phase of the materials management. Buyers spend  company  money and can be  subjected to tremendous temptation.  Although perhaps 99%  of all buyers are above  corruption, the opportunity does exist. Good  recurs along with  well planned  administrative controls and periodic audits can  discourage corruption.

Posted Date: 2/25/2013 6:59:23 AM | Location : United States







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