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Materials Management

The most important activity of all industrial and trading companies is the acquisition, storage, movement and processing of materials before they are delivered to customers for consumption. Since the assets of all the industrial and trading companies is normally invested in material flows, the efficiency of material management determines the fortune of such companies. This makes effective management of material flow process one of the key business processes operating in an organisation.

The Supply Chain Management (SCM) concept has been developed to face the new competitive pressures and performance demands imposed on the modern organisation. SCM is more theoretical with Enterprise Resource Planning (ERP), which can be understood mainly by the management consultants. This has strictly restricted the conceptís understanding and applicability among managers, who cope with the complexity of materials flow and management on day-to-day basis.

Theoretically, consistent set of concepts, tools and techniques, which can be understood and used by the materials managers and other members of the management, can be presented to rectify the problem. SCM comprises of coordination, control and profit initiatives associated with the flow of materials, information and transactions among the partners. Such transaction partners include vendors, buyers, their channels, operations and abilities to integrate with the core enterprise.

The concepts, tools and techniques presented, attempt to optimise SCM and more specifically present ways to:

  • Conceptualise other methods to model supply chains and supply systems, and material flow processes.
  • Incur costs in supply systems and avoid them wherever possible.
  • Correlate cycle times with customer service level and provide correct levels of inventory.
  • Approach the function strategically, and act practically instead of reactively.
  • Provide an integrative systems and process oriented approach, which looks holistically at SCM and does not ignore important fundamentals of the problem.

Such a systems approach is called as supply chain analysis, which shall be discussed in detail later.

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