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Lecture Purchasing and supply chain management (3/e): Chapter 4 - W. C. Benton

Chapter 4 - Materials management. Chapter 4 focuses on materials management in support of the transformation of raw materials and component parts into throughput (sales). The functions included in the materials management concept include materials planning and control, production scheduling, receiving, stores, traffic, disposal of scrap, quality control, and inventory control. | 1 Chapter 4: Materials Management Purchasting and Supply Chain Management, 3rd edition, Copyright 2013 W. C. Benton, Jr., All rights reserved. Materials Management The purpose of materials management To support the transformation of raw materials and component parts into shipped or finished goods 2 The Five Functions of Inventory 1. Pipeline inventories 2. Cycle inventories 3. Buffer stock 4. Seasonal 5. Decoupling 3 Order Cycle as a Link A link or pipeline that facilitates the flow of information and materials Characteristics Length The distance between supplier and customer Modes Method by which information is sent and material moved The Trade-off Speed, reliability, inventory, and cost 4 Order Cycle as a Set of Activities Activities Order preparation by Customer Order transmission by Customer Order processing by Supplier Order transportation by Supplier Order receipt by Customer 5 Tasks: 1. Physical receipt 2. Unloading 3. Inspection 4. Storage location decision 5. Move to storage | 1 Chapter 4: Materials Management Purchasting and Supply Chain Management, 3rd edition, Copyright 2013 W. C. Benton, Jr., All rights reserved. Materials Management The purpose of materials management To support the transformation of raw materials and component parts into shipped or finished goods 2 The Five Functions of Inventory 1. Pipeline inventories 2. Cycle inventories 3. Buffer stock 4. Seasonal 5. Decoupling 3 Order Cycle as a Link A link or pipeline that facilitates the flow of information and materials Characteristics Length The distance between supplier and customer Modes Method by which information is sent and material moved The Trade-off Speed, reliability, inventory, and cost 4 Order Cycle as a Set of Activities Activities Order preparation by Customer Order transmission by Customer Order processing by Supplier Order transportation by Supplier Order receipt by Customer 5 Tasks: 1. Physical receipt 2. Unloading 3. Inspection 4. Storage location decision 5. Move to storage 6. Documentation Customer Satisfaction Objectives of Material Managers Customer satisfaction Minimum total materials costs Customer Satisfaction Dimensions Customer service Material availability Quality And others 6 Product design and Quality Design is setting the specifications for a material or product. A product designer’s job is to capture, in the product’s design, the expectations of the customer. A Materials manager’s job is to ensure that products are made in the least costly way so that the item qualifies as a best buy. 7 Objective Quality Approaches to quality Subjective quality Objective quality The degree to which material conforms to specifications High quality products must both: Conform closely to specifications Objective Quality Satisfy consumer expectations Subjective Quality However, objective quality can be too high. 8 MRO Materials and Specification Maintenance Materials Periodical replacement in a piece of equipment Resupply by original equipment manufacturer Specified by manufactured part number and the model number of the unit Repair Materials Unexpected replacement Usually not carried as inventory Specified by various ways such as drawings and photographs 9 MRO Materials and Specification (cont.) Operating Supplies Essential parts of the end item Unit value or size is too small to plan or control usage unit by unit Standard items Specified by manufacturer or industry codes 10 Questions? 11