Organization of Materials Management Functions

Organization of Materials Management Functions

The overall objectives of an organization tend to be achieved most efficiently when the organization is structured by grouping similar activities together. The process begins by dividing the total operation into its basic functional components. Each component, in turn, is divided into a number of sub-functions. The process is continued until each individual job encompasses a reasonable number of related tasks. The basic aim is to have a system that is functionalized, has proper control over the activities and is well co-ordinate.
Materials Management provides an integrated systems approach to the co-ordination of the materials activities and the control of total material costs. Obviously, the MM organization is
Derived from its fundamental objectives. Since Materials management function ranges from receiving the material requisition to placement of purchase orders and then on the other hand to receiving the material and making it available to the users , a commonly seen organization of materials management is divided into an integrated sections as :
¾ Purchasing
¾ Stores
¾ Inspection
¾ Traffic
1- Purchasing:- Once the whole Materials Management function has been divided into its different sub-functions as above, the sub-functions too are divided into their functions which are usually seen to be as :
Administrative: Purchasing administration involves all the tasks associated with the management process, with emphasis on the development of policies , procedures, controls and the mechanics for coordinating purchasing operations with those of other departments.
• Buying: It addresses to a wide gamut of activities such as reviewing requisitions , analyzing specifications, investigating vendors, interviewing sales people studying costs and prices and negotiating.
• Expediting: This is basically the order follow up activity involving various types of vendor relationship work.
• Reviewing Order status, providing clarifications on transportation, writing and emailing vendors etc.
• Special projects (Non routine) : In order to facilitate smooth purchasing in a highly competitive business environment , purchasing authorities have to keep building the capacity to do better by taking up as special projects activities such as vendor development, vendor registration, value analysis, market studies, system studies etc
• Routine : Purchasing process or procedure involving routine or every day activities such as dealing specific purchase file , placing orders, maintaining records of commodities, vendors etc.

Purchasing

Purchasing refers to a business or organization attempting to acquire goods or services to accomplish the goals of the enterprise. Though there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations. Typically the word “purchasing” is not used interchangeably with the word “procurement”, since procurement typically includes Expediting, Supplier Quality, and Traffic and Logistics (T&L) in addition to Purchasing.

Selection of Bidders

This is the process where the organization identifies potential suppliers for specified supplies, services or equipment. These suppliers’ credentials (qualifications) and history are analyzed, together with the products or services they offer. The bidder selection process varies from organization to organization, but can include running credit reports, interviewing management, testing products, and touring facilities. This process is not always done in order of importance, but rather in order of expense. Often purchasing managers research potential bidders obtaining information on the organizations and products from media sources and their own industry contacts. Additionally, purchasing might send Request for Information (RFI) to potential suppliers to help gather information. Engineering would also inspect sample products to determine if the company can produce products they need. If the bidder passes both of these stages engineering may decide to do some testing on the materials to further verify quality standards.

Bidding Process

This is the process an organization utilizes to procure goods, services or equipment. Processes vary significantly from the stringent to the very informal. Large corporations and governmental entities are most likely to have stringent and formal processes. These processes can utilize specialized bid forms that require specific procedures and detail. The very stringent procedures require bids to be open by several staff from various departments to ensure fairness and impartiality. Responses are usually very detailed. Bidders not responding exactly as specified and following the published procedures can be disqualified. Smaller private businesses are more likely to have less formal procedures. Bids can be in the form of an email to all of the bidders specifying products or services. Responses by bidders can be detailed or just the proposed dollar amount.