Lecture Purchasing and supply chain management (3rd/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.

Purchasing and Supply Chain Management

3rd edition

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Chapter 4:

Materials Management

Purchasting and Supply Chain Management, 3rd edition, Copyright 2013 W. 

Materials Management

• The purpose of materials management

• To support the transformation of raw materials and component  parts into shipped or finished goods

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1. Pipeline inventories 

2. Cycle inventories

3. Buffer stock

4. Seasonal

5. Decoupling

Order Cycle as a Link

• A link or pipeline that facilitates the flow of  information and materials

moved

• The Trade­off 

• Speed, reliability, inventory, and cost

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• Activities

• Order preparation by Customer

• Order transmission by Customer

• Order processing by Supplier

• Order transportation by Supplier

• Order receipt by Customer

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

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• 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.

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.

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• 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

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

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Questions?