Business Today development of the hotel i

Business Today

1. INTRODUCTION TO MATERIAL MANAGEMENT Material management is an approach for planning, organizing, and controlling all those activities principally concerned with the flow of materials into an organization .

2. MATERIAL MANAGEMENT INCLUDES Material planning and control Production planning Purchasing Inventory control In -plant materials movement Waste management.

3. OBJECTIVES OF MATERIAL MANAGEMNET

4. SCOPE OF MATERIAL MANAGEMENT Emphasis on  the acquisition aspect Inventory control and stores management Material logistics , movement control and handling aspect Purchasing , supply , transportation , materials handling etc supply management or logistics management All the interrelated activities concerned with materials

5. INTEGRATED MATERIAL MANAGEMENT- all aspects of material costs , supply & utilization OBJECTIVES OF INTEGRATED MATERIAL MANAGEMENT Procuring better value Obtaining better yield Reducing investments in stock through Inventory control and material flow.

6. PURCHASING – 5R PRINCIPLES OF PURCHASING RIGHT QUALITY RIGHT QUANTITY RIGHT PRICE RIGHT SOURCE RIGHT TIME RIGHT PLACE ( of delivery)

7. METHODS OF PURCHASING Direct Purchasing Centralized Purchasing Group Purchasing Organizations (GPOs ) Online Purchasing Request for Proposals (RFPs ) Vendor Relationships and Partnerships Just-In-Time (JIT) Inventory System Bulk Purchasing Leasing and Renting Local Sourcing

8. VENDOR SELECTION - POINTS TO BE CONSIDERED WHILE SELECTING VENDOR Define Requirements Identify Potential Vendors Prequalification Request for Information (RFI ) Request for Proposal (RFP ) Evaluation Criteria Vendor Evaluation Site Visits and References Negotiation Contract Finalization Implementation Plan Monitoring and Performance Evaluation Continuous Improvement Risk Management

9. VENDOR RATING- COMPONENTS OF VENDOR RATING Quality of Products or Services Timeliness of Delivery Cost-effectiveness Communication Reliability Innovation Compliance

10. BENEFITS OF VENDOR RATING SYSTEM Considering all relevant criteria in assessing suppliers. Providing feedback from all areas in one package. Facilitating better communication with vendors. Providing overall control of the vendor base. Requiring specific action to correct identified performance weaknesses. Establishing continuous review standards for vendors. Building vendor partnerships, especially with suppliers having strategic links.

11. VENDOR EVALUATION KEY COMPONENTS OF VENDOR EVALUATION Quality of Products or Services Cost and Pricing Reliability and Reputation Financial Stability Experience and Expertise Capacity and Scalability Compliance and Risk Management Communication and Responsiveness Sustainability and Corporate Social Responsibility Service Level Agreements (SLAs ) References and Case Studies Contractual and Legal Considerations Location and Logistics Cultural Fit

12. PRICE FACTORS Competitive pricing Price stability. Price accuracy Sensitive to costs. Billing . QUALITY FACTORS Compliance with purchase order. Conformity to specifications. Reliability . Reliability of repairs Durability . Support Warranty . State-of-the-art product/service.

13. DELIVERY FACTORS Time Quantity Lead time Packaging Documentation Emergency delivery

14. INVENTORY CONTROL -ABC ANALYSIS ABC inventory analysis is based on the Pareto Principle . The Pareto Principle states that 80% of the sales volume are generated from the top 20% of the items. It means that the top 20% of the items will generate 80% of the revenue for the business. It is also known as the 80/20 rule.

15. INVENTORY CONTROL -ABC ANALYSIS

16. INVENTORY CONTROL STRATEGIES –ABC ANALYSIS For Category A items, businesses may implement strategies like just-in-time inventory management, safety stock, and frequent order reviews to ensure availability and prevent stock outs . Category B items may involve periodic review systems and moderate stock levels to balance the cost of holding inventory and the risk of stock outs . Category C items may be managed with more liberal reorder points and less frequent reviews due to their lower impact on overall inventory value.

17. 6 steps to conduct analysis Define the things you want to analyze.   Gather the necessary information.   Sort your goods.   Figure out the impact of your products on the company.   Divide your products into three classes based on demand.   Analyze the obtained data . In a nutshell, the technique is especially useful in terms of warehouse management. It helps identify the items that bring the highest profit and products that a business owner doesn’t need to replenish. The analysis gives business owners a clear picture of the sales performance of certain goods.

18. Advantages

19. Disadvantages

20. STORE MANAGEMENT The store is an important component of material management since it is a place that keeps the materials in a way by which the materials are well accounted for, are maintained safe, and are available at the time of requirement Storage is an essential and most vital part of the economic cycle and store management is a specialized function, which can contribute significantly to the overall efficiency and effectiveness of the materials function . Literally store refers to the place where materials are kept under custody.

21. The main processes of the store are To receive the incoming materials (receiving ) To keep the materials as long as they are required for use (keeping in custody), and  To move them out of a store for use (issuing )

22. Objectives of store management Efficient store management has normally the following main objectives. To ensure an uninterrupted supply of materials without delay to various users of the organization. To prevent overstocking and under stocking of the materials To ensure safe handling of materials and prevent their damage. To protect materials from pilferage, theft, fire and other risks To minimize the cost of storage To ensure proper and continuous control over the materials. To ensure the most effective utilization of available storage space To optimize the efficiency of the personnel engaged in the store

23. Types of stores Functional stores – Functional stores are named based on the function of the materials stored. Examples are fuel store, chemicals store, tools store, raw materials store, spare parts store, equipment store, refractories store, electric store, explosives store, and finished goods store, etc . Physical stores – Physically stores can be centralized stores or decentralized stores. These stores are named based on the size and location of the store. Examples are central store, sub store, department store, site store, transit stores, receipt store ,  intermediate store, open yard store, and covered store, etc .

24. Stores are also classified by naming them after the departments to which they serve Ex: construction stores, operation stores, rolling mill stores, blast furnace stores, and steel melting shop stores, etc. Stores are sometimes classified based on the nature of materials stored in them . Examples are a general store, bonded store, perishable store, inflammable store, salvage store, reject store, and quarantine store, etc.

25. Functions of stores Receipt of incoming materials Supervision of unloading of materials and tallying of materials Checking for damages or shortages and preparation of the report Filling of ‘goods inward’, ‘day book’, or ‘daily collection’ register Completion of vendors consignment note ( challan ) Making arrangement for inspection and getting the inspection completed Preparation of ‘goods receipt note’ (GRN) Preparation of ‘goods rejection memo’ (in case of rejection of materials) Sending of materials to the respective stores Sending of the relevant documents to the respective departments

26. Ensuring all storage and material handling facilities are in proper working order Ensuring good housekeeping and cleanliness in the storage space Checking, counting and tallying of materials before an issue Making prompt entries in ‘Bin card’ or stock card Ensuring correct documentation of material receipts and material issues Ensuring safe and proper handling of materials so as not to damage them Ensuring proper record keeping and correct accounting of materials Ensuring regular stock verification Ensuring that rules and regulations relating to physical custody and preservation of materials are followed Ensuring the safety of materials and personnel

27. PRICING OF ISSUES The important methods followed in pricing of issue of materials are : 1. Actual Cost Method 2. First-In First-Out (FIFO) Method 3. Last-In First-Out (LIFO) Method 4. Highest-in First-Out (HIFO) Method 5. Simple Average Cost Method 6. Weighted Average Cost Method 7. Periodic Average Cost Method 8. Standard Cost Method 9. Replacement Cost Method 10. Next in First Out (NIFO) Method 11. Base Stock Method.  

28. 5. For example, three batches of materials received at Rs . 10, Rs . 12 and Rs . 14 per unit respectively. The simple average price is calculated as follows: Rs . 10 + Rs . 12 + Rs . 14/3 batches = Rs . 36/3 batches = Rs 12 per unit 6. For example, three batches of material received in quantities of 1,000 units @ Rs . 15, 1,300 units @ Rs . 16 and 800 units @ Rs . 14. The weighted average price is calculated as follows: (1,000 units x Rs . 15) + (1,300 units x Rs . 16) + (800 units x Rs . 14)/1,000 units + 1,300 units + 800 units= Rs . 15,000 + Rs . 20,800 + Rs . 11,200/3,100 units = Rs.47,000/3,100 units = Rs . 15.16 per unit

29. 7. The average price for all the materials issued during the period is computed as follows

30. WAREHOUSING A warehouse may be defined as a place used for the storage or accumulation of goods. The function of storage can be carried out successful with the help of warehouses used for storing the goods.

31. FUNCIONS OF WAREHOUSING 1. Storage 2 . Price Stabilization 3 . Risk bearing 4 . Financing 5 . Grading and Packing

32. Benefits of warehouses Regular production Time utility Store of surplus goods Price stabilization Minimization of risks Packing & grading financing Types of warehouses Private warehouses Public warehouses Bonded warehouses