other functions of an organization

7/29/2019 Other Functions of an Organization

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Other functions of an organization

Introduction

Every organization, big or small, depends on materials and services from otherdepartments in an organization to varying extents. These materials and services areobtained through exchange of money and the physical arrangement of it all iscalled Materials Management or even Material Management.

Various materials used as inputs, such as raw materials, consumables &

spares, are required to be purchased and made available to the shops / users

as & when needed to ensure uninterrupted production.

Therefore, efficient management of input materials is of paramount

importance in a business organization for maximizing materials productivity,

which ultimately adds to the profitability of the organization.

All the materials related activities such as material planning &

indenting,purchase systems&procedure, variety reduction through

standardization & rationalization, reducing uncertainties in demand & supply,

handling & transportation, inspection, properstorage& issue of materials to

the internal customers,inventory management, vendor management & finally

disposal of obsolete, surplus & scrap materials etc. taken together is termed

asINTEGRATED MATERIALS MANAGEMENT

To carry out these functions efficiently, it is essential to have a very good supplier base,order booking process & inventory management system as well as expert

MATERIALS MANAGEMENT (MM) professionals.

Materials Management is a key business function that is responsible for co-ordination ofplanning, sourcing,purchasing, moving ,storingand controlling materials in an optimum

manner so as to provide a pre-decided service to the customer at a minimum cost.

In its process of managing , materials management has such sub fields as inventorymanagement , value analysis, receiving, stores and management of obsolete , slowmoving and non moving.

Materials Management's scope is vast. Its sub functions include Materials planning andcontrol, Purchasing, Stores and Inventory Management besides others. The variousactivities represent these four functions:
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Planning and control Purchasing Value analysis and Physical distribution

The planning and control functionsareinventory management, productionplanning and scheduling.

Purchasing functionsare buying,subcontracting, value analysis and followups.

Distribution functions are receiving , packaging, shipping, transportation

andstorage, making it theIntegrated Materials Management.

Once the whole Materials Management function has been divided into itsdifferent sub-functions as above, the sub-functions too are divided into theirfunctions which are usually seen to be as :

Purchasing

Administrative : Purchasing administration involves all the tasks associatedwith the management process, with emphasis on the development of policies ,procedures, controls and the mechanics for coordinating purchasing operationswith those of other departments.

Buying : It addresses to a wide gamut of activities such as reviewingrequisitions , analyzing specifications, investigating vendors, interviewing salespeople studying costs and prices and negotiating.

Expediting : This is basically the order follow up activity involving various typesof vendor relationship work.

Reviewing Order status, providing clarifications on transportation, writing andemailing vendors etc.

Special projects (Non routine) : In order to facilitate smooth purchasing in ahighly competitive business environment , purchasing authorities have to keepbuilding the capacity to do better by taking up as special projects activities suchas vendor development, vendor registration, value analysis, market studies,system studies etc
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Routine : Purchasing process or procedure involving routine or every day

activities such as dealing specific purchase file , placing orders, maintainingrecords of commodities, vendors etc.

. Business organizations are group of people intentionally organized to accomplish an overall, common

goal or set of goals

relationship between procurement and other functions of an organisationMany will agree, that main function of a business organisation is to maximise profits. This is

true to a certain degree, but many well known and also profitable business organisations dosome fundamental things very well. They are,

1. Having a solid product portfolio and sustaining the same with competitive quality and

pricing.2. having an eye on innovations and products for future need / requirements.

3. Keeping Human Resources / employees / suppliers/ buyers; happy and rewarding themfor their performances. as regards to the employees- they are the people who make the

organisation complete. so they should be handled with care. Give responsibilities andpowers to execute it. If they do well; reward them. Invest in training.

4. Sustaining the above three points without fail. Resulting in profits.

5. Should have a good cash flow in the business, having enough General Reserves forinnovations- new products- reward programmes, having a good credit rating with financial

institutions.6. Marketing, sales, sales-support and Finance functions should be handled carefully and

there should always be room for rookie ideas to pour in. No harm in having fresh ideas.any company that does the above, are successful companies. You will find a lot of

companies doing these simple things well. Hence their Balance sheet is always in

"handsome Black".

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Cooperation between multiple departments in a company is essential for increased profits. Production

departments and marketing or sales departments have different functions, but a similar overall objective.

Both departments look to enhance sales and profits by supplying products that customers need or want.

Marketing and sales support within the production department can help tie customer preferences to theproduction process.

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Functions of various departmentsEvery organisation is made up of different department. Each department contributes to the running of the

business. The most common departments are:

Production

Marketing & Sales

Finance

Human resource

and in some cases, Information Technology departments

Production DepartmentThe production department is responsible for converting inputs into outputs through the stages of

production processes. The Production Manager is responsible for making sure that raw materials are

provided and made into finished goods effectively. He or she must make sure that work is carried outsmoothly, and must supervise procedures for making work more efficient and more enjoyable.

There are five production sub-functions

Production and planning.

They will set the standards and targets at each stage of the production process. The quantity and quality

of products coming off a production line will be closely monitored.

Purchasing department

This department will provide the materials, components and equipment required. An essential part of this

responsibility is to ensure that stocks arrive on time and are of good quality

The stores department

The stores department are responsible for stocking all the necessary tools, , raw materials and equipment

required to service the manufacturing process.

The design and technical support department

They are responsible for the design and testing of new product processes and product types, together

with the development of prototypes through to the final product.

The works department

This department is concerned with the manufacture of products. This will include the maintenance of the

production line and other necessary repairs. The works department may also have responsibility for

quality control and inspection.

Aims and functions of production department

Production is the functional area responsible for turning inputs into finished outputsthrough a series of production processes. The Production Manager is responsible formaking sure that raw materials are provided and made into finished goods effectively.


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He or she must make sure that work is carried out smoothly, and must superviseprocedures for making work more efficient and more enjoyable.

Five production sub-fuctions

In a manufacturing company the production function may be split into five sub-functions:1. The production and planning department will set standards and targets for eachsection of the production process. The quantity and quality of products coming off aproduction line will be closely monitored. In businesses focusing on lean production,quality will be monitored by all employees at every stage of production, rather than atthe end as is the case for businesses using a quality control approach.2. The purchasing department will be responsible for providing the materials,components and equipment required to keep the production process running smoothly.

A vital aspect of this role is ensuring stocks arrive on time and to the right quality.3. The stores department will be responsible for stocking all the necessary tools,spares, raw materials and equipment required to service the manufacturing process.

Where sourcing is unreliable, buffer stocks will need to be kept and the use ofcomputerised stock control systems helps keep stcoks at a minimal but necessary levelfor production to continue unhindered.4. The design and technical support department will be responsible for researchingnew products or modifications to existing ones, estimating costs for producing indifferent quantities and by using different methods. It will also be responsible for thedesign and testing of new product processes and product types, together with thedevelopment of prototypes through to the final product. The technical supportdepartment may also be responsible for work study and suggestions as to how workingpractices can be improved.5. The works department will be concerned with the manufacture of products. This willinclude the maintenance of the production line and other necessary repairs. The worksdepartment may also have responsibility for quality control and inspection.

A key aspect of modern production is ensuring quality. The term quality means fitnessfor purpose i.e. a product, process or service should do exactly what is expected of it

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The main role of production is to turn inputs (raw materials) into outputs (finished goods). Outputs

refer to a finished product or service and inputs are the materials that are needed to manufacture

certain goods. When a business completes this process they are able to achieve customer satisfaction

by producing products that are ready to be used and fit for purpose.

The production department is responsible for ensuring quality is achieved in each item

produced. They will need to carry out inspections and implement suitable qualityinitiatives. This is one of the major duties of this department because if mistakes are madeon products, customer satisfaction will be decreased or if products are ruined during the

production process it means that the company will have to throw "bad" products away

(creating waste). Both aspects will lead the company to a loss of profit. Quality assurancewill have to be carried out everyday on a number of occasions to ensure that the productionprocess is working efficiently and effectively. For example Coca-cola will carry out

approximately 200 inspection per day to ensure quality is being achieved and also to makesure all equipment is running well.

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The production department is the driving force turning the wheels of every manufacturing company

because without it there are no goods to sell to customers. Along with producing the goods a

manufacturer sells, the production department determines how much of those goods can be produced in

a certain time frame.

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Quality of Goods

The production department's main duty is to ensure the goods being produced meet thecustomer's quality expectations. Even though the quality assurance department inspects thegoods through the manufacturing process, the production department has certain qualityduties too. Each step measures the raw material to make sure it is within the tolerancesrecommended before it goes to the next step. This measurement is either done digitally or

by the machine or production operator.

Production Scheduling

A production department can only manufacture or assemble so much product in a certainamount of time. It is the duty of the production department to maintain a productionschedule so other departments know what is being produced and how long it takes toproduce that quantity. The sales department relies heavily on this production scheduling toprovide customers with a satisfactory time line of shipment for their purchases.

Coordinating Duties

Not all goods are produced on an assembly line. This is the last step in a long productionprocess. The production department coordinates the production of each part of theassembled goods to ensure all parts are being produced in conjunction with each other. All
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parts of an assembled product are formed from raw material. This process takes severalsteps from the production department to make sure each part of the product is beingproduced simultaneously or within the same time frame.

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WHAT IS THE FUNCTION OF DIFFERENT DEPARTMENTSIN PRIVATE AND PUBLIC ORGANISATION AND WHICHORGNISATION IS USED

.

PURPOSE OFORGANISATION

In organisation we can do many types of work with collectively,

because every individual is expert in his field, the main purpose of this to earn maximum profit in short

time. The working process in organization is so fast other than who work separate (synergy).

PRODUCTION

The function of production department is to convert input to output. In productiondepartment the production manager has some responsible for making sure that raw material is

provided and made in finished goods effectively, and make sure that work id carried out smoothly it is

closely related to other departments like HRM, Finance etc

O FUNCTIONS IN PRIVATE AND PUBLIC COMPANY

In shiraz flour mills we produces the maximum quantity of flour in short time to meet the demand of

market production and it is totally process of planning if demand is high then we produces in high

quantity and store in our god owns, and total quality management to check it time to time.

In publicorganizationPIAin which totally parts are import from other countries and assemble in

Pakistan and in which some parts is produces in Pakistan. In PIA production department has the function

to repair it and assemble new planes and checked it time to time.

ntroduction
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Industrial Engineering has been traditionally concerned with the analysis, design and control of materials,

work and information in operating systems.

A distinguishing focus has been the integration of humans, machines, and materials to achieve optimum

performance of operating systems. Methods of operations research and ergonomics provide the fundamental

tools for performing this analysis and integration.

More recently the field has expanded to include non-industrial operations involving supply, distribution,

transportation, communication and information handling, medical care and safety. The design and control of

these systems requires the use of scientific methods in a variety of research and application areas.

The Materials Management applications must provide the NCAS with capabilities for managing andcontrolling the State's purchasing and accounts payable policies and accounting for the inventoriedassets. These functions include Purchasing, Accounts Payable, Fixed Assets, and Inventory which are

completely integrated within the Materials Management system, as well as with the General Ledger andBudget Control process.The Materials Management modules are currently integrated components of the NCAS with the exceptionof the Fixed Assets Module (FA). Figure 5, along with the following paragraphs by business application,portray the fully integrated process.

Figure 5. Overview of Current Materials Management ProcessThrough shared vendor and policy information, Purchasing and Accounts Payable functions can freelycommunicate without the usual control issues associated with duplication of files and batch interfaces.Accounts Payable shares purchase order information from Purchasing and updates the invoiced-to-dateamount on the purchase order real-time. Receipts are entered and referenced to a purchase ordernumber, ensuring accurate posting of deliveries to each purchase order line. Receipts that cannot beidentified or that do not fit matching criteria are identified, placed on hold, and reported for buyer action.Each receipt is checked for proper delivery points and verified that the quantities received and the receipt


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date are within tolerances already defined on the purchase order. Another receipt requirement,inspection of goods, is handled through dock-to-stock tracking. This feature tracks the inspection ofmaterials according to a table of routing and inspection areas. Accounts Payable performs the invoice audit and approval functions by checking invoice details such asamounts, unit price, terms, tax, freight, etc. against the purchase order. Data entry effort is minimal,

because invoice details are built from the purchase order and displayed on-line. Accounts payable clerkshave to deal only with the exceptions, resulting in maximum efficiency with full control. The NCAS systemuses a PC-based, laser printing process to support the creation of vendor payments. The laser checkprinting process has strong internal controls, including password protection access to the check printingsoftware, the use of security chips in the printers themselves, as well as the use of blank check stock (vs.pre-printed check forms). Agencies print checks locally, using a nightly check file that is downloaded fromthe NCAS mainframe system.The Inventory integration with the Purchasing system is designed to address warehouse replenishmentneeds. Information about stock items and requisitions for replenishment are passed from Inventory toPurchasing, and purchase orders and receipts pass from Purchasing to Inventory. The followinginformation is shared between the two systems: items, requisitions, purchase orders, and receipts.Requisitions are created to replenish warehouse inventory. They can be generated either automaticallyin batch by the system, or created manually by the inventory replenishment planner. Once approved,these requisitions automatically pass to Purchasing to be converted into purchase orders. When goodsare received in the Purchasing function, the quantity is passed to Inventory to reduce the on-orderquantity and increase the on-hand quantity. If goods undergo inspection in the Purchasing function, theactive on-hand quantity is not increased in the Inventory until the goods have passed inspection. The Materials Management systems maintain accounting integrity through integration with the GeneralLedger. Distribution entries from purchase orders, Accounts Payable and Inventory issues andreplenishments are validated directly against the General Ledger. Offsetting cash, assets accounts, andencumbrances are automated through the accounting rules or system policies to ensure accountingaccuracy.The integration of the Materials Management functions with the budgetary control function provides thefunds-checking capability required for the NCAS. All Purchasing, Accounts Payable, and Inventorytransactions (commitments, encumbrances, inventory consumption and replenishment, and expenditures)are checked real-time to the available funds amount calculated through budgetary control functions.Real-time funds checking ensures expenditures are kept within the authorized budget and providesadvanced knowledge of the budgetary status for spending decisions. PurchasingThe Purchasing function is a real-time, decision support application designed to help manage the entireprocurement cycle. This cycle includes requesting, competitive bidding, buying, receiving, andinspecting. Purchasing agents' day-to-day decision-making is fully supported with tools and informationon-line to manage the supplier base and service the purchasing function for the State in a timely andefficient manner. Figures 6 and 7 display the participants and tasks in the Purchasing or Competitive

Sourcing and Vendor Selection processes, respectively. Purchasing Financial FunctionsThe State's purchasing policies and strategies are the basis for the system and are incorporated into apolicy hierarchy. The policy hierarchy consists of rules that define how to handle purchasing functionswithin the government environment. The most general purchasing policies represent the highest level ofthe hierarchy, and each successive level below the general policy defines further levels of detail to thegeneral policy.


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As requisitions and purchase orders are processed, the policy hierarchy ensures that the majority of thepurchasing activity is handled automatically and within the required purchasing guidelines. If a particularsituation does not fit the general rules, a purchaser may change the hierarchy default to fit the situation;however, the system tracks in detail the full procurement process from requisition to payment.

Figure 6. Overview of Current Purchasing ProcessThe Purchasing function provides:

Full integration with Accounts Payable, Inventory, Budgetary Control, and General Ledger; Real-time encumbering of funds and confirmation of funds availability; A centrally-controlled item file that ensures a consistent statewide purchasing history database; Common policy files for Purchasing and Accounts Payable; A statewide central vendor file that is shared by both Purchasing and Accounts Payable;


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Funds checking at each decision point (requisition, purchase order, and Accounts Payable); Buyer tools (on-line buyer split requisition worksheet);

Figure 7. Overview of Current Vendor Selection Process Document preparation for requisitions, purchase orders, and requests for quotes (RFQs) with

standard phrases available to expedite the preparation process;


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Flexible purchase order generation to support blanket order purchases, services, and purchasesof goods;

An integrated receiving function; Documentation and tracking of purchase order quotes; On-line real-time requisition approval and rejection; and Continuous building of financial data throughout the Purchasing and Accounts Payable functions.

Purchasing Reporting FunctionsReporting within the Purchasing function supports:

Daily purchasing decisions through buyer action reports and buyer exception reports, and Central management requirements for the Division of Purchase and Contract (P&C) HUB

reporting and recycled goods reporting.Accounts PayableThe Accounts Payable function provides an effective and efficient cash management process byautomatically calculating the discount due date, discount amount, and payment due date according tostandard vendor terms or system policy, thus maximizing cash availability. For inventory transactions, the

Accounts Payable function recognizes price variances, and automatically posts the adjustments to theGeneral Ledger. Figure 9 shows the details of the Current Accounts Payable process. For clarity andcompleteness, a flow of the Current Receiving Process is also presented in Figure 8. The Receivingprocess contains multiple decision points necessary to bring a receipt to the point where the AccountsPayable staff are involved and pay for the items.


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Figure 8. Overview of Current Receiving Process


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Figure 9. Overview of Current Accounts Payable ProcessAccounts Payable Financial FunctionsThe Accounts Payable function provides:

Full integration with Purchasing, Inventory, Budgetary Control, and General Ledger; Flexible payment cycles; Available funds checking; Efficient document processing through:

o Automatic document matching;o Automatic validation of Purchasing and Accounts Payable policy and accounting

distribution;o Recurring payment options ;


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o Pre-defined policies that default on the invoice;o Information passing from the purchase order to the invoice;o Automatic proration of discount, sales tax, and freight ;o Agency cash management;o Common policy files;o Statewide centrally-controlled vendor files;o Bank reconciliation;o Agency-controlled checks;o 1099 processing and control from the central vendor file;o Fixed Assets interface to facilitate establishing newly acquired fixed assets;o Cash, encumbrance, and accrual reporting automated to the General Ledger;o Employee advances/reimbursements tracked and balanced; ando Vendor payment history.

Accounts Payable Reporting FunctionsThe Accounts Payable function supports the following reporting requirements:

Daily input control reports; Automated balancing reports; Cash management reports; Sales and Use Tax reports; Ad hoc reports; Bank reconciliation with the Treasurer; and MICR-encoded checks from blank stock.

Fixed AssetsThe Fixed Assets function provides timely and accurate information about the State's fixed assets. TheCurrent process is described in Figure 10.


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Figure 10. Overview of Current Fixed Asset ProcessFixed Assets Financial FunctionsThe Fixed Assets function meets the following NCAS objectives:

Maintains maximum property control for acquisitions, additions, transfers, retirements,adjustments, property listings, and retirement reversals; and

Provides depreciation calculations according to GASB specifications.Some of the specific features included with the function are:


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Maintenance of service and repair cost information, with supporting information such as vendorname, service contract number, and contract expiration date;

On-line data entry, validation, and inquiry; Interface to establish fixed assets when payment is made for an item in Accounts Payable; On-line report viewing; and User-defined fields that can be used to identify location and other descriptive information.

Fixed Assets Reporting FunctionsThe Fixed Assets function provides reporting for:

Active and retired assets; Assets transfers; Asset adds and deletes; and Asset depreciation.

InventoryThe Inventory function tracks and maintains inventory in a cost-efficient manner, ensuring the integrity ofthe inventory balances while providing the flexibility required at the agency level. The Inventory design

allows for multiple warehousing, staging areas, and inventory item differences. The financial integrationof Inventory to Purchasing, Accounts Payable, Budgetary Control, and the General Ledger, along withInventory policy defaults ensure uniform and appropriate financial information required for cash basis,GAAP, and management reporting.Figures 11 and 12 cover the current inventory replenishment and inventory issuing processes. Inventory Financial FunctionsThe Inventory function supports:

Flexible policy definitions; Multiple buying entities defined;; User-defined network of warehouses and item controls at the warehouse level; Historical demand information captured to assist in forecasting future demand for an item and

management of inventory levels; Automatic calculation of a moving weighted average cost, which provides up-to-date inventory

valuation; Precise inventory replenishment through multiple ways of controlling replenishment: order point,

computed order point, and standard inventory level;


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Figure 11. Overview of Current Inventory Replenishment Process Reduction in number of backorders through usage order shortage checks that identify approved

substitutes to resolve material shortages;

Allocation of inventory off-line or real-time, providing up-to-date information on availableinventory; Cycle counting procedures and on-line adjustment to prevent understating inventory and/or

ordering unneeded material; Integration with other business functions (Purchasing, Accounts Payable and General Ledger) to

expedite the inventory management process and ensure the integrity of the financial data; and Inventory security, permitting operators to be defined with varying degrees of access to

warehouse and other system functions.


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Figure 12. Overview of Current Issue Inventory Process

Signature approval process that provides management controls over work orders; Automatic inventory picking, which programmatically posts the allocated quantity as the picked

quantity for usage orders allocated during off-line processing (optionally, the picked quantity canbe manually posted);

Minimum/maximum item quantity controls that prevent stockpiling of inventory; Available funds checking through integration with Budgetary Control ensures that funds are

available before inventory is issued or replenished; and Consumption accounting, which provides effective planning information for future budgeting

requirements for inventory purchases and cost of operations. Inventory Reporting FunctionsThe Inventory reporting capabilities include:

Pick lists; Value transaction register by warehouse; Inventory valuation detail report; Transfer and usage reports; Usage history by item and assets; Replenishment action report; Cycle count reports by warehouse; and


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Ad hoc reporting. ROLE OF MATERIALS MANAGEMENT IN OPERATIONS Materials management is an important organized activity of any business system,

which is essential for any manufacturing sector. A careful planning is requiredwhile laying the objectives.

The objectives of materials management are either set by the top managementor by the materials manager himself keeping in view corporate policies. The mainaim of material management is to provide efficient service of continuous supplyof bought out materials at minimum cost. These can be raw materials orcomponents for production as direct inputs, spare parts or factory operatingsupplies. Stock out of any of these may totally disrupt the production causingsevere losses to the company.

The following are the objectives set by materials manager in the process ofachieving the organizational goals :

To procure raw material at low cost In a manufacturing firm raw materials play an important role in the process of

production . They constitute about 50% of the total cost of production. Therefore,a slight reduction in the cost would certainly reduce the price which would in turnincrease the profits of the firm.

To maintain consistent quality The materials manager should look for quality, even though the raw material is

available at a lower cost. As the procurement of raw materials is done only forproduction, finally a product is manufactured for selling; a customer would lookfor a quality product apart from price. Therefore, care should be taken to procurethe material of precise specifications which would reduce the cost of inspection,degree of defectiveness and increase the inventory turnover, profitability andimage of the company.

To ensure continuous supply of raw material The materials manager should ensure smooth flow of supply of raw materials

from suppliers or else, it would affect the process of production which would

substantially increase the operating costs and also increases the unit productioncost.

To minimize the carrying costs and ordering costs The material function involves the incidental costs such as costs of ordering

material, freight changes, storage costs etc. Reducing any of the above costs,would substantially increase savings, which inturn increases the profits.Techniques such as Economic Order Quantity are used in order to minimize thecarrying and ordering costs.To maintain a good relationship with supplier

A good relationship with the supplier shows the efficiency of the purchasedepartment. Maintaining a good rapport with suppliers would not only have agood image in the industry, but also leads to certain economic advantages likereasonable price, preference in time shortages, intimation about forthcomingshortages etc., which will have an edge over the competitors.

Efficient record-keeping and prompt reporting Materials management involves huge paper work. Paper processing work should

be standardized through designing forms for recurring operations, submission of


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copies to the needy departments. It should ensure efficient record maintenanceand reproduction of records when ever necessary.

To develop new sources and new materials Purchase research helps in exploring new sources of supply. This may result in

the supply of better quality of materials at favorable terms. Procurement of

cheaper substitutes than the presently used material ( without affecting thequality) if any, should be availed. Thus it would reduce the cost. Training and development of personnel Materials department is an indispensable part of manufacturing sector. Efforts

should be made to develop the personnel by training them if necessary; suchtraining programs will not help to improve the morale of the employees but also,contribute to the qualitative.

Due to the conflicting nature of objectives it is difficult to achieve all of them at atime. For example, low cost of acquisition and storing would come in conflict withminimizing the storing costs while, the objective of procurement at a low cost willconflict with continuous supply of materials. Thus, it is difficult to attain all the

objectives at a time.

more athttp://www.citeman.com/151-roles-of-materials-management-in-operations.html#ixzz22CFnULOw Materials are any commodities used directly or indirectly in producing a product such as raw

materials, component parts or assemblies.

Materials management is the grouping of management functions supporting the completecycle of material flow, from the purchase and internal control of production materials to theplanning and control of work in process to the warehousing, shipping, and distribution of thefinished product.

Thomas F. Wallace & John R. Dougherty

Materials management involves planning, programming, organising, directing, controlling, andco-ordinating the various activities concerning the materials. The production managers found

it necessary to develop an organised body of knowledge on this subject. The resulting set ofrelated disciplines is known as materials management.

Materials planning and programming

Raw material purchase

Receiving, store keeping, and warehousing

Issuing of material

Inventory control

Value engineering

Transportation of materials

Vendor development

Vendor rating

Disposal of scrap and surpluses

Buying the best item at the lowest cost

Reduction in inventory cost and High inventory turnover Maintaining the flow of production

Maintaining the consistency of quality

Optimisation of acquisition and possession, resulting in lower cost

Cordial relationship with suppliers

Maintaining good records

Contribution towards competitiveness

Personnel development

Material cost can be lowered ( Sales price can be brought down to a reasonable level)
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Controlling of indirect cost (such as materials movement)

Risk of inventory loss minimised (theft, pilferage )

Reduction in loss of time of direct labour

Cost of material used in different department ascertained

Control of manufacturing cycle

Material congestion in storage places avoided

Improvement in delivery of the product

other functions of an organization

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