MS 56 IGNOU MBA Solved Assignment - If the responsibility for maintaining the quality of the product and incurring less cost on its production is the responsibility of the “production/ operation” and deciding

If the responsibility for maintaining the quality of the product and incurring less cost on its production is the responsibility of the “production/ operation” and deciding the price of the product and finding the customers that will buy it comes under “marketing”. What do the “materials management function” does?

Ans :

   Materials management is typically comprised of four basic activities:

1. Anticipating materials requirements.

1. Sourcing and obtaining materials.

1. Introducing materials into the organization.

1. Monitoring the status of materials as a current asset.

Functions performed by materials managers include purchasing, inventory control of raw materials and finished goods, receiving, warehousing, production scheduling, and transportation. The definition of materials management views the activity as an organizational system with the various functions as interrelated, interactive, subsystems.

The objectives of materials management are to solve materials problems from a total company viewpoint [optimize] by coordinating performance of the various materials functions, providing a communications net work, and controlling materials flow.

The specific objectives of materials management are closely tied to the firm's main objectives of achieving an acceptable level of profitability or return on investment (ROI), and remaining competitive in an increasingly competitive marketplace. The major objectives of materials management are low costs, high levels of service, quality assurance, low level of tied-up capital, and support of other functions.

Materials management encompasses a variety of logistics activities. The primary differences between the process of materials management and that of finished goods distribution are that the items handled in materials management are incoming finished goods, raw materials, component parts, and subassemblies to be further processed or sorted before being received by the final customer. The recipient of the materials management effort is the production or manufacturing group and oilier internal customers, not the final customer.

   Integral aspects of materials management include purchasing and procurement, production control, inbound traffic and transportation, warehousing and storage, management information system (MIS) control, inventory planning and control, and salvage and scrap disposal.

Materials management is no longer simply a product purchasing function  -  it has gone beyond procurement and into analyzing how products are being used and just as importantly, where the products are at any given time. Understanding these dimensions has become critical to efficient utilization and inventory control, which are integral to optimal expense management.

The scope of materials management has evolved, as has the position itself inside hospitals over the past two decades. The department has become recognized by the C-suite as a cornerstone of fiscal restraint and is instrumental in exacting prudent product utilization, said Pam Poshefko, consulting manager for Chadds Ford, Pa.-based IMA Consulting.

"Materials managers are becoming educators for clinicians and helping them understand how to manage supplies and finances," she said. "That is a change in focus  -  this was always a siloed area."

Chief financial officers are also deploying materials managers as gatekeepers in the quest to control non-labor expenses, of which products comprise the largest portion, Poshefko said.

"They want to know if they are getting the best spend for their buck," she said. "They want to know how many supplies are bypassing materials management, what those supplies are used for and if they are getting the best prices."

Efforts to standardize product purchases to one or two brands have been going on for decades and over that time they have matured from being contentious to cooperative, Poshefko said. In fact, she says physicians have become strong allies of materials managers in the quest to get the best product value possible.

"There is a much greater awareness among physicians about value analysis for products," she said. "Where it used to be a process of materials managers telling them what they couldn't buy, they now present a united front on which products to select. Physicians are facing the same cost pressures and are now more willing to become part of the solution for their hospitals."

To be sure, materials management has come a long way from the days of being told "get me my stuff," Poshefko said.

"There are clinicians who are more financially astute and becoming part of the supply chain management team because they have the skills to be a liaison between the clinical and financial," she said.

Product 'traffic control'

A crucial aspect of cost-effective product utilization is knowing how many products are available and where they are in the hospital at any given time. While this may seem like a rudimentary procedure, it is more complicated than it looks, said Paul Segovis, director of materials management for Ellis Hospital in Schenectady, N.Y.