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Materials Management Activities Anticipating materials requirements Sourcing and obtaining materials Introducing materials into the organization Monitoring the status of materials as a current asset Objectives of Integrated Materials Management Low costs High level of service Quality assurance Low level of tied-up capital Support of other functions Differences Between Inbound and Outbound Transportation Market demand that generates the need for outbound movement is more uncertain and fluctuating Inbound transportation tends to involve bulk raw materials, supplies, or parts Firms exercise less control over inbound transportation due to total delivered pricing programs Types of Forecasts Demand forecast Supply forecast Price forecast Long-term Midrange Short-term Total Quality Management (TQM) the application of quantitative and human resources to improve the material services supplied to an organization, all the processes within the organization, and the degree to which the needs of customers are met - now and in the future. Administration and Control of Materials Flow Kanban/Just-in-time systems Kanban (Toyota Production System) JIT JIT II MRP systems Materials requirements planning (MRP I) Manufacturing resource planning (MRP II) DRP systems Distribution requirements planning (DRP I) Distribution resource planning (DRP II) Benefits Resulting from Implementing Just-in-Time Improved inventory turns. Improved customer service. Decreased warehouse space. Improved response time. Reduced logistics costs. Reduced transportation costs. Improved quality of vendor products. Reduced number of vendors. Reduced number of transportation carriers. Elements of an MRP I System Elements of an MRP II System Elements of a DRP II System Elements of a DRP II System (cont.) Copyright ? 2001 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 7-* CHAPTER 7 Managing Materials Flow Inventory transactions Customers’ orders Forecasts Engineering changes
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