Integrated Material Management.

Group – 2

Rucha Puri
Shweta Telang
Vishal Jadhav
Ravi Shinde
Manoj Joshi
Chinthu V.Nair
 Agenda
 What is Material Management ?
 Steps in Material Management.

 What is integrated Material

Management (IMM) ?
 Details of steps in IMM.
What is Material Management?
 Materials management is the
branch of logistics that deals
purchasing or acquisition of spare
parts, ordering such parts and the
standards involved in ordering,
shipping, and warehousing the said
parts.
 Overview: Procurement Cycle
Forecast
Material Requirements
Stocks Planning Demand

Requirement

Production Purchasing
(Internal Procurement) (External Procurement)

Invoice
Inventory Management
Invoice
Goods Receipt
Verification
Warehouse
Management
Goods Transfer
Issue Posting

Accounting

Sales and Distribution

 Material Requirements Planning
 MRP (Material Requirements Planning)
determines:
• What material is needed
• How much of the material is needed
• When the material is needed
 Objectives: Understand the role,
impact and activities associated with
MRP (Material Requirements Planning)
 Integrated Material Management
 In Integrated Material Management ,
all the steps in material management
are automated to serve customer the
best with minimum inventory at any
given time.
 Integrated material management

helps to
• avoid duplication.
• Multiple data entry.
• Avoid Redundancy of data.
 Basic functions of IMM
 Provides platform for placing all
related data on Materials
 Provides relevant people with

complete and accurate data

 Optimizing the service level

 Minimizing costs and capital lockup

 The BIG Picture – Material Flow

 Steps in IMM
 Determination of Requirements
 Source Determination
 Vendor Selection Purchase Order
Processing
 Goods Receiving and Inventory
Management
 Invoice Verification
 Payment to Vendor
 Steps in IMM
Steps Integration

1. Determination of 1. Sales and production

Requirements 2. Quality management ,
2. Source Finance
Determination 3. Quality management ,
3. Vendor Selection Finance
Purchase Order 4. Warehouse , Finance ,
Processing Production
4. Goods Receiving and
Inventory 5. Finance , Quality
Management management
5. Invoice Verification 6. Finance
6. Payment to Vendor
 Determination of Requirements

 Determination of Requirements
• Materials requirements are identified
either in the user departments or via
materials planning and control.
• To calculate requirement system
requires bill of material.
 Bill of material
 A formally structured list of the
components that make up a product.
 The list contains

• the component,
• Quantity of component
 Example of BOM
Blue Pen
Now you got sales order of 100 pens
10 PC

Refill 10 Export Sales

Order

Cap 10 100
PC
Body 10

Bag 1 How the requirement is calculated?

 Requirement calculation
Blue Pen Gross requirement
10 PC
Export
Sales
Order
Refill 10 100 Refill 100
PC

Cap 10 Cap 100

Body 10 Body 100

Bag 1 Bag 10
 Requirement calculation
Gross and Net

Blue Pen Gross requirement Stock on

10 PC hand
Export
Sales order
100 pc
Refill 10 Refill 100 50
Net Requirement
=
Cap 10 Cap 100 60 Gross requirement
-
Stock in hand
Body 10 Body 100 0

Bag 1 Bag 10 10
 Net Requirement
Gross Stock on hand Net Requirement
Requirement

50 50
100
Refill

100
- 60 = 40

Cap
0 100
100
Body

10 10 0
Bag
 Source Determination

• RFQ – Request for Quotation

• Sources of supply based on past orders

and existing longer-term purchase
agreements
 This speeds the process of creating
requests for quotation (RFQs).
 Source determination
Net Requirement
Source / Vendor
List
Possible sources for refills
50
Refill 1. Ram Pens pvt limited
40 2. Welcome Traders
Cap 3. Bipasha’s Pens and inks
company
100
4. Mallika Plastics
Body
0
Bag
 Vendor Selection
 Vendor Selection and Comparison of
Quotations
• compare a number of different
quotations and select the proper vendor.
 Vendor Selection
Source Rate Quality Service Overall Comment
Score score Rating
Ram Pens pvt 500 85 85 A Source for
limited Domestic
pens

Welcome Traders 510 85 80 B Back up

source

Bipasha’s Pens and 525 95 90 A Source for

inks company export orders

Mallika Plastics 520 75 70 C

Processing Purchase
Requisitions
MRP
Purchase Manual
Requisition Creation
Planned
Order
Release
Procedure

Identify
Supplier

Allocate and
Process
Requisition

Purchase Release
RFQ
Order Order
 Purchase Order Processing
• After selecting vendor Purchase order is
created and given to vendor. Based on
requirement scheduling agreement is
made.
Purchase order for Bipasha pens

Order no 101-5772484
Item Quantity Date

Refill 50 15.01.2009

By-ITM Batch 23 Group # 2

Purchasing to payment process

Purchasing
Vendor
Document

Delivery Invoice

Goods
Verification Payment
Receipt
 Goods receipt
 Goods Receipt
• Goods from vendor are received and
based on need sampled for quality /
testing.
• Once found correct in quality and
quantity then invoiced is sent to finance
department.
Goods Receipt note
Purchase order 101-5772484

Item Oty Date of receipt

Refill 60 13.01.2008
 Payment
 Payment :
• Finance department after checking price
variance releases payment.

Released for payment

Rs.300 Bipasha Pen and inks

 Accounts Payable

Accounts Payable

Invoice
Purchase Goods Receipt/
Orders Receipt Invoice
Verification

Payment Transactions
Payment Program
Balance
sheet Profit
& Loss
(P/L)
Integrated Material Management

Procu
r emen
t
Planning
W
ar
eh
ou
se
Quality

Inventory
Inventory
Mgmt
Mgmt

Sales or Payment
Production

Controlling
IMM – Advantages &
Issues Addressed
 Inventory Vs Procurement
 Production Qty Vs Purchase Qty

 Forward buying

 Alternate Materials / Spares

 Adaptability

 Helps in comparing effect of various market

situations on business
 Procurement to Sale – The BIG Picture
Thank you