What's are the Top Problems in Material Management? Master the Techniques of Overcoming and Add Values to Productivity!

Abstract

Materials management involves the planning, procurement, storage, and distribution
of materials in an organization. Effective materials management is critical to the
success of any business as it ensures that the right materials are available at the
right time, in the right quantity, and at the right cost. However, there are several
issues that organizations face in materials management. 

Keywords

Material Planning, Design of Product, Specifications of Product, Procurement of Materials, Obsolescence

Learning Outcomes 

After undergoing this article you will be able to understand the following:

Problems In Material Management: An Introduction 

1. Problems with regards to Material Planning

2. Problem with regard to Design and Specification

3. Problems with regard to Procurement of Materials

4. Problem with regard to Obsolescence

5. Problems Associated with Managing Inventory 

6. How to overcome material management problems?

Conclusions

FAQs

References 

Problems In Material Management: An Introduction 

Materials management is a critical function that involves planning, organizing, and controlling the flow of materials from procurement to consumption. It encompasses various activities, including inventory management, procurement, production planning, logistics, and warehouse management. The significance of materials management cannot be overstated, as it directly impacts the overall operational efficiency and success of organizations.

Explanation of Problems In Material Management:

1. Problems with regards to Material Planning

All the business and industrial houses have to make plans regarding raw material well in advance so as to avoid eleventh hour arrangements and adjustments. However some important factors/forces disturb planning of industrial houses.

In our country the biggest headache of industry is the power-cut. To solve this problem the industrial house can install its own generators. But the generator is not economical in long term power-cuts. Similarly small units are also unable to afford the cost of running generators. Thus, planning of small industrial units is disturbed due to uncertainty of power supply.

The purchasing departments of large industrial units are facing a shortage that is not easy in the present conditions. Scarcity of raw materials, shortage of finance, problem of transportation, etc. further aggravates the situation.

2. Problem with regard to Design and Specification

Requirements of consumer, availability of raw materials, and capacity of suppliers are the guiding factors to a designer. But the following three additional factors are gaining importance:

(a) Tolerances and Precise Workmanship

(b) Ambiguity in drawings

(c) Buyer’s inadequate Specifications to Suppliers

3. Problems with regard to Procurement of Materials

The following problems are related with materials procurement:

1. Lead Time

Any industrial unit in India is to take sufficient time in determining the requirements, making choice of suppliers and placing orders. But once orders are placed the industrial units do not want to allow sufficient time to its suppliers and they want to get the material at their doorstep as quickly as possible.

This attitude of purchasing industrial units poses a problem of insufficient lead time with the suppliers. The supplier has to send the material within the stipulated lead time. In such a case quality supply is not ensured. Apart from that the materials supplied are not properly inspected, kept in bins issued to the using department. This makes the production of inferior quality. In our country these problems are faced by almost all the industrial houses.

Therefore, it is suggested that sufficient lead time should be given to the suppliers so that they can manager proper material as per the demand of purchasing industrial units.

2. Problems Associated with Staff in Material Management:

Procuring materials is not a very easy job since a lot of formalities and specific procedures are to be followed before receiving required materials. Complicated formalities, rigid procedure, cumbersome government requirements and day to day developments create the procurement work more difficult. Because of formalities and lengthy procedures, staff become short.

Procurement is done after market analysis. In the absence of sufficient staff a reliable market survey/analysis of right quality at right price is seldom possible. The procurement programme also suffers due to non-availability of sufficient staff. Hence, it is suggested that the department should be adequately staff according to size and number of procurement.

3. Problems with Terms of Payment:

The suppliers are not paid as per the credit policy and time given to the purchasing unit. This purchasing Department of the industrial unit in an awkward position. The suppliers are not concerned with the internal problems of the industrial units. They are concerned with their payment which should be made in time in order to maintain good relations between the suppliers and the purchaser. This is also essential to maintain the regular flow of the supply.

Terms of payment should be explicitly settled between the two at the time of placement of orders and in normal circumstances it should be strictly adhered to.

4. Problems with Management in General:

Receipt of materials follows the materials planning and policy and as such it is linked with the management which is expected to provide full cooperation to the materials department in its manifestations. Industrial activities are growing with leaps bound.

Growing activities and increasing complexities always affect the efficiency of an organisation very adversely until management devotes more time in analysing and devotes more time in analysing and finding out the ways to improve the organisation functioning to sustained growth of business enterprise.

The materials management has to play a vital role in taking a decision about maintaining the level of stocks and go on shifting them according to changed circumstances.

4. Problems with regard to Obsolescence

After the problem relating to design and specifications, the other important problem is obsolescence. Obsolescence takes the toll of our industrial peace, progress and prosperity. The various examples facing obsolescence problems are jute, sugar, cotton textile industries.

Finances are obviously at the back of our obsolescence problem. Our capacity for arranging finance is very limited. Unless we arrange for necessary finances and take a firm decision to avoid purchasing such materials which are more prone to obsolescence we shall not be capable to solve the problem of obsolescence we shall not be able to solve the problem of obsolescence in the Indian context.

5. Problems Associated with Managing Inventory 

Managing inventory is a daunting task. The process and results impact every aspect of your business. To help, here are 20 common inventory management challenges to watch for in your supply chain.

1. Inconsistent Tracking:

   Using manual inventory tracking procedures across different software and spreadsheets is time-consuming, redundant and vulnerable to errors. Even small businesses can benefit from a centralized inventory tracking system that includes accounting features.

2. Warehouse Efficiency:

   Inventory management controls at the warehouse is labor-intensive and involves several steps, including receiving and putaway, picking, packing and shipping. The challenge is to perform all these tasks in the most efficient way possible.

3. Inaccurate Data:

   You need to know, at any given moment, exactly what inventory you have. Gone are the days when inventory could be counted once a year with an all-hands-on-deck approach.

4. Changing Demand:

   Customer demand is constantly shifting. Keeping too much could result in obsolete inventory you’re unable to sell, while keeping too little could leave you unable to fulfill customer orders. Order strategies for core items, as well as technology to create and execute an inventory plan, can help compensate for changing demand.

5. Limited Visibility:

   When your inventory is hard to identify or locate in the warehouse, it leads to incomplete, inaccurate or delayed shipments. Receiving and finding the right stock is vital to efficient warehouse operations and positive customer experiences.

6. Manual Documentation:

   Managing inventory with paperwork and manual processes is tedious and not secure. And it doesn’t easily scale across multiple warehouses with lots of stock.

7. Problem Stock:

   Perishable and fragile stock need specialized plans for care and storage. And high-value inventory needs specific loss-prevention strategies and inventory controls.

8. Supply Chain Complexity:

   Global supply chains shift daily, placing a burden on your inventory planning and management operations. The manufacturers and wholesale distributors that dictate when, where and how your inventory ships require flexibility and offer unpredictable lead times.

9. Managing Warehouse Space:

   Efficiently managing space is an intimidating task. Planning and designing warehouse spaces with inventory management platforms helps you better control the timing of new stock deliveries. It can account for important factors, such as available space. Read more about the differences between warehouse management and inventory management.

10. Insufficient Order Management:

    One of the most common challenges to sound inventory management is preventing the overselling of products and running out of inventory. Using historical and seasonal data trends can help you accurately predict customer orders.

11. Increasing Competition:

    Globalized supply chains are subject to unpredictable economic shifts and market forces that impact the competition for raw materials. Small businesses are sometimes faced with choosing between competing for high-demand materials or holding enough inventory to control costs.

12. Evolving Packaging:

    Compostable packaging—or removing packaging all together—to reduce waste presents new obstacles for warehouse design and storage. It may even mean new equipment or shorter shelf life for some items.

13. Expanding Product Portfolios:

    Many online retail strategies remove the need for large warehouse distribution centers. These strategies make it easier to expand inventory and diversify product portfolios, but demand technology and resources for ordering, shipping and tracking.

14. Overstocking:

    Keeping too much stock on hand can be as problematic as having too little. Overstock impacts business cash flow and leads to inventory-related problems, such as storage and loss.

15. Inventory Loss:

    The loss of inventory due to spoilage, damage or theft can be a supply chain problem. It requires identifying, tracking and measuring problem areas.

16. Poor Production Planning:

    Production planning is vital for avoiding delayed manufacturing and cost overruns. If not done well, it can impact sales forecasts and project scheduling.

17. Lack of Expertise:

    It can be tough to find skilled inventory managers who are adept at the latest technology and can improve inventory strategy. Simply upgrading your inventory management platform with a host of features isn’t enough. You need capable management.

18. Poor Communication:

    Communication and collaboration are key. When departments are apathetic about sharing information, it makes identifying inventory trends and finding ways to improve much more difficult.

19. Inefficient Processes:

    Low-tech, manual inventory management procedures don’t seem like a daunting challenge when inventory is small and there’s only one warehouse location to manage. But as sales volume increases and inventory expands, inefficient, labor-intensive and low-tech standard operating procedures are difficult to scale.

20. Inadequate Software:

    To scale inventory management software to support complex logistics, it needs to integrate with your existing business process platforms. The difficult task is choosing from hundreds of inventory management solutions and mastering a host of features that require training and ongoing support

6. How to overcome material management problems

Project setup within the Materials Management System is the foundation for ensuring your project is executed effectively. Below are some basic requirements to ensure consistency and accuracy for a well-run Materials Management System that will lead to accurate real-time inventory levels.

Key foundations for setting up a Materials Management System:

• Assign unique project number schemas in the event multiple projects are being managed
• Defined part number catalogs must be used for managing tagged equipment, sub-components, commodities and bulk material to ensure resource names in the MMS system match construction drawings
• Material descriptions, unit of measure and material classifications must be descriptive and accurate to ensure all material can be found quickly and efficiently
• Project controls cost coding structure must be in place at the beginning of the project to avoid confusion later on in the project
• Construction Work Packages must be finalized prior to the start of construction
• Material storage locations must be clearly defined and marked (warehouses, laydown yards, module yards, field and vendor shops)
• Key shipping dates must be accurate to ensure proper equipment is available to off-load material
• Quality requirements, hold points, inspections, and certifications must be tracked digitally
• Preservation requirements and record keeping must be kept up to date
• Logistics requirements and documentation should be readily available
• Material acceptance and release from storage forms and processes must be followed
• Implementing site materials management processes and procedures for inventory counts and receiving
• Automating Integration with Project ERP and Engineering systems will ensure proper data integrity in the MMS System

Conclusions 

The significance of materials management cannot be overlooked in the successful operation of organizations. By ensuring efficient materials flow, optimal resource utilization, and streamlined supply chain processes, materials management contributes to improved productivity, cost control, customer satisfaction, and overall business success. Organizations that prioritize and invest in effective materials management gain a competitive edge in the market and position themselves for long-term growth and sustainability.

FAQs

What are the objectives of system of material control?

(i) Minimising interruption in production process: Material Control system ensures that no activity, particularly production, suffers from interruption for want of materials and stores. This requires constant availability of every item needed in the production process.

(ii) Optimisation of Material Cost: The overall material costs includes price, ordering costs and holding costs. Since all the materials and stores are acquired at the lowest possible price considering the required quality and other relevant factors like reliability in respect of delivery, etc., holding cost too needs to be minimized.

(iii) Reduction in Wastages: It aims at avoidance of unnecessary losses and wastages that may arise from deterioration in quality due to defective or long storage or from obsolescence.

(iv) Adequate Information: The system of material control maintains proper records to ensure that reliable information is available for all items of materials and stores. This not only helps in detecting losses and pilferages but also facilitates proper production planning.

(v) Completion of order in time: Proper material management is very necessary for fulfilling orders of the firm. This adds to the goodwill of the firm.

References 

Materials and Logistics Management by L. C. Jhamb

Handbook Of Materials Management by Gopalkrishnan

Introduction To Materials Management reference book by Tony Arnold

Materials & Logistics Management reference book By Dr. Kasande

Materials Management: Procedures, Text & Cases by A. K. Datta

Purchasing & Materials Management by Gopalakrishnan

Materials and Logistics Management reference book by Saroj Kumar