MATERIAL MANAGAMENT TECHNIQUES:
Planning is an essential part of the management processes. In this modern era, if excess or inadequate planning for materials management is done then it can cause a threat to the organization. Thus, there is a need to introduce certain techniques and methodologies to control materials management i.e. Modern Material Management Techniques.
JUST IN TIME (JIT):
- JIT is one of the material management techniques which is used by the companies to increase the efficiency and decrease waste receiving goods only as they are needed in the production process, thereby reducing inventory costs. This methods required producers to forecast demand accurately.
- A good example would be a car manufacturer that operates with very low inventory levels, relying on its supply chain to deliver the parts it needs to build cars. The parts needed to manufacture the cars do not arrive before or after they are needed instead, they arrive just they are needed.
- Production runs remain short, which means manufacturer can move from one type of product to another very easily.
- Reduces costs by eliminating warehouse storage needs.
- Companies spend less money on raw materials because they buy just enough to make the products and no more.
- Risk of running out of stock.
- Lack of control over time frame.
- More planning required.
- It is one of the material management techniques which allows companies to stock only needed components and arts in the production or distribution process.
- Lea manufacturing systems use the KANBAN as a technique to keep inventory levels as low as possible.
- A picture is worth a thousand words for scientific reasons. The brain processes visual information 60,000 times faster than text. KANBAN uses the power of visual information by using sticky notes on a whited to create a picture of the work.
- KANBAN systems is based upon a series of colored cards. These cards denote such factors such as the quantity, the type of part and the manufacturer. A card is placed in the bin or other container with each group of manufactured items as an identifier for those involved with the next phase of production or distribution.
- KANBAN is a Japanese word which means Signal. A KANBAN card or a tag usually attached to work in progress (WIP) parts and it is used to facilitate the proper movement of these parts. The movement may be within the same manufacturing plant or between plants.
- They are used as a means for process improvement which helps to reduce the level of IN process inventories.
- The role played by KANBAN in production control is to tie the different manufacturing processes together and ensure that the necessary amount of materials and parts arrive at the appropriate time and place.
- Basically there are two types of KANBANs
- Withdrawal KANBAN
- Production KANBAN
- The Withdrawal KANBAN is used to indicate the type of quantity which the next process should withdraw from the preceding process.
- Production KANBAN
- The Production KANBAN specifies the type and quantity of product which the next process must produce.
- Traceability is the art of having capability to trace something. It is interpreted as the ability to verify the history, location and whereabout of an item in the stores by means of documented recorded identification system. Produce-traceability makes it possible to track down product from its point of origin to a retail location where it is purchased by a customer through the use of a barcode or through traceability software system. Tracing of an item is made easy through various stages of production, manufacturing, processing, handling, transportation, sales and consumption. It simplifies the problem of detection of a deflective or contaminated product, ingredient or component. Traceability limits losses and reduces cost.
LAST IN FIRST OUT (LIFO):
- It is one of the material management techniques which assumes material produces or acquired last are the one used, sold or disposed of first.
- At the time of inflation in the inventory, the value of the unsold stock will be low while the values of the cost of goods sold will be high, which will ultimately result in low profit and income tax as well. Whereas in deflationary conditions the whole scenario will get reversed due to fall in the general price level, resulting in higher profits and income tax.
FIRST IN FIRST OUT (FIFO):
- It is one of the material management techniques which assumes material produced or acquired first are the one used, sold or disposed of first.
- It follows a chronological order i.e. it first disposes of the item that is placed in the inventory first.
- If the goods are perishable in nature, then they will get obsolete soon, so it would be beneficial that the earliest stock should be handled first which minimizes the risk of obsolescence. Therefore, the leftover stock in hand will ultimately show the most recent stock that is at at the present market price.
- This method is considered as most suitable one when there is a fall in prices because the cost that is charged to production will be higher than the replacement cost. However if the prices are high the same condition will get reversed and as as result it is not east to order the same quantity of materials without having sufficient funds.
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