Issues Relating to Materials Planning

Materials Identification 

Materials management department closely and continuously coordinates with the engineering and design, production and process to help identify the materials, sub-assembly, spare parts tool and equipment needed in the process and manufacture of end products. It provides information with respect to various options alternative materials available could be made available to meet the needs of production. The engineering and design, production and process departments assess these alternatives for suitability to the design from functional point of view, from processing point of view, i.e. whether it will help in easier/faster/more efficient performance of process operations ? Through meticulous assessment each of the material, component etc is identified. This assessment is a continuous process depending on new materials. substitutes, supply conditions or internal changes in the products, process methods, designs or schedules. 

Standardization 

Basic purpose of standardization is to achieve inter-changeability of parts/components internally in the organisation or even across industry. Second purpose is to reduce the number of varieties of parts/components used in the production process of the organisation. 

For example, in manufacture of motor car a large number of nuts and bolts of different dimensions, different specifications may be in use, suitable for various applications in the product. Suppose there are 100 different types of nuts and bolts being used. Through proper standardization, this number of different types can be brought down to 20 or 30 without compromising on functional quality and requirement of the product. 

Make or Buy 

Large organisations (even small organisations) usually are not in a position to manufacture all parts or components required to be used in the product manufactured by them. 

This is because : 

1. It may not be economical to manufacture internally. 
2. In house expertise/technical skill may not be available. 
3. Additional capital required to set up facilities for the manufacture of the component may not be available. 
4. Specialized manufactures-suppliers of the specialized components may be operating in the market. The components of the right quality may be available at competitive rates. 

From time to time, it needs to be reviewed whether certain items ma) be more advantageously manufactured in-house or to be brought from outside. Materials management activity helps the organisation in making this decision from time to time. Engineering and design, production, finance department etc. also join together to help take this decision. A decision to make an item in-house has long term implications because the company's funds are to be invested into fixed assets to create the manufacturing facilities. Such a decision is very difficult to reverse later on. 

Coding & Classification 

A system of classification and codification for all items/parts/component.s, needs to be devised and implemented. So that detailed descriptions need not be refereed to every time. The code assigned to an item is uniquely identified. It should be uniformly understood by all concerned in the organisation. 

The following factors need to be considered while devising a classification and codification system: 

1. The basis of classification and codification should be same and consistently applicable to all items. 
2. It should cover all items presently in use and should be capable to take up any new items in future. 
3. Every item should have a unique code/or number such that there is one-to-one correspondence between code and the item. No Two codes should refer to the item, and no two or more items should have same code. 
4. The code should be uniformly used and understood throughout the organisation by the concerned persons. It should be simple to understand and apply. It should normally be self explanatory. 

Several advantages accrue if proper codification system is used in the organisation. 

1. There is no need of long description. Each item can be described by using the codes. 
2. Correct identification of each and every item possible. 
3. Duplication of storage, purchase, etc. avoided since each item is uniquely identified. 
4. Uniformity is achieved in maintaining accurate records in all sectors, i.e. stores, purchase, finance, production. etc. 
5. Can be used for location planning of materials in the stores.