Chapter Seven Managing Materials Flow

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Chapter Seven Managing Materials Flow

• Part Two.

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Materials Management Activities

• Anticipating materials requirements
• Sourcing and obtaining materials

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Materials Management Activities

• Anticipating materials requirements
• Sourcing and obtaining materials
• Introducing materials into the organization

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Metals
Tube Supplier
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Metals
Tube Supplier
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Tube Supplier
Metals
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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

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Objectives of Integrated Materials Management
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Objectives of Integrated Materials Management

• Low costs

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Objectives of Integrated Materials Management

• Low costs
• High level of service

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Objectives of Integrated Materials Management

• Low costs
• High level of service
• Quality assurance

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Objectives of Integrated Materials Management

• Low costs
• High level of service
• Quality assurance
• Low level of tied-up capital

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Objectives of Integrated Materials Management

• Low costs
• High level of service
• Quality assurance
• Low level of tied-up capital
• Support of other functions

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Differences Between Inbound and Outbound
Transportation
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Differences Between Inbound and Outbound
Transportation

• Market demand that generates the need for
  outbound movement is more uncertain and
  fluctuating

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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

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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

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Types of Forecasts
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Types of Forecasts

• Demand forecast

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Types of Forecasts

• Demand forecast

• Long-term

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Types of Forecasts

• Demand forecast
• Supply forecast

• Long-term

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Types of Forecasts

• Demand forecast
• Supply forecast

• Long-term
• Midrange

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Types of Forecasts

• Demand forecast
• Supply forecast
• Price forecast

• Long-term
• Midrange

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Types of Forecasts

• Demand forecast
• Supply forecast
• Price forecast

• Long-term
• Midrange
• Short-term

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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.

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Total Quality Management

• Based upon continuous improvement.
• Uses quantitative and other analysis to determine
  quality.
• Based upon benchmarking us against other
  organizations, us against ourselves.

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Kanban Production Technique

• Kanban, Japanese for signboard.
• Small cards in manufacturing supply container.
  Upon use of material, card is sent back to
  supplier to indicate another container is needed.
• Highly effective but simple information system.

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Just-in-Time (JIT)

• Sometimes called Efficient Consumer Response,
  ECR, (food industry) or Quick Response, QR,
  (retailing).
• Inventory is on hand just in time instead of just
  in case.

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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.

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Materials Requirements Planning (MRP I)

• Computer-based manufacturing system to coordinate
  manufacturing components and materials.
• Operates on master scheduling technique to
  improve manufacturing performance, reduce
  inventory, and be more market oriented.

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Manufacturing Resource Planning (MRP II)

• Computerized coordination of engineering,
  finance, logistics, manufacturing, purchasing,
  marketing.
• Results in reduced inventory, higher inventory
  turnover, better customer delivery, reduced
  purchased costs and worker overtime.

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Enterprise Resource Planning (ERP)

• Uses accounts payable, accounts receivable,
  general ledger and logistics to coordinate
  manufacturing and distribution.

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Distribution Requirements Planning (DRP I and II)

• Include demand forecasts, purchase orders,
  customer orders.
• Pushes demand information backward to inform and
  control the supply chain.
• Coordinates MRP with logistics.