What is integrated material management?

For running any industry or business, we need a number of resources. These resources

are popularly known as 5 M's of any Industrial activity i.e.

M

en

M

achines

M

aterials

M

oney

M

anagement.

All these resources which are basic inputs, are important but their relative importance

depends upon the particular type of industry and also other environmental factors.

Earlier, when many modern machines were not even known, whole activity was

around men.

But now the importance has shifted from men to machines and in the present

environment materials are the life blood of any industry or business and for their

proper running, materials should be available at proper time in proper quantity at

proper place.

Traditionally, various activities related to managing materials were looked after by

various departments. While purchases were generally arranged by top management

with the assistance of a Purchase Agent or Purchase Officer, store keeping and stock

control was the responsibility of the production head with the assistance of a store

keeper or Stores Officer. Apart from these two main activities, distribution of

materials (mostly finished goods) was the responsibility of marketing.

After realizing the profitability potential of Materials Management function, when

attempts were made to exploit this potential, it was realized that there were many

problems in achieving the objectives due to inherent conflicts amongst various

departmental objectives. When a purchasing personnel wants to purchase in bulk to

get price discounts, inventory of the stores personnel becomes high. Similarly desire

of marketing personnel to have adequate stocks of finished goods in order not to loose

any opportunity of sale resorts in high inventory.

In the traditional set up one person could not be held responsible for all the functions

of materials management to achieve overall economy. Therefore necessity of placing

all the functions related to materials management e.g. purchasing, stocking, inventory

control and distribution under one department headed by an executive of status at par

with other departmental heads, was felt.

Thus evolved the concept of integrated materials management which can be defined as

the function which is responsible for the coordination of planning, selecting sources,

purchasing, moving, storing and controlling materials in an optimum manner so as to

provide a pre-decided service to the customer at a minimum cost.