Impact Of Material Management On Performance In Manufacturing Industry

Literature Review

Background of the study

Ptak and Schragenheim (2016) stated that material management is considered as a scientific technique as well as deals with the process of planning, organizing and controlling the flows of materials from the beginning purchase to the destination. The aim of material management is maintaining right quality, right time, right place, quantity of supplies and right cost. In the present study, Temperzone has been selected as a manufacturing organization. The company deals with manufacturing air condition units as well as air ventilation equipments for residential and ventilation equipments.

Research aims and objectives 

The research aims to assess the impact of material management on performance of the organization.

The research objectives can be described as followed.

• To understand the importance of material management for a company
• To evaluate the impact of material management on performance of the organization
• To find out the issues faced while dealing with material management in a company
• To recommend solutions for overcoming the issues

Research questions

The research questions can be listed as followed.

• How important material management is for a company?
• What is the impact of material management on performance of the organization?
• What are the issues faced while dealing with material management in a company?
• How the issues can be overcome?

Rationale of the study

The importance of material management in manufacturing industry is immense. It is essential that the materials are purchased, stored as well as utilized appropriately. Hence, any type of avoidable amount can be spent on the fronts as well as optimizing overall results. On the other hand, material management is planning, directing, controlling as well as making co-ordination of all activities (Kerzner and Kerzner 2017). It deals with supplying the materials as well as associated activities for achieving the maximum co-ordination. Hence, it is important to analyze the impact of material management on performance of the organization.

Problem statement

Material management is significant as manufacturing, finance as well as engineering. Supplying appropriate quality is necessary for standard products. The material cost content of entire cost needs to be kept at a reasonable level. Appropriate storing materials assists in reducing wastages (Bag et al. 2017). The factors can be helpful to control cost of the products. In Temperzone, material management covers up the manufacturing process of air condition unit and air ventilation equipments. However, it is difficult to use materials properly that has a great impact on overall operation of the organization.

Structure of the study

The study includes five chapters such as introduction, literature review, research methodology, data analysis and findings, conclusion and recommendations. Literature review includes reviewing literature about material management and its impact on the organization. Research methodology part discusses selection of methodology for the research. Data analysis and findings are discussed in the study. In the last chapter of the research, conclusion and recommendations are described.

The chapter deals with overview of material management in a manufacturing company. In addition, the factors responsible for performance management of a manufacturing company, theories and models related to operation management are discussed in this chapter of the study.  On the other hand, the impact of material management on performance of manufacturing organization is explained in the study.

Research Methodology

Overview of material management 

The significance of material management can be summarized as followed.

• In manufacturing industry, scientific purchasing helps to acquire materials at affordable price. Proper strong materials help in reducing wastages (Zhang et al. 2015). On the other hand, the factors help to control the cost of the products.
• The cost of materials requires to be checked under check.  In addition, the cost of the indirect materials increases the cost of production as any proper control over materials.
• The equipments are used as there is any breakdown due to late supply of the materials.

Meihami and Meihami (2014) mentioned that the functional areas in manufacturing industry include purchasing, production, receiving, control and shipping.  The following functions are assigned for material management.

• Production and management of materials: The demands of parts as well as materials of the products are determined according to the schedule of production (Hitomi 2017). It is prepared based on the products received or anticipated demands for products.
• Purchasing: The department of purchasing is authorized in order to arrange buying departments based on requisitions issued by different departments.
• Non-production stores: The materials such as office supplies, maintenance, perishable tools as well as repairing and operating supplies are require to properly maintained according to the requirement of business. The stores are required daily (Venkatesh et al. 2015). However, availability of stores is necessary. On the other hand, non-availability of the stores leads to the stoppage of the work process.
• Transportation: Transportation of materials within manufacturing company development as well as cost of managing materials is kept under proper control.   There are no wastages of the materials during movement. Equipments are required for managing materials.
• Receiving: The department of receiving is responsible for unloading of the materials, determining quality, counting units as well as sending to the stores. The department of purchasing is informed regarding the receipt of several materials.

The Key Performance Factors in a manufacturing company

The key performance factors of a manufacturing company are important to be evaluated.  The successes of a manufacturing company in enhancing the application of managing accounting information as well as financial performances are influenced by several factors. Internal factors are organizational learning, experiencing lead and educational leaders (Govindan et al. 2015). The internal factors have an impact on managing accounting performance. On the other hand, environmental factors in internal organization are engaging human resources. Thus, the factors have impact on people of the enterprise.

On the other hand, the changes of enterprise need to become insightful learning for all members (Chin et al. 2017). The changes to the organization for internal environment need to respond to the incidents that the enterprise needs to respond to incidents that are caused through the changes.  There are also some terms that require to be provided operational complaints in order to facilitate as well as direct sample detection as well as measurement (Colledani et al. 2014). The global manufacturing has experienced several changes over the years. It is one of the key variables in the development and manufacturing company. It is also required to produce revenue and growth of the manufacturing company. The key success factors of a manufacturing company can be described as followed.

• Wide focus on performance:
• Alignment across disciplined culture:
• Develop stable and flexible operations:
• Collect as well as use feedback of customers:
• Forge strong external as well as internal partnership

Positive Impact of material management on performance of manufacturing organization

The possibility of procurement strategy is improving performance of an organization that already proven in previous studies (Cooper 2017). As per the previous studies, the strategy can enable the organizations decentralizing operational procurement procedures as well as centralize the strategic procurement procedure and resulting higher supply chain transparency provided through procurement process. Procurement function of an organization can be subdivided  into several strategic as well as operational procedure as the activities as well as priorities are different (Ng et al. 2017). Strategic procurement deals with administrative routine and industrial transactions. Hence, converting the request for purchase orders needs to ensure that the organizations are ensuring the allocation of invoices reviewed. Record management system of an organization has a major impact on performance of an organization.

The record management system is considered as a significant factor in order to increase the internal procedure enhancement. The skill as well as resources is important to understand the process. Positive management supports the process for e-procurement that can ensure the system adoption procedure (Rostamzadeh et al. 2015).

Data Analysis and Findings

Negative impact of material management

Although there are several benefits of material management, there are few limitations of material management in manufacturing industry. Materials as well as equipments are spiked as costs of projects. It is difficult to find appropriate material in the system so that suppliers are called or more products are ordered. Training is considered as the best support to enable the procurement in order to utilize the key success factor.  There are 50% of annual turnover in the manufacturing organization (Pimenova et al. 2016). Hence, economic and political changes in the technological management help the process. Materials management need to be no longer viewed as drain pipe and serious process of stabilizing along with economic development factor.

These have tendency to have common indicators, which is an issue in costing of the products in manufacturing industry. In addition, the unused inventory determines how much warehouse space is used. Through eliminating excess, it drives some cost savings in the process.

Summary

From the above chapter, it can be concluded that material management is one of the tools for optimizing performance in order to encounter requirements of customer service. Thus, reducing costs as well as making help to the available resources. The objective of material management is required to ensure that appropriate is available to manufacturing organization. In addition, an integrated approach is important to material management can be defined as the major function that is responsible for coordinating the planning, purchasing and storing the materials.

In order to assess the importance if materials management in a manufacturing company like Temperzone, different books as well as journals are reviewed. In this chapter methodological tool like research philosophy, research design, research approach, data collection and analysis process are selected. It will be helpful to conduct the research in proper way.  

Research philosophy

Research philosophy deals with source, nature as well as development of knowledge (Mackey and Gass 2015).   E  In other words, research philosophy is considered as a belief regarding the methods regarding the phenomenon need to be collected, analyzed as well as used.  However, the concept of creating appears to be profound and involved in the process.  Identifying research philosophy deals with source, nature as well as developing knowledge. Selection of research philosophy has an impact on practical implication. In addition, significant philosophical difference in the studies concentrates on the practicing the studies represented as main point. In the present study, post positivism philosophy is selected for analyzing the information of associated books from the sources. Post positivism philosophy is used in the research.

Conclusion and Recommendations

Research approach

In the manufacturing company, most of the organizations have made general information regarding aligning strategic information system with business organization (Vaioleti 2016). Most of the organization involved in hospitality industry collected massive information regarding market. However, there is no simple knowledge in the process of aligning information with business management. Selection of deductive approach is helpful to conduct the research in proper way. It is helpful to understand the perception of the users regarding the topic.  In addition, selection of deductive approach will be helpful to conduct the research in appropriate way.

Research design

Descriptive research design is selected in the research in order to support the possibilities of the topic. In addition, selection of the design will be helpful for the research (Brinkmann 2014). There are three types of research designs such as descriptive, explanatory and explonatory research design. It provides research design that assists providing an appropriate and definite purpose for the particular research. There are different types of research that assists in guiding a researcher to deal with the research.

Descriptive research design assists in conducting the entire research with more description and exploration through putting detailed information of associated research topic. A research describes the research with additional information of the research. The researcher has selected descriptive research design for describing and exploring the research topic with additional information.

Strategy of the research:

 The researcher has selected survey process to analyze the importance of materials management for manufacturing company. Survey has been conducted with the employees of Temperzone in order to analyze data investigated for the research.

Data collection and analysis process

In order to conduct the research, it is required to acquire several types of data.  Data is useful and most significant component while conducting the research on a specific topic (Smith 2015). The sources of data are two types such as primary data collection and secondary data collection. In the research, secondary data has been collected for the research.  Secondary data collection and analysis has been used for the research. Secondary sources are also used in the research. Books, journals and websites are used in the research for collecting secondary data, which are discussed in the literature review part of the research. On the other hand, online survey has been arranged for the research.

There are two types of data analysis technique. Quantitative and qualitative data analysis technique are the types. In the present research, qualitative data analysis technique is used. In addition, comparison of two articles regarding the material management has been used in the research to represent the data gathered.

Overview of Material Management in a Manufacturing Company

Sampling technique and sample

Sampling techniques are two types such as probability sampling technique and non-probability sampling technique. In the research, simple random probability sampling technique is used in the research. Journals and websites have mainly selected to gather data for the survey.  

Ethical consideration

The researcher has given prior constant of the respondents of the research. The researcher has maintained privacy of the data collected from the articles.  The researcher has not leaked collected data for the research. It was also not tried to publish the data in different purpose except of the research.

Chapter Summary

In this chapter, selection of methodological tools is discussed in order to develop best possible methodology for the research. In the research, positivism philosophy, descriptive research approach and deductive approach has been used for conducting the research in effective way.  On the other hand, the researcher has followed ethical consideration.

In this chapter of the research, data gathered from secondary sources is presented. The researcher for analyzing data in effective way has used statistical analysis. The analysis is helpful to get the findings regarding the importance of material management in business organization. The articles related to the topic are selected for the research. Based on the data gathered from secondary sources, themes have been developed that would be helpful to analyze the data and get expected outcome.

Theme 1: Current state material management for industry

A successful manufacturing organization encounters the requirements of customers effectively as well as in the procedure of making profit. In addition, the owners are looking for the manufacturing organizations that can deliver the project at low cost and the required standards of quality in a reasonable way. It has been mentioned by Hitomi (2017), that materials account nearly 50-60% of the project cost. Moreover, the materials need to be obtained at the lowest cost possible in order to provide savings to the organization. In the late 1970’s, the manufacturing organizations have experienced as increase in the costs as well as decrease in productivity. The management of the organizations thought that the organizations increase in costs that were due for inflation as well as economy issues. Materials management becomes an issue of concern in manufacturing industry.

Hence, it is required to focus on the opinion of the employees and emphasize on the process of material management. It will be helpful to increase productivity of the organization and get competitive benefits. On the other hand, it can be stated that a major factor for change has profound as well as long-lasting impact on the industry like manufacturing companies. Manufacturing capacity represents a huge investment, which is considered as difficult for relocating the process. The flexibility as well as ability for acting market changes becomes difficult to cultivate. It makes the process significant to gain competitive benefits.

Significance of Material Management

On the other hand, majority of the organizations attain important savings from effective management of the materials. It amounts between 50% and 60% of total costs. On the other hand, effective management of the materials led to minimization of cost. It results important savings of the process (Hitomi 2017). Several types of the materials are required to manage in the organization. Detected basic price and cost of purchasing obsolesce along with several costs engaged in the materials. Hence, managing the materials for minimizing costs related to the process is referred as material management.

Theme 2: Issues in material management

The issues as well as consequences of poorly managed inventory are reaching and not affordable. On the other hand, material management helps to enable JIT inventory management. The cost savings realized through JIT are important as well as understanding the necessity of good material management as important for successful implementation of the process.  

Cost is a major consideration in entire project. Thus, effective material management reduces the overall costs of material. For an instance, discuss as well as bulk order is economical in the process of purchasing (Kerzner and Kerzner 2017). On the contrary, the reasonable time requires to be considered so that the materials are ordered in early stage. In addition, quality becomes an issue in Temperzone as it is required to understand the demand of people. Hence, equality management is important in material management. Hence, it is required to emphasize on the issues faced while working with material management and take necessary steps to overcome the issues.

Moreover, 40% of total time lost on site, which can be attributed to non-effective management, lack of materials when required, poor detection of the materials along with inadequate storage. In manufacturing projects, the costs of materials exceed half of total cost of production. The researchers have mentioned that nearly 50-60% of total cost for equipments as well as material (Hitomi 2017). Some studies have indicated that an effective material management system is able to generate 6% enhancement for labor productivity as well as computerized system that is able to generate extra 4-6% in total savings.  There is also increasing awareness in manufacturing industry that materials management requires to be addressed as comprehensive integrated management activity. In addition, the significance of materials as well as its impact on total cost of project.

However, the researchers have pointed out that management of materials is significant for successful project completion. The primary idea behind managing materials is that the materials and equipments required and meeting the standards of quality that has been specified in the project. The procedure of material management needs to integrate buying, expediting as well as inventory control. Along with these, a well-managed materials management contributes total cost of effectiveness of a particular project (Colledani et al. 2014). Thus, successful planning, vendor control and close out are important for the organizations. The seven stages of project management team ensure effective management. It develops material management as well as working towards the team for developing a team. In the final stage, the team needs to develop specifications for the equipments as well as materials used for requesting as well as gaining competitive proposals. It might ensure reliable for re-handling. It is important to identify the factors essential for increasing effectiveness in manufacturing organization.

Key Success Factors of a Manufacturing Company

Hence, the management needs to focus on planning of materials, inventory control, effective control of raw materials and transpiration as well as material handling. In addition, waste management is important for the manufacturing industry to manage the materials effectively.

 Theme 3: Advantage of material management

The benefit of material management is enhanced labor productivity. It minimizes bulk materials surplus. In addition, vendor performance can be enhanced by the effective use of material management. In a survey, it has been reported that 19.4% respondents think that material management helps to keep inventory accurate.

On the other hand, 13.9% respondents pointed out the benefit of material management is enabling just in time inventory management. Approximately, 33.3% respondents think freight costs are optimization (Brinkmann 2014). However, 22.2% respondents and 11.1% respondents go with quality control and increasing productivity as the benefit for material management. However, Bid procurement, material purchasing, material procurement, job site storage and handling as well as engineering requisition issues are the major issues faced while using effective material management.

The significance of raw materials for effective operation of a manufacturing company cannot be focused. In this process, proper quality as well as quantity will be helpful to determine a reasonable extent. Functioning the materials is organized as well as operated on integrated basis as well as presumed as responsible for forecasting materials, planning and inventory control.  Hence, material management makes coordination of efforts like planning, organizing as well as directing for achieving efficiency in the procurement. In addition, effective as well as efficient functioning of material management has direct bearing on total material management.

Theme 4: Impact of material management on productivity

Material management as well as inventory is precisely controlling flow of the materials. It is considered as frontier profit making manufacturing enterprise. However, in order to reduce the cost issues as well as make the enterprise cost effective. Material management and inventory control are basic concerned with flow of materials as well as from an organization and in the lean manufacturing techniques. The primary objective of business is making profit.  Thus, in order to achieve profits, the costs engaged in manufacturing process needs to be engaged in manufacturing process. Majority of the organizations and cost of the materials develop a substantial part of selling price. Material management is important for procurement of the organizations as well as held the process as well as held the process. It is important to hold inventories and essential for holding the process.

Procurement Strategy and Record Management

Cooper (2017) stated that 5S is one of the systems that help to minimize waste as well as optimize productivity by maintaining an orderly workplace as well as using the system using the visual cues for achieving outcomes that are more consistent. However, the critical issues related to raw material management in the manufacturing industry is important. Inefficient usage of production time and resources are required to maintain in the process. Poor liquidity position of several concerns is considered as a matter of concern to the several shareholders as well as stakeholders. In manufacturing industry, there is any adequate provision of quality labor in the stock maintenance as well as material management (Venkatesh et al. 2015). It is also recommended that manufacturing industry help to make proper outcomes in this process. Employing stack illiterates as well as dislocation of important documents are significant. Thus, the use of electronic data processing devices is removing the issues of inability in order to use the models of inventory.

The expert of material management has an important role those efforts to save cost in the materials. Hence, materials from a significant part of the present depend on great deal on the way of using materials. Inventory management practices a small as well as medium scale organization that helps to detect experiences of the managers. Thus, deploying the process is tactical as well as strategically business enhancement. Deployment needs to focus on people and determine a long term vision of future.

The purpose of material management is obtaining economy in purchasing, satisfying the demands at the time of replenishment and carrying reserve stock in order to avoid stock out. Moreover, stabilizing the fluctuations in the method of consumption and providing reasonable level of client services are the major purpose of material management.

Conclusion and recommendations

Conclusion 

The above study concludes that material management takes total system approach in order to control the flows of information, materials as well as service demands simultaneously. It helps to reduce cost and use the available services resulting increase of profit by the organization. The major concept of material management can be demonstrated by maintenance of manufacturing procedure of right material that needs to be available at appropriate time. Thus, the organizations need to focus on the process of material management and get competitive advantages.

In order to overcome the issues faced while working with material management, following are the recommendations that can be taken.

• maintaining communication and involvement
• establish a consistent process from the beginning
• working with reliable suppliers
• storage solution suits your job and
• reducing how far people have to go to get material.

Limitations of Material Management in Manufacturing Industry

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