• 1. CHAPTER 7 Managing Materials Flow
    • 2. Materials Management ActivitiesAnticipating materials requirements Sourcing and obtaining materials Introducing materials into the organization Monitoring the status of materials as a current asset
    • 3. Objectives of Integrated Materials Management Low costs High level of service Quality assurance Low level of tied-up capital Support of other functions
    • 4. Differences Between Inbound and Outbound TransportationMarket 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
    • 5. Types of ForecastsDemand forecast Supply forecast Price forecastLong-term Midrange Short-term
    • 6. 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.
    • 7. Administration and Control of Materials FlowKanban/Just-in-time systems Kanban (Toyota Production System) JIT & JIT II MRP systems Materials requirements planning (MRP I) Manufacturing resource planning (MRP II) DRP systems Distribution requirements planning (DRP I) Distribution resource planning (DRP II)
    • 8. Benefits Resulting from Implementing Just-in-TimeImproved 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.
    • 9. Elements of an MRP I System Inventory transactionsCustomers’ ordersForecastsEngineering changesMaster production schedule (which products to produce, in what quantity, and when)Bill-of-materials file (product structure and routing)Inventory status file (finished items, work in progress, planned orders)Planned schedules and various other reportsMRP I systemSource: MCB University Press Ltd., Amrik Sohal, and Keith Howard, "Trends in Materials Management," International Journal of Physical Distribution and Materials Management 17, no. 5 (1987), p.11.
    • 10. Elements of an MRP II SystemMaterials requirements planning (MRP)Capacity requirements planning (CRP)Execute capacity plansExecute material plans Realistic ?Order (production plan)Order (production plan)Inventory recordsYesNoSource:Karl A. Hatt, ‘What’s the Big Deal about MRP II?” Winning Manufacturing 5, no. 2 (1994), p. 2.
    • 11. Elements of a DRP II System Source: “How DRP Helps Warehouses Smooth Distribution,” Mondern Materials Handling 39, no. 6 (April 9, 1984), p. 53. Modern Materials Handling, copyright 1984 by Cahners Publishing Company, Division of Reed Holdings.Distribution centerDistribution centerDistribution centerDistribution centerCustomersDistribution centerDistribution centerRegional warehousePlant warehouseRegional warehouseDistribution resource planning7-11 a
    • 12. Elements of a DRP II System (cont.)Source: “How DRP Helps Warehouses Smooth Distribution,” Mondern Materials Handling 39, no. 6 (April 9, 1984), p. 53. Modern Materials Handling, copyright 1984 by Cahners Publishing Company, Division of Reed Holdings.Plant warehouseFinal assembly (manufacturing)Subassembly BSubassembly CSubassembly APart CRaw materialsPart CPart DPart BPart EPart AMaterial requirements planning7-11 b