raw material management problem in the nigerian manufacturing sector
TRANSCRIPT
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Introduction The importance of raw material to
efficient operation of a manufacturing organization cannot be over underlined
In the form of
right quality
availability of the raw material
right quantity
of the ensuing output
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Conti…RMM is critical to the overall performance Nearby demand and other forces like
competitor’s actions
RMM is to determine on the bases of efficient management and effective planning which include
economic orderquantity (EOQ) re-order level
minimum/maximum stock
levels
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Functions of Material Management
Organized and operated on an integrated basis and is also presumed to be responsible for material forecasting, planning, inventory control, scrap control and disposal
information regarding purchases and inventories within the framework of the financial policies
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Conti… RMM efforts towards achieving efficiency in
the
procurement, transportation, stocking and utilization of inputs of a manufacturing
organization
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Conti… Effective and efficient functioning of the
material management has direct bearing on the total performance of the organization
Holding the right stock level could improve the
level of available working capital
Could be profitably
employed in other areas
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Literature Review
RELATIONSHIP BETWEEN INVENTORY AND RAW MATERIALInventory refers to totality of stocks, being held by a business enterprise at a particular time. It includes
1) Raw materials,2) In-progress or semi finished goods,3) Finished goods.4) Other stocks such as: tools, spare parts and
production consumables.
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Conti… Raw materials are component parts of the
stock of inventories carried by a manufacturing firm at a given time.
Every organization has inventories of some type and the economics and techniques of inventory management are critical for efficient operation, profitability and survival; especially in a highly competitive
environment
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Relationship Between Inventory And Raw Material
Inventory control is a method of recording and reporting the movement of raw materials within a company:
from material stock room
any of the manufacturing
processesfinished
product stage
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Classification Of Inventory Management System The use of inventory management system in
RMM practice is commanding today;
Mantho (1994) classified Inventory Management computer based activities into three broad areas:
1Inventory record
keeping
2Inventory
decision-making
3 Material requirement
planning (MRP) system:
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Inventory management effected by the these variables..
Highinflation
rates& more buying
low availability of traditional materials
High costs of labor leading
to less making
Rapid development
of micro processors
increasing # of suppliers entering the procurement
market software in decision making support systemsNew technological
innovations lead
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Important Elements In Raw Material ManagementThe key elements for efficient material management
Purchasing
Inventory Control
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Conti… Another important issue in material management
is the matter of
The proper documentation is provide timely and reliable information for planning, follow-up and control.
M• Maintaining good
systems and procedures
D• Strict discipline in
documentation
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Material Management Problem: The manager becoming interested in inventory
further spare parts operation, management became interested in the first place
Over- stocking as identified above is not the only problem in material management.
Under-stocking could lead to a bigger problem
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Conti…
In (2008) made a study of 40 small and medium enterprises (SMEs) in Bangalore, India of manufacturing industry sector.
For low inventory management practices
Material Management practices were poor
formal practices for managing inventories was also inadequate.
lack of appreciation for Inventory Management (IM) among the entrepreneurs
lack of qualified staff
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Conti…
Todd (Article writer) Prescribed rules;A. The implementation should be considered as a
planned and strategically business improvement.
B. Implementation should deliberate on people not the systems.
C. Determine a long-term vision of future to provide a focus for real business benefits.
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D. The project must have a full time project manager reporting to a multi-disciplined executive management.
E. An educational plan must be constructed in line with software and computer system plans.
F. Before the system goes to live, the base data must be audited and achieve an acceptable level of accuracy.
Conti…
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Raw Material Management Problem In The Nigerian Manufacturing Sector
The people give inadequate attention to trace down the problems to find right solution at right time
Problems faced by firms are followed as:
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Conti… The inefficient use of
production time, labor and other resources due to delays and disturbances during
production
Effects1) Inability to fulfill customer order2) Low Marketshare3) Low capacity utilization4) loss of revenue
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Conti…2) Poor liquidity position of many manufacturing concerns
i. To hold too much stock than necessary So e.g(firm need 50 tons material but place order for 90 tons)
Effects(of extra 40 tons stock)• capital is locked• Maintenance charges, godowns expenses,• And org. will never regain if this extra stock
become obsolete or useless
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Conti…3) All slow-moving stock items should be identified;
• Slow Moving Stock: items which are consumed from date of reception from 60-180 days
To reduce • Maintenance cost• Unlock capital
• In this way, liquidity positions of manufacturing organizations will be better.
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Conti…4) Employment of illiterate employees should be reduced as they can misplace and dislocate important files , documents and inventory items
In areas where higher stock management education is not required, (like stock keeping and records) employee should be given adequate orientation and training.
There should also be training and retraining of employees to ensure that they are kept abreast of developments in the field.
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5) The use of electronic data processing devices will remove the problem of inability to use inventory models.
Conti…