IMTS TQM (Materials Managment)

I ns t i t ut eo fMa na g e me nt & Te c hni c a lSt udi e s MATERI ALS MANAGMENT

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IMTS (ISO 9001-2008 Internationally Certified) MATERIALS MANAGEMENT

MATERIALS MANAGEMENT

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MATERIALS MANAGEMENT CONTENTS UNIT 1 Materials management vividly

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UNIT-I MATERIALS MANAGEMENT: INTRODUCTION AND MEANING: Materials management is one of the areas covered by the whole process of management. For a balanced growth and effective running of the enterprise, it is necessary that materials cost, materials supply and materials utilization are so controlled that they lead to Materials management is concerned with the management of materials resources with the eye on the cost. We incur on materials and seek to reduce this cost.  Maximization of production  Reduction in the cost of production and distribution and  Minimization of the profit.

Materials are important determinant if the total cost of production as it occupied 20% to 35% of the total cost which in certain cases may be 60%. The materials require serious attention in any work of production. Materials means raw materials components, sub-assemblies and finished products. Materials are classified as Direct; and Indirect. Direct materials goes directly in to product and forms a part of the end product while indirect materials are used in processing or packaging the direct materials. Materials management is a specialized, systematic and scientific function of a group of people for better procurements stores and distribution of materials.

Introduction: Materials management is one of the basic functions of every business. Economic success of any manufacturing company has a direct relationship with the efficiency of the materials management.

Materials management can be defined as a function. Which aims for integrated approach towards the management of materials in an industrial undertaking. Its main objects is cost reduction and efficient handling of materials at all stages and in all sections of undertaking. Management of Materials functions includes several important aspects connected with materials; such as purchasing, storage, inventory control, material handling, standardization etc. Hence this subject has become very important and requires more attention. Materials are purchased fro different purposes for house utility by common man, for trade by middle-men, by government for own utilization, for production by manufacturers who convert the materials into products required by the consumers. Here in materials management we are concentrating on this last category. The manufacturers purchase raw materials, components, consumables, machine tools, spare parts, fuels, lubricants, packing materials.

Definitions: Materials management is a concept that integrates all the activities of planning, scheduling and controlling materials from design through production and including delivery to the customer. Thus it establishes full

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responsibility full responsibility over the material flow system with full accountability for quality, delivery and cost.

Materials management can also be defined as an organizational concept in which a single manager has authority and responsibility for all activities principally concerned with the flow of materials into an organization, which includes purchasing, production, planning and scheduling, incoming traffic, inventory control, receiving and stores.

Management of Materials Functions Scope of Materials Management: Materials Management covers all aspects of materials, cost, materials supply and utilization. It covers the whole range of functions involved in converting raw materials and ancillary supplies into finished products. It is concerned with the planning and programming of materials and equipments, market research for purchasing; Pre-design value analysis, procurement of all materials, packaging and packing materials, stores control and inventory control; packaging and packing material handling; value analysis, disposal of scrap, surplus and salvage and operation research for materials.

Materials management provides tools and techniques, most of which are very simple, to reduce material costs. In addition to reducing material costs, efficient materials management can also bring about. (i)

Reduction of foreign exchange requirements by getting the maximum value out of the available foreign exchange or by reducing the value of imports thus contributing substantially towards narrowing the foreign exchange gap.

(ii)

Reduction of cost of finished goods of high quality and maintaining the quality at reduced cost.

Industrial managers have been slow in appreciating the importance of materials management as they have been preoccupied with other matters, such as finding new markets, labour problems and so on.

Material management brings about increased profits result in increased productivity in inventories. . Classification of Materials Or Explain the types of Materials The materials manager is responsible for classifying the materials before they are sent for inspection, entered into the stock ledger and binned. Therefore, broad classification of materials according to their nature, use and service becomes essential before the job of identification is undertaken.

Various items carried in a store are generally divided in to the following major types in order to help the materials executives and staff in maintaining the records, laying down the broad principles of preservation and the internal organization of the store room. (i)

Raw materials

(ii)

Work – in – progress

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(iii)

Machinery and Equipment

(iv)

Purchased Components

(v)

Packing Materials

(vi)

Finished Goods

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. Explain about the importance of the materials management.

The importance of materials management cannot be over-emphasised in this complex industrial word. It affects not only a particular industry but the entire economic activity of a whole nation. Materials contribute to the quality of the end product. The amount spent on materials in increasing in relation to the expenditure on other inputs. The margin between the values of raw materials and the finished products is known as the value added by production.

The following are the importance of the materials management.  Continuous production The material management is helping the production for their continuous production. According to this type the production department comes to know about the availability of the raw materials and maintain the machineries details of the company.  Maintain quality The material manager need to check whether they are getting the good quality or not. Quality control helps to control over the materials in term in the control of quality during manufacturing and purchasing the raw materials. Quality of a product itself comprises several engineering and manufacturing characteristics, which go to make the product to meet the performance expectations of he designers and the customers.  Cost control Reduction of procurement cost by placing bulk order, reduction of investment and carrying cost by low rate of delivery, avoiding obsolescence, control over consumption of materials etc., having the control over receiving the raw materials.  Maximize the profit Eliminate the duplication of ordering and replenishing stocks. This is possible with the help of centralizing purchases. To minimize losses though deterioration, pilferage wastages and damages. This it self leads to maximize the profit.  Proper utilization of raw materials Utilizing the raw materials in the proper manner during the handling of materials and delivering time.

According to the storage of materials pre-specified use of stores by using the right facilities and equipments and précising a system to enable the easy identification of materials.

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 Materials handling The materials received against order placed by purchase section are kept in store after they are inspected and checked for quality as per specifications physical conditions and quality.

Definition of Materials Management According to BAILEY and FARMER define materials management as the management of flow of materials into an organization to the point where these materials are converted into the firms end product.

According to AMMETR defines it as the “process by which an organization s supplied with goods and services that it needs to achieve its objectives. The materials management begins with the supplier and ends when the materials is consumed or incorporated into some other product. The executives who engage in materials management are concerned with three basic activities- buying, storage of materials and movement” Define materials management.  “It covers the whole range of functions involved in covering raw materials and ancillary supplies in to finished product”.  “The function responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a pre decided service to the customer at minimum cost”.  “According to Lee and Dobler define “Material management as a confederacy of traditional materials activities bound by a common idea – the idea of an integrated management approach to planning, acquisition, conversion, flow and distribution of production materials from the raw materials state to the finished product state”.

. Explain the merits or advantages of materials management.

The following are the merits or advantages of materials management.  Cost reduction: o

Reduction in the materials cost by about 5% is always possible through an official management of materials.

 Maintain quantity: o

Materials contribute to the quality to the end product. The amount of materials is increasing in relation to end product. The efficient material management ensures the quality.

 Centers of accountability for performance:

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Materials form an important aspect of current assets in any organization conversion of raw materials and their availability for prosperity is one of the social responsibilities of business. Hence materials management is one of the accountability for performance.

 Major add value to the product: o

Materials contribute quality to the end product. The margin between the value of raw materials and finished product is known ad the value added by production.

 Major part of expenditure in materials: o

They usually represent 50 to 69% of the total cost of the final product. So even a small change in material cost can lead to a substantial saving.

 Productivity: o

Materials management is to increase the productivity of materials. Productivity is the ratio between input and output. As far as materials management is concerned, it implies the reduction of the costs and increases the profit.

. Write about the objectives of materials management.

A good materials manager can advice the twin objectives but the identification as to who can be a good materials manger is a difficult task.  To ensure an uninterrupted production, by maintaining a steady flow of materials.  Ensuring low departmental costs and high efficiency  To effect economics in the cost of materials by purchasing materials of the right quality, in the right quantity, at the right term, form the right source and at the right price.  To reduce working capital requirements through proper and scientific inventory control.  To be alive to the changes in the market in respect of new products etc.,  To improve the quality of manufactured goods by the use of better raw materials or components and there by increase the competitiveness of goods put on sale.  To improve the quality of manufactured goods by reducing their prices through cost reduction and value analysis.  To save foreign exchange through import substitution & economizing on foreign purchases.  To ensure proper cooperation among all department of the organization to meet objectives of the materials management, both at the corporate and functional levels.  To conserve materials resources with in the organization, there by contributing to the conservation of national resources.  Continuous supply and Maintain stock level  Maintains investment and Cost under control  Duplication elimination and Minimize losses  To ensure perceptual inventory.  Right quality goods and Data.  Procuring better value  Obtaining better yield

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 Reducing investments in stock through Inventory control and material flow.  Establish good- seller-relation

. Write about the functions of the Materials Management.

Explain the process of Materials Management.  Materials Planning and Programme:  This function involves the setting up of the consumption standard or working out requirements for all materials for any giving manufacturing program, considering all relevant factors.  Material planning also involves maintenance of information system to feed details necessary for its better functioning in future.

 Primary Materials Objectives:  There are at least nine primary objectives of materials department. These are low prices, High inventory turnover, low cost of acquisition and possession, continuity of supply, consistency of quality, low pay roll nance of materials management.

 Materials purchase:  Generally purchasing function is the combination of functions like locating and development of sources of supply, market research for purchasing, calling for tender’s selection of supplies, negotiating, entering in to contract and issue of the purchase orders, monitoring specification delivering schedule and other terms and conditions.  Store Keeping:  Store keeping involves receipt, custody and issue of materials. Materials received against order placed by purchase section are kept in store after they are inspected and checked for quality as per specifications physical conditions and quantity.  Inventory Control:  Inventory control is a systematic location, storage and recording of goods in such a way that desired degree of service can be made to the operating shops at minimum ultimate cost.  Material Handling:  Various functional related to store keeping requires a lot of handling starting from receipt of material, inspection and storage etc.,  Quality Control and inspection:  Quality control is simplest terms in the control of quality during manufacturing. Quality of a product itself comprises several engineering and manufacturing characteristic which go

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to make the product to meet the performance expectations of the designers and the customer.

Integrated materials management: ConceptsMaterials Management as a function responsible for the co-ordination of planning, sourcing, purchasing; Moving; storing and controlling materials in an optimum manner so as to provide a predecided services to the customer at a minimum cost. If the above functions of Materials Management are separately handled a conflict of interests occurs and there is a need to balance the conflicting objective from a total organization point of view so as to achieve optimum results for the organization. The organization which are following integrated Materials Management concept require the services of professional managers so that they can fulfill the requirement of an integrated materials management function which demands an ability to bring together conflicting and yet inter- related function.

. Define integrated materials management.

An integrated approach to materials is only a concentrated and coordinated effort for obtaining greater efficiency in the field of materials utilization and costs. . Objectives of Integrated Material Management The fundamental objectives of an integrated management approach can be viewed as: (a) Procuring better value (b) Obtaining better yield (c) Reducing investments is stock through inventory control and material flow.

In an integrated set-up the materials manager who is responsible for all such inter- related functions is in a position to exercise control and co-ordinate with an overview that ensure proper balance of the conflicting objective of the individual functions. Integration also helps in the rapid transfer of data, through effective and informal communication Explain about the functions of Integrated Materials Management.

The functions of the integrated materials management are based on the following points, 

Arranging for finance:



Assembling, storage and productions of materials



Distribution

 Arranging for finance: o

Making provisions for the operation of the enterprise for which the management has to make all efforts to manage the adequate finance so that the organization may smoothly with out interruption.

 Assembling, storage and productions of materials o

This in fact is the functions of actual operation of the enterprise.

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For an efficient and purposeful operation of the enterprise materials to be assembled, acquired, stored and produced. So that the organization may move a head uninterrupted with speed and good will.

 Distribution: o

The organization operates for the ultimate consumers. It is the basic function of any management to arrange the distribution.

o

So as to get the goods and services reach the ultimate consumers.

Explain about the advantages of the Integrated Material Management.

The following are the advantages of the integrated materials management.

 Centralized authority and responsibility: o

An integrated materials management presupposes the establishment of centralized organization offers a better accountability problems faced by the individuals and various department can be directed to the central point.

 Better Accountability: o

In a centralized materials management organization the materials manager is responsible for all the aspects of materials functions.

o

He creates a common identity with the entire department under his charge and set out the materials policy.

 Objectives evaluation of performance: o

The performance of the materials department is judged by if it is able to achieve a better inventory turnover, reduced lead time and better materials planning an integrated materials management this secures better performances.

 Economic use of data processing system: o

An integrated materials management facilities the collection, processing, retention, analysis and distribution of data in a manner in which it can be used to eth benefits of the managerial decision and consequently to the advantages of entire setup.

 Team spirit: o

An integrated material management offers better scope for active cooperation among all those who are directly as well as indirectly related with the management of materials.

 Procurement at the right time: o

The combined set up in an organization brings about the greater coordination and increased sense of responsibility with regard to procuring materials at the right time.

o

The store keepers and the purchase officers may often indulge in mutual criticism for any delay in procurement other short comings etc.,

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ď‚ł Cost reduction: o

Reduction of procurement cost by placing bulk order, reduction of investment and carrying cost by low of delivery, avoiding obsolescence, control over consumption of materials.

ď‚ł Reduce of correspondence: o

Correspondence between stores, purchase and stock control is reduced in a combined set up.

. Explain the process of integrated material management.

An integrated approach to materials management is only a concentrated and coordinated effort for obtaining greater efficiency in the field of materials utilization and costs.

1, PURCHASING: Purchasing department procures materials as per requirements to meet quality and time specifications. The main activities include. (i)

Selecting acceptable vendors and negotiating with them on purchase terms, price, quality and other related factors.

(ii)

Interacting with vendors to develop materials specification, to control quality and to solve problems involved in receipt and usage of materials.

(iii) Placing purchase orders for materials, and services, considering economic levl, blanket or open ordering, make-or-buy consideration, priority of orders and vendor performance. (iv) Expediting delivery of materials. (v)

Keeping abreast of prevailing market conditions and knowing about the arrival of mew materials that result in cost reduction.

2, RECEIVING AND STORE: The receiving and store function accept, store, handle and issue materials and process the necessary documents to record transactions. (i)

Receipt of materials, verification of quality and preparation of material receives reports.

(ii)

Storage of materials in accordance with pre-specified use of stores by using the right facilities and equipment and practicing a system to enable the easy identification of materials.

(iii) Issuing materials upon authorized requisition. (iv) Physical check of stocks to verify accuracy of transactions though constant, special and annual inventories.

3, PRODUCTION CONTROL: The function of production control is increasingly being considered as a part of the materials function.

4, INVENTORY CONTROL: Inventory control is responsible for supplying materials to fulfill production plans and schedules and ensuring that it is achieved with minimum required stocks.

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5, PRODUCT DISTRIBUTION: Product distribution receives, stores, select orders, packs and ships finished goods, processes the necessary papers the record such transactions and arranges for transportation of inbound and outbound shipments.

6, MATERIALS COST CONTROL AND COST REDUCTION: As has been stated, materials cost control and cost reduction are the chief tasks of materials management.

EXPLAIN THE FUNCTIONS OF MATERIALS MANAGEMENT. WHAT ARE THE FUNCTIONS OF MATERIAL PLANNING? EXPLAIN THE PRINCIPLES OF MATERIAL PLANNING.

Functions of the materials management department are grouped. (i)

Materials planning and programming.

Planning of materials requirement and its timely provisioning is the essence of the success of materials management. This function involves the setting up of consumption standard or working out the requirements for all materials for any given manufacturing programme, considering all relevant factors, male or buy, laying down standard and specification, sources of supply available, availability of stock, import substitution. Lead time, manufacturing schedule, economic ordering quantity is considered while programming for materials requirement. The department should also follow-up for timely deliveries, and to expedite in case of emergencies.

(ii)

Purchasing Purchasing function includes locating and development of sources of supply, market research of purchasing, calling for tenders, selection of suppliers, negotiating, entering into rate contract and issue of purchase orders mentioning specifications, delivery schedule and other terms and conditions.

Each organization has its own purchase policy, which indicates its policies about (a) Open, limited and single tenders, (b) Rate and running contracts, (c) Purchase through manufacturers, distributers or suppliers, (d) Delegation of powers to its various levels of personnel.

(iii)

Store-Keeping Store-Keeping involves receipt, custody and issue of materials. The materials received against purchase placed by purchase section, are kept in stores after they are in specter and

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checked for quality as per specifications, physical condition and quality. The materials are kept in stores in such as way that they require minimum handling and remain well protected against any damage or loss. Materials issued from the stores against the authorized indents or store issue vouchers and proper record is maintained for receipts and issues of materials.

(iv)

Inventory control Inventory control is a systematic location, storage and recording of goods in such a way that desired degree of service can be made to the operating shop at minimum ultimate cost.

Inventory control has following functions. (a) To run the stores effectively. (b) To ensure timely availability of material and avoid build up of stock. (c) Technical responsibility for the state of materials. (d) To protect the inventories. (e) Pricing of material supplies. (f) To develop policies. (g) To maintain overall control.

(v)

Materials Handling Various functions related to store-keeping requires lot of handling. Starting from receipt of materials, inspection, storage and issue items should be handled in such a way that it require minimum handling. For large stores, suitable materials handling equipment like cranes, hoists, fork lifts, conveyors are required.

(vi)

Quality control and inspection Quality control in simplest terms, is the control of quality during manufacturing. Quality of a product itself comprises several engineering and manufacturing characteristics which go the make the product meet the performance expectations of the designer and the customers.

These characteristics are Dimensions, Chemical properties, Sensory property. In other words quality includes appearance, performance, life, dependability, reliability, durability, maintainability, small, taste, feel, sound

(vii)

Value engineering Value engineering is a tool of management which approaches the question of saving cost from the point of view of value. In other words value engineering is a study of relationship between the design function and cost of a part, Keeping this is view, reduce the cost through change in design, modification is specification of the materials used, changing the source of supply.

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(a) Cost value: This is the sum o f all the elements of cost required to produce an item or provide a service. (b) Use value: Use value is equal of the functions performed. (c) Esteem value: The properties, features or attractiveness which creates a desire to possess an articles. (d) Exchange value: The properties or qualities which will remain attractive enough to other people to permit resale in the future. (e) Materials Planning Introduction of Materials Planning: As planning and controlling is the main function of a manager, materials planning and budgeting is given a prominent place in the integrated materials management set-up. Planning for materials and working out a realistic budget not only help motivate people but also serve as a control device. As we know that in an enterprise planning is done at all levels of the organization, as illustrated in the following diagram.

Top Management

Middle Management

Planning for non-programmed decisions

Planning for programmed decisions

There are large number of non-programmed decisions in materials planning, such as import policy, foreign exchange availability, credit squeeze etc., Which are take by top management. For routine and programmed decisions like working out economic lot, delivery schedule.

Explain Material Planning.

Define Material Planning.

Materials planning is the scientific way of determining the requirements of raw materials, components, spares and other items for meeting the production needs within the economic investment policies.

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Material planning also involves, maintenance of information system to feed details necessary for its better functioning in future.

Purchase section initiates purchase activities only when they are informed by planning cell about the quality required, procurement programme, and financial provisioning. Materials requirement and its programming is based on lead time so that delivery is ensured at the right time. Materials planning cell prepares its plan based on the production schedules and bill of materials received from the production control department.

Explain the factors of Materials Planning (a) External factors.

These covers the factors which are related to the overall business activities affecting the internal policy of the organization towards the materials management. (i)

Price trends of the materials in the market

(ii)

Import policy of the government, for imported materials

(iii)

Prevailing credit policy of the banks

(b) Internal Factors.

These factors are related to the internal business activities of the firm. (i)

Objectives of the organization on which entire planning including materials planning, depends.

(ii)

Production programme and scheduling.

(iii)

Lead time decides the inventory level, in turn which help in planning materials requirement and its programming.

(iv)

Working capital requirements and its availability.

(v)

Purchasing policy of the enterprise.

Effective and reliable materials planning (i)

In working out the horizon for planning purposes, the longest lead time that are anticipated must be taken into account so that they are adequately covered.

(ii)

Operating environment of the firm be carefully analyzed.

(iii)

When the planning horizon is short, if more plans are made in a year the materials plan will more reliable.

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(iv)

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Whenever possible, computerisation of materials planning process should be done.

Objectives of Material Planning (i)

To offset change and uncertainty.

Business conditions are undergoing constant changes. Thus to meet the challenges of change and uncertainty planning must be done.

(ii)

To focus attention on obligation.

Because all planning is directed towards achieving enterprise objectives, the very act of planning focuses attention on these objectives.

(iii)

To gain economical operation.

Planning minimizes costs becomes of the emphasis on efficient operation and consistency.

(iv)

To facilitate control.

Planning also facilitates control a manager can only check on his subordinates accomplishments if planned goals are there for making comparisons and assessments.

What are the needs for material Planning? (i)

Motivates the people: The functions are clearly defined so there is no possibility of the confusion in this there is every activities of the organization is defined so there is the possibility of motivation.

(ii)

To keep production department active.

Through proper planning each and every activities are well defined and also it will make the corrective action. These make the production department active.

(iii)

Planning for programmed decision

`

The middle order management engaged itself in planning for programmed decisions.

(iv)

Planning for non- Programmed decision The top management is usually engaged in planning for non programmed decision such as import policy, foreign exchange availability credit and other monetary and fiscal policies.

(v)

Feed back information and reviews Material planning is however is based on certain feed back information and reviews and later it gain helpful for the information system.

(vi)

Forecasting and production programming In fact sales forecasting and production programming are two major functions, which normally precede the materials planning.

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WHAT ARE THE TECHNIQUES OF MATERIAL PLANNING? There are two techniques of materials planning are as follow 

Bill of materials techniques.



Past consumption analysis technique.

Bill of materials techniques Materials planning is done on the basis of forecast. Requirement of various materials are arrived at the form of sales forecast using bill of material through explosion charts.

Bill of materials indicate materials required for a given component. It also indicates bought-out item and shop made items. Explosion chart is then made by combining all the bill of materials requirement is determined with the help of explosion charts. Delivery schedules of materials are then prepared considering the production scheduling and inventory level in the stock and organization policies for maximum inventory level.

The list of materials so prepared is know as bill of materials which includes all the details as regards to quality, all the details as regards to quality, quantity, code number, drawing number and other necessary specification and provisions for buffer stock and lead time consumption should be made.

Importance: 

The bill of material knows as ‘BOM’ is the simplest techniques of materials planning,



BOM with the required lead time and necessary contingency provision is drawn which eventually turn into indents for procurements.



A BOM therefore, helps in keeping watch over the delivery of matching equipments, spare parts, components and over materials.



A bill materials is also helpful in avoiding the looking of funds uncertainty by proper scheduling the orders, delivery and arrival of materials.

Past consumption analysis technique.

The materials which are consumed continuously and for which no bill of materials are made, like maintenance item, lubricants, fuel past consumption data is analyzed and then future projections are made.

Where materials are consumed on the continuous basis, the technique of past consumption analysis for material planning is used. According to this technique future projection is made on the basis of the past consumption data

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Importance.

Used in process industries. This can be used for materials, being used for which no straight forward norms of consumption can be easily worked out in the organization and also for those materials which are either used directly or indirectly in the production process.

INVENTORY CONTROL MEANING Inventory control is the means by which material of the correct quality and quantity is made available as and when required with due regard to economy in storage and ordering cost, and working capital.

It may also be defined “ as the systematic location, storage and recording of goods in such a way that desired degree of service can be made to the operating shops at minimum ultimate cost�.

Need Of Inventory Control The necessity of inventory control is to maintain a reserve store of goods that will ensure manufacturing according to a production plan based on sales requirement and the lowest possible ultimate cost. Losses from improper inventory control include purchases in excess than, and what needed, the cost of slowed up production resulting from material not being available when wanted. Each time a machine must be shut down for lack of materials or each time sale must be postponed or cancelled for lack of finished goods. Thus a factory loses money.

To promote smooth factory operation and to prevent piling up of stock of idle machine time, proper material must be on hand when it is wanted. Proper inventory6 control can reduce such losses to a great extent.

EXPLAIN THE FUNCTIONS OF INVENTRY CONTROL.

(i)

To run the stores effectively. This includes layout, storing media (bins, shelves and open space), utilization of storage space, receiving and issuing procedures.

(ii)

To ensure timely availability of material and avoid build up of stock levels.

(iii)

Technical responsibility for the state of materials. This includes methods of storing, maintenance procedures, studies of deterioration and obsolescence.

(iv)

Stock control system. Physical verification stock taking, maintenance of records, ordering policies and procedures for the purchase of goods.

(v)

Maintenance of specified raw materials. General supplies, work in-process and component parts in sufficient quantities to meet the demand of production.

(vi)

Protecting the inventory from losses due to improper handling and storing of goods and unauthorized removal from stores.

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Pricing all materials supplied to the shop so as to estimate material cost.

WHAT ARE THE MATHEDS FOLLOWED BY INVENTRY CONTROL? EXPLAIN INVENTORY CONTROL METHEDS. There are six important quality standards used as tool to control Inventory. (i)

The Maximum Stores.

This term is applied to designate the upper limit of the Inventory and represents the largest quantity which in the interest of economy should generally be kept in stores.

(ii)

The Minimum Stores.

This term is applied to designate the lower limit of the Inventory and represents a reserve or margin of safety to be used in case of emergency. When requirement have been abnormal, it is intended that there must always be at least this quantity available in stores.

(iii)

The Standard Order.

It is the quantity to be purchased at any time. Repeat order for a given product are always for this amount until this is revised.

(iv)

The Ordering Point.

This represents the quantity required to ensure against exhaustion of the supply during the interval between the placement of an order and delivery. When the balance fall to this level, it is an indication that a new purchase order must be placed.

(v)

Lead of Procurement Time.

In the graph the lead-time is the time which takes the stock to reach from Reorder point to Minimum stock level. In other words, lead-time is the time taken from the time the requisition for an item is raised till the supplies are received, inspected and taken into stock. Lead time involves the time taken by following activities. (a) Requisitioning of material (b) Enquiries, quotations, scrutiny, negotiations and approval (c) Import formalities, in case of imported items (d) Placing an order (e) Time taken by supplier for making the goods ready (f) Transportation (g) Receipt of goods (h) Inspection (i) Taking the material into stock

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(vi)

18

Reserve Stock.

If every thing goes as per programme is placed exactly at recorder level, consumption rate remains same and material is received within lead time than there is no need for Reserve or Safety stock. But this seldom happens. Therefore to safeguard the production against uncertainties in consumption rate and lead time, an extra stock is maintained all along and this is called as safety stock, reserve stock or buffer stock.

Safety stock level should be decided very carefully, as lower level may lead to stock out position and higher level means blockage of capital. The factors considered for this purpose are. (i)

Economic size of each purchase order.

(ii)

Increased lock-up of capital.

(iii)

The time required to receive the goods after requisitioning.

(iv)

The probable deprecation and obsolescence.

(v)

The rate of demand.

WHAT ARE THE IMPORTANT TOOLS OF INVENTORY CONTROL? 1. ABC ANALYAIS 2. VED ANALYSIS 3. FSN ANALYSIS 4. EOQ ANALYSIS

Want is ABC analysis? Explain the advantages.

ABC analysis (always better control) In this always control (ABC) technique of inventory control, the materials are classified and controlled according to the value of the materials involved. It is management by exception, system of inventory control. The high value items are paid more attention than low value items. The materials are classified under ‘A’, ‘B’, ‘C” designation on the basis of their value and importance. It is also called proportional parts value analysis.

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The general classification of item under ABC categories are given below: Category

Percentage of total items

Percentage of total material cost

A

5 to 10

70-80

B

10 to 20

10-20

C

70 to 80

5-10

From the above classification, it is clear that ‘A’ items are of minimum quantity an of maximum value out of total quantity and value of materials. ‘B’ & ‘C’ are of portion quantity of raw materials but having minimum capital investment hence A & B have to be controlled to the fullest possible extent by all methods of inventory control and B & C are to be managed through less stringent controls Advantages of ABC techniques: 1) Closer and stricter control can be exercised on those items which represent large amount of capital invested.

2) Investment in inventory is regulated and funds can be utilized in the best possible way.

3) Economy in stock carrying costs.

4) It helps in maintaining enough safety stock for ‘C’ category items.

5) Selective control helps in maintaining high stock turnover rate.

What are the varies ABC policies?

Policies for A items (i)

Since these items account for 70% of the total value hence they should be ordered more frequently, but in small quantities in order to reduce capital \locked up at any time.

(ii)

The requirement of such items must be planned in advance for expected future consumption, so that only the required quantities arrive a little before they are required for consumption.

(iii)

Purchase of A items should be looked into by the top executives in purchasing department.

(iv)

Since A items should be stocked as minimum as possible, maximum effort should be made to expedite the delivery.

(v)

Two or more suppliers for each item may be engaged so that dependence on one supplier is eliminated to safeguard against failure by one supplier.

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Policies for B items (i)

The policies for B item in general are in between those for A and C items.

(ii)

Order for those items must be placed less frequently than for A items. Generally 3 to 6 orders per year are placed for B items.

Policies for C items (i)

Since C items do not involve much capital tie up, the stock for such items may be kept liberal.

(ii)

Annual or 6 monthly order should be placed to reduce paper work and ordering cost and to get advantage of quality discounts for bulk purchases.

What is meant by VED analysis and explain in detail?

VED analysis V- stands for vital items, without which production of would come to halt.

E- is for Essential items, without which did location of production work occurs.

D- is for Desirable items. Remaining items which do not cause any immediate loss in production fall under this category.

Vital, essential and desirable analysis is done mainly for control of spare parts. Spares are controlled on the basis of their importance. Vital spares are crucial for production. Non-availability may stop production. The stock out cost of these spares is very high. Essential spares are spares the stock out of which cannot be sustained for more that a few hours and cost of loss of production is high.

Desirable spares are needed but their absence for short time may not lead to stoppage of production.

What is meant by FSN analysis and explain in detail?

This analysis related to the demand for the materials and stock moving pattern.

F- Fast Moving S- Slow Moving N- Non- Moving Analysis 

Fast moving materials are to be stocked nearer to the store keeper.



Slow moving materials are stocked at a considerable distance.

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Non-Moving materials are stocked in place with out causing inconvenience to day to day movement of men and materials.



Similarly fast moving materials must be placed easily reached by the store keeper.



Non-Moving materials are kept in a remote place.



This analysis will help for optimal utilization of space available and materials handling time of the store keeper.

Explain EOQ analysis.

Economic Order Quantity This method of material control utilizes the principles of planning the demand for and supply of each item of material t lowest cost possible. With lowest possible inventory, consistent with operating requirements. Optimum quantity of purchasing and manufacturing are determined to economic the cost of procuring, storing and consuming each item of material. The various stock levels are Minimum stock level, Maximum stock level, Danger level, reorder level.

Economic ordering quantity The evaluation of the most economic quantity to be purchased involves calculation of the following two cost: (i)

PROCUREMENT COST OR BUYING COST, OR SET UP COST.

(ii)

INVENTORY CARRYING COST.

Procurement cost: This cost includes the expenditure made on: (i)

Calling quotations.

(ii)

Processing quotations.

(iii)

Placing purchase orders.

(iv)

Receiving and inspecting.

(v)

Verifying and payment of bills.

(vi)

Other incidental charge.

Inventory Carrying Cost: This consists of expenditure made for: (i)

Interest on capital.

(ii)

Insurance.

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(iii)

Storage and handling.

(iv)

Obsolescence and Depreciation.

(v)

Deterioration.

(vi)

Taxes.

IMPORTANCE OF EOQ

1, In real life situation, demand is never deterministic.

2,Even if demand remains known over a range of probable values, the starting point for a design of an inventory system in “EOQ”, even though by itself it is not an inventory system.

3, Another important feature of EOQ is justifying the conventional ABC and also elaborating it 4, The order quantity could be altered to get benefits of transport getting a truck load or a wagon load.

INPORTANT ASSUMPTIONS IN APPLING THE EOQ MODEL: (i)

Demand is continuous and constant, and does not change with time.

(ii)

Load-time is constant. In practice, these are often quite variable. This will stock out when lead time is more than normal, and produces excess inventories when the lead time is shorter than normal.

(iii)

Delivery of all the items is instantaneous.

(iv)

Replenishment of one item has on effect on the replenishment of any other item of inventory.

(v)

Purchase price and their and their cost parameters.

MATERIAL HANDLING INTRODUCTION MEANING AND DEFINITION According to American Material Handling Society, material handling amount for 15 to 25% of total cost of product. Material handling is the art and science involving the movement, handling and storage of materials during different stages of manufacturing.

In order to convert the raw materials in to finished products, it is essential that one of the three basic elements of production, material, men or machines should move. In majority of the industrial processes, it is the material that moves from raw material stage to finished goods stage. Because the material is more widely moved rather than the men or machines, it is known be the name material handling.

Definition of Material Handling According to the International Material Management Society “Material handling is the art and science involving the movements, Packaging and storing of substances in any form”

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According to Raymond A. Kulwice defines “Materials handling is a system or combination of methods, facilities, labour and equipment for moving, packing and storing the materials to meet specific objectives”

IN WHICH MANNER THE FINISHED PRODUCT MOVED FROM ONE LOCATION TO ANOTHER: Materials and finished products must be moved from one location to another. Material handling is concerned with (a) Movement: Material handling expert are primarily concerned with how raw materials reach the operator and how finished or processed articles are removed from the work area. (b) Time: material handling must ensure that no product process or the needs of a customer will be hampered by sending the materials too early or too late at a chosen location (c) Quality: Material handling must also ensure that each location continually receive the correct quality of parts\raw materials. (d) Space: Space requirement are generally influenced by the materials handling flow pattern.

Storage of raw material part and semi-finished or finished products involves material handling.

EXPLAIN MATERIAL HANDLING ACTIVITIES AND ITS FUNCTIONS. In a manufacturing organization, the handling activities include 1. Transportation and handling at suppliers’ end 2. Material handling at manufacturing plant.

3. Transportation and handling from warehouse to customer (Physical distribution)

But we are more concerned in this chapter with materials handling within the plant.

The material handling activity in the plant begins with the unloading of the material after receipt from suppliers, and extends throughout the processing from raw material stage till it is manufactured and stored in the warehouse to be dispatched to he customer.

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      Packing at customers end Loading and transportation at suppliers end External plant handling

    

Unloading Receiving and temporary storage location Storing Issuing Workplace handling In process handling and storage Inter-department Inter plant Packaging Warehousing of finished goods Loading and shipping

Transportation to consume Inter-plant handling

IMPORTANCE OF MATERIAL HANDLING: Material handling accounts for approximately 15 to 25 per cent of the total cost of production. Though material handling operations add no value to he end product, the operations may help in reducing the cost of production since material handling operation offers enough scope for minimization of handling operations result in delay. Delay reduces speed which obviously leads to idling of materials and equipment adding to carrying costs and slowing down the production.

The importance of material handling lies in fact that the cost and the time of material handling can be reduced to a greater extent by adopting a sound system of material handling procedures which result in the following: 

Increased productivity of labour.



Increased production capacity of the plant.



Full utilization of plant capacity



Saving in man-hours.



Reduction in inventory.



Clean shop-floors enabling smooth and efficient functioning of factory.



Less utilization of available space.



Less wastage, spoilage and damage.



Reduction n fatigue of workers.

Economic utilization of materials brings prosperity to the organization. This fact has now been realized and organizations have become very conscious of this factor.

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WHAT ARE THE OBJECTIVES OF MATERIAL HANDLING? 

Selection of machines\equipment and plant layout to minimize material handling requirements.



Selection of appropriate, efficient and safe material handling equipment.



Prevention of damage to materials



Safety in material handling through improvement in working conditions.



Increase the productive capacity of the production facilities and enhancing productivity.



We can minimize the cost of material handling by:

(a) Minimizing movement of semi-finished goods during production. (b) Planning the movement of optimum number of pieces in one unit. (c) Minimizing the distance moved. (d) Increasing the speed of material handling operations through mechanization. (e) Utilising gravity for handling. (f) Standardizing materials and methods. (g) Training the operators.

WHAT ARE THE FACTORS INFLUENCING THE SELECTION OF MATERIAL HANDLING SYSTEM? Material handling system mainly depends on following primary factors: (i)

Nature of Operations: By this we mean whether material flow is temporary or permanent, continuous or intermittent or even vertical or horizontal. For intermittent industries with process layout, prime requirement of material handling is the volume of load. The equipment can be mobile truck, tractors, trains, cranes etc.,

(ii)

Layout of the Plant: Layout and material handling problems are not separable so they should always be considered jointly. One important consideration is planning the detail of a labour is to provide easy access to all operations by providing an efficient material handling system.

(iii)

Building Construction: Once a building has been erected, it is not possible at a reasonable cost, to make too many changes in the construction merely for the purpose of installing material handling equipment.

The equipment used for material handling should be such that no under loads or other strains be placed on the structural members of the building:

(iv)

Material to be Handled: 

Size and shape of the material



Quantity and weight of the material



Material characteristics

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 (v)

(vi)

(vii)

26

Susceptibility to damage during handling.

Distance over which the material is to moved: 

Fixed distance



Long distance



Work station

Engineering Factors: 

Door and ceiling dimensions



Floor conditions and structural



Traffic safety strength

Equipment reliability: 

Use of standard components



Service facilities



Supplier reputation

EXPLAIN THE PRINCIPLE OF MATERIAL HANDLING: Principles of Material Handling: (i)

Planning Principle: All handling activities should be planned and should not be left to chance, or to the operating personnel to device methods of handling. Material handling may account for 25 to 80 per cent of all productive activity the management of an organization certainly has to plan this sizable portion of total activity and should not leave it to chance.

(ii)

System Principle: Plan a system integrating as many handling activities as possible and coordinating the full scope of operations (Receiving, storage, production, inspection, packing, warehousing, shipping and transportation)

(iii)

Material-Flow Principle: Plan an operation sequence and equipment arrangement to optimize material flow. Material handling and plant layout are interrelated.

(iv)

Simplification Principle: Reduce, combine, or eliminate unnecessary movements and or equipment. Simplification is one of the by-words of efficiency, motion economy, and many other aspects of industrial operations.

(v)

Gravity Principle: Utilise gravity to move material whenever practicable this is an obvious principle but one that is frequently overlooked.

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27

Space Utilisation Principle: Factory and warehouse space are expensive therefore wasted space is wasted money. Inherent in this principle is that square feet and cubic feet are to be given due consideration.

(vii)

Unit Size (load) Principle: The quantity size or weight of unity load or flow rate should be increased to he possible limit. In general more the load lower the cost per unit handled.

(viii)

Safety Principle: All handling activities in operation or being planned should be safe, since the object of material handling is to improve working conditions by providing safe work environment.

(ix)

Equipment Selection Principle: In selecting material handling equipment, one must consider all aspects of the material to be handled the move to be made the methods to be utilized.

(x)

Mechanisation \ Automation Principle: Use mechanized or automated handling equipment whenever necessary. Use of mechanized or automated handling devices and equipment can be of extreme value in increasing material handling efficiency.

(xi)

Standardisation Principle: Standardise methods as well as types and size of handling equipment consideration.

Standardisation does not mean that only one type or make of equipment must be used. It should be interpreted to mean fewer number of types makes, models, sizes.

(xii)

Flexibility Principle: Use methods and equipment that can perform a variety of tasks and applications. Equipment that can perform a wide range of handling tasks and applications can be utilized.

(xiii)

Dead-weight Principle: Reduce the ratio of mobile equipment dead-weight to pay load. Excess weight of mobile equipment not only costs more money, but may require additional power and be slower to operate.

(xiv)

Maintenance Principle: Plan for preventive maintenance and scheduled repair of all handling equipment. The suggestions for application of several of the previous principles have implied the importance of preventive maintenance and schedule repairs to the effectiveness of material handling activities.

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28

Control Principle: Use material handling equipment to improve production control, inventory control and order handling. Since material handling equipment is used to move material through the plant and the production processes its use can have a great effect on the control of the items being moved.

(xvi)

Capacity Principle: Make optimal use of equipment to help achieve full production capacity.

(xvii)

Performance Principle:

Determine efficiency job handling performance in terms of cost per unit handled which is the primary criteria.

MATERIAL HANDLING EQUIPMENTS: WHAT ARE THE EQUIPMENTS USED FOR HANDLING THE MATERIALS? LIST OUT THE EQUIPMENT FOR HANDLING MATERIAS. Various types of equipment available for material handling can be divided on the basis of types of service rendered into three major divisions. They are (1) LIFTING AND LOWERING DEVICES 

Block and Tackle



Winches



Hoists



Elevators

(2) TRANSPORTING OR MOVING DEVICES (HORIZONTAL MOTION) 

Hand truck



Wheeler or box truck



Narrow- gauge rail road



Car puller

(3) COMBINATION DEVICES (LIFTING AND LOWERING, TRANSPORTATION) FOR DTACKING AND PORTIONING. 

Spiral chute



Dolly



Low lift truck



Car dumper



Car conveyor



Car puller



Car truck



Air conveyor

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Roller conveyor

Lifting and lowering equipment: All handling equipment that comes under at this category has only vertical motion. Some of them are discussed below.

Block and Tackle: Block and tackle arrangement of lifting loads through a vertical distance. This is one of the oldest and simplest equipment. It is used even now by moving men and in hoisting machinery into position. It depends in general on manpower and gives only the mechanical advantage that is possible for the various rope formations. It is the most inexpensive in cost but the most wasteful of manpower.

Winch: This is used to lift loads vertically by winding the rope of cable on a drum. Here, it is possible to use manpower or other power, to get a much greater mechanical advantage than with a Block and Tackle. It is frequently used in loading heavy equipment into ships, construction equipment into buildings and in other similar jobs.

Power Hoists: A power hoist, which is often operated between fixed guide rails, for lifting things vertically. There is an infinity variety of hoists suitable for different purposes. The simplest is the chain hoist, which is operated by hand. There are also hoists operated by compressed air or by electric power.

The hoists are similar to elevators except that, a hoist does not carry the operator in it but is operated from one or two other point.

Elevator: This is differentiated from hoist by the fact that the operator rides with the load. Although, there are different types for such for such elevators, in general the only important type is the electric one.

Hydraulic elevators are now used only where it is prudent to avoid an electric spark, as in acetylene generator houses.

Transporting Devices: Under this type, those devices which allow horizontal motion are dealt.

Hand truck and Wheeler or box truck The simplest transporting devices are wheel barrows and hand trucks. These are still in use in a number of small industries all over the country. Both wheel barrows and hand trucks which are used to carry materials inside the machine shops.

All such equipment involve more manpower for a relatively small load. The chief advantage of these equipment is there very low cost, greater flexibility and easy portability from one job to another.

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Narrow- gauge rail road: In general, little use is made of such equipment because it requires a heavy investment in laying road-bed and tracks, has little flexibility and is difficult to change at a later date.

These were used in the days before the development of equipment having wheels in rubber tyres. They are still found in metal-working industries.

Combination Equipment Spiral chute: One of the simplest equipment that has both vertical and horizontal motion is a chute which may either be straight or spiral. In this, gravity is utilized to move the material. Chutes are common in railway and air line terminals for handling packages and baggage. Chutes are also used in departmental stores in a spiral from to bring the stock reserves from on the upper floors to the lower floors.

Low lift truck: It shows the lifting feature in lift trucks, it provides clearance from the floor fro the skids and permits horizontal transportation.

Belt Conveyor: Belt conveyor consists of moving endless belts and carries materials on them. This has a power driven pulley at one end which moves the belt. Belt is made of rubber fabric or leather. This conveyor is mostly used for handling large quantities of materials such as cement, fertilizer, coal, ore.

Elevating Conveyor: This is used for transporting dry granular materials in the vertical direction with the help of buckets and trays.

Roller Conveyor: A roller conveyor. It is used to transport various shapes of products such as huge boxes of products such as huge boxes or materials that extend over several rollers. This type consists of rollers supported in frames over which materials are allowed to move. They are driven by power or gravity.

Cable conveyor: Tins is moved by chain or cables in horizontal direction and is installed flush with floor or a little above it. This is used for moving barrels and heavy boxes.

Pipeline Conveyor: This is largely used for transporting dry, pulverized or granular materials, chemical powder. Send, cement, etc. It can be operated by gravity, air pressure or some mechanical means.

PURCHASING PURCHASING INTRODUCTION: The scarcity of raw materials has practically put the people in purchasing department in a very tight position. The purchasing department can be in a better position if the designer \takes a little pain to consult the purchasing personnel about the technological capabilities of the vendors. It has been observed that drawings are sent tot purchase department for components with high degree of close tolerance. But we should ensure that high degree of tolerance is really needed because close tolerances not only make procurement difficult also contribute to high price. The main outset of company’s cash goes

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in materials purchase thus purchasing people should take greater responsibilities and should analyses the existing procurement policy and should tune with the overall organizational objectives and policies.

MATERIAL HANDLING EQUIPMENTS Material Handling Conveyors: If the path for the flow of material is fixed then the provision of Conveyors at suitable levels eliminates a good deaI of lifting and lowering of :rials. Conveyors require no stopping or starting as they are continuous in :ration. In these, transportation is effected by mction between materials being ISpOrted by the belt. The advantage of conveyors is that they save labour ,st considerably, the disadvantage being occupation of considerable space.

There are several kinds of conveyors, such as: (i) Bett conveyor, (ii)Elevating conveyor, (iii) Roller conveyor, (iv) Chain cable conveYOf; (v) Pipe line conveyof, (vi) Screw conveyor.

Each type is explained in brief below: I Belt conveyor: Belt conveyor consists of moving endless belts and carries materials on them. This has a power driven pulley at one end which moves the It. Belt is made of rubber fabric or leather. This conveyor is mostly used for dling large quantities of materials such as cement, fertilizer, coal, ore, etc.

Elevating conveyor: This is used for transp01,1ing dry granular materials in e vertical direction with the help of buckets and trays.

I RoUer conveyor: Figure 32.14 shows a roller conveyor. It is used to transport !various shapes of products such as huge boxes or materials that extend over ileveral follers. This type consists of rollers supported in frames over which

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system utilising conveyors quite freely, whereas a more thorough

study might provide an even

greater Ie I improvement through minor layout revisions. The most important part of a material handling study is the e/ gathering of complete and sufficiently :01 accurate data, for no amount of :a manipulation can transform an Id inherently poor data into a useful state. n. Required changes in processes and equipment must be studied. The influence of a new system on space utilisation, s well as the compatibility of the system with the existing building structure, is important. One system may require considerable aisle space than another, or a proposal may be put into use only after a substantial reinforcement of flooring.

Material handling symbols.

It is not that a particular unfavourable factor should result in the rejection. This will measure only the time element in material handling. For finding out the cost effectiveness, we may have to find out the expenses incurred in handling It particular unit of material. Also, it is necessary to know tbe effective utilisation of equipment used in the material handling process. For finding out the effectiveness of equipment util.isation, we should try to d I know the equipment utilisation ratio. Thus, for evaluating the effectiveness . e of a material handling systEm. the following ratios should be computed: 1. Material Handling Time Ratio, 2. Material Handling Cost RaUo. 3. Material Handling Labour Ratio.

4. Material Handling Dir'ect Labour Loss Ratio, and S. Material Movement Operation Ratio) WHAT IS THE MEANING FOR PURCHASING? Purchasing is the activity responsible for getting the right materials to the right place at right time, in the right quaint at the right price.

OR The moment buyer placed an order he commits a substantial portion of the finance of the corporation which affects the working capital and cash flow portion. Thus the buyer can make or make the company’s image by his image by his excellent or poor relations with the vendors.

DESCRIBE THE IMPORTANCE OF GOOD PURCHASING SYSTEM. In any workshop or industry purchase means buying of equipment, materials, parts, tools, stores etc. required for industry. As one of the first act of manufacturing business is to purchase materials, hence

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purchasing is a primary function. Competitive sales cannot be made unless the material used for manufacturing or for resale are purchased at ultimate cost which is commensurate with that available to competitors.

The importance of the purchasing function varies with the nature and size of industry. In small factories, this function is performed by works manager but in large manufacturing concerns, where large quantities of materials are consumed, the buying function is giving to a separate department under highly competent executive designated as chief buyer or purchase manager or purchasing officer.

The cost of direct and indirect materials from a part of the prime cost of the product. Careful buying helps in reducing the cost of materials and thereby increasing profits. Hence purchasing is one of the delicate activities and the persons employed should be sincere, honest and intelligent.

FUNCTIONS OF PURCHASING DEPARTMENT: WHAT ARE THE FUNCTIONS OF PURCHASING DEPARTMENT? 1. To purchase materials on properly authorized requisitions.

2. To place orders of the requisitioned goods with right suppliers.

3. To obtain right type and quality of good at cheapest price.

4. To purchase right quantities in right time.

5. To see that deliveries of all goods are received within time.

6. To check and see that the goods received are in accordance with the orders placed in respect of quality, quantity and specification.

7. To advice the management regarding possible economics to be maintained by manufacturing an ensure availability of materials all the time.

8. To study the market conditions and enter into a rate contact with the large suppliers to ensure availability of materials all the time.

9. To study various sources of supply and decide upon the most convenient as well as alternate supplies.

10. To maintain the list of available and reliable suppliers.

11. To keep the list of articles needed in the organization up to date with their normal quantities for placing orders.

12. To prepare specifications to obtain quotations and compare these quotations and placing orders.

13. TO ensure that suppliers payments are made promptly so that better relations are maintained with the suppliers.

14. To purchase directly all small items, which do not require quotations.

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15. To consider first the interest of the enterprise.

16. To assist purchasing agents, cooperate and guide them, and raise the purchasing standards.

WHAT ARE THE DUTIES OF PURCHASE MANAGER? The most important duties of Purchase Manager are: 

To maintain the standard of quality of product by selecting right quality of materials during of materials during purchases.



To organize and direct the purchasing department for efficient working.



To represent his concern with other concerns during purchasing contacts.



He should maintain the reputation of the concern, through integrity and fair dealings with others while negotiating.



Shops should not await for materials.



To make a final check on all the requisitions received from different shops in the interest of economy, as regards quality, quantity and specifications.



To help in the preparation of purchasing budget.



To spent money on purchases very carefully and wisely.



To suggest if the materials can be economically produced in the concern instead of purchasing and vice-versa.

WHAT ARE THE OBJECTIVES OF PURCHASING? The management expect the purchase department to achieve the five rights in the acquisition of materials.

1. Right Quality: Cost and quantity are critical dimensions. The inter-action between two is very complex. A right quantity is not necessarily a best quality. To a large degree manufacturers determine the quality of goods by the desired quality of product to make. The considerations are basic materials, workmanship, grades, size, designs, colures, patterns, durability. For the purpose of purchasing quality of raw materials etc…., need to be established.

2. Right Quantity: Quantity to be purchased varies with the production strategy and planning. For running operations the value of production in advance, and in such cases it is desirable to enter into annual or biannual contracts specifying periodical supplier at regular intervals. This leaves the burden of ensuring the uninterrupted supply with the suppler and lot of energy of purchase department in saved.

In case of carried strategy of manufacture, the techniques of E.O.Q is followed to save the producer from the damager of stock outs as well as carrying cost of surplus inventory.

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3. Right Supplier / Source: The source of supplier is determined normally by calling quotations and the lowest bidder is selected provided he has quoted as per the requirement of producer in terms of quality, quantity and period of delivery.

It is always prudent to select a manufacturer in case patent standard products even if it means a little extra transportation. Secondly the past records, financial capacity, technical ability, and other resources play important role in the selection of supplier.

4. Right Time: The ideal time of purchase period would be the minimum time for which the goods remain unconsumed. This could be achieved if the stockiest of manufacturer of raw materials supplies the day-to-day requirements in regular instilments. This would save the storage. But the geographical and market conditions do not permit and it is where the ordering system comes into existence. The timing policies will depend upon fluctuating prices as well as problems arising out of monopolistic trade and sellers maturity.

5. Right Price: The right price is the worth in terms of quality, time and adequacy of supply of an item obtained. It is no doubt easy and safe to go for standard products at a higher price but then one has to keep in mind the utility of item in the ultimate worth of product.

WHAT ARE THE TYPES OF SPECIAL PURCHASING SYSTEM? EXPLAIN THE METHODS OF PURCHASING. Purchasing strictly by requirement.

This is also known as hand to mouth purchasing. When a job is taken in hand only then the required quantity of material for that particular job is purchased.

Therefore, it is suitable for the concerns, having less working capital.

Advantages: 

The market fluctuations will not affect as costing is based on the market rates.



Small storage space will be required.

Disadvantages: 

Distribution cost will be higher.



Sudden demands cannot to met.



Bargaining cannot be had due to the small amounts involved.

Purchasing for a specified period.

Generally, the standard items are regularly purchased in quantities that will be sufficient for a particular future period.

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Advantages: 

Short duration market fluctuations will not effect.



The involved working capital will be less.



Less storage space is needed.



Cost analysis is easier.

Market purchasing.

The reasonable requirements based on production planning are calculated. Market trends are analyzed and then purchasing is done. Generally , raw materials used in of manufacturing are purchased by this methods.

Advantages: As purchasing is done in lot, distribution cost is less.

Disadvantages: 

If the market topples, there is big loss.



Large storage space is required.



Large capital is required.

Central Purchasing.

Large concerns or certain big government concerns may have section wise stores at different places and each section may have a separate store. In such a case, there arises a problem as to whether each store should make its own purchases or whether purchases should be made by the central stores that would go on supplying materials to section wise stores.

If the local sectional store is allowed to make its own purchases there would be no delay and the shops can get materials very soon after they have sent their requisitions, but local purchases may sometimes lead to malpractice. The purchase officer may have some kind of understanding with the local dealers and this may result in purchases at higher rates.

Advantages: 

Volume discounts are made possible by consolidating all company orders for the same and similar materials.



Duplication of effort and haphazard purchasing practices are minimized.



Services of purchase specialists can be obtained.



Transportation savings can be realized by the consolidation of orders and delivery schedules.



More effective inventory control is possible.



Fewer order are processed for the same quantity of goods purchased, thus reducing purchasing, receiving, inspection, and record keeping expenses.



Better management control.

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Contract Purchasing.

Contracts are giving to suppliers for large amount of future requirements, for a certain period (Say 2-3 Years), subject to review and cancellation with an appropriate period of notice.

In addition, contract purchasing can be classified in the following two groups: Rate Contract.

Under this system rates are fixed for certain items of stock or component parts of product for certain period. In this system no tenders are invited but rate are fixed by analyzing the market trends by the purchaser. Any firm whosoever is interested in supplying the material at these fixed rates for that duration can make the supply.

Product like fans, paints, cables can be purchased through this method. This is simple and convenient method. In this method purchaser is not bound to purchase from one supplier but they can receive the materials from any body.

Running Contract.

In this, the rate as well as quantity for certain period by buyer and supplier is decided. As soon as the desired quantity is supplied by the supplier, the contract is automatically terminated.

Main Advantages: 

It avoids necessity for keeping stocks.



It gives a measure of safety to suppliers.



The purchase is not affected by market fluctuations and the supply is ensured.



As fewer purchase orders are required to be placed, it therefore, reduces to a great extent clerical work, accounting and receiving work.



The purchase department is relieved from the routine work and it can pay more attention on the major works.

Blanket Orders.

Blanket Order refer to the purchase of variety of items from a single source. Usually. A middleman.

Important characteristics of blanket orders are: 

A blanket order specifies the category of items covered by the order.



The items covered by the order generally have low unit value.



More than one middleman may be selected to avoid hold-ups in case of nonavailability of an item with one.

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“Market-price” is generally specified in the order which may include a specified method of determining price variations.

Tender Purchasing: Government department and public sector undertaking in India follow this method of buying. Private sector organizations too adopt tender buying of the value of the purchase exceeds the prescribed limits, say, Rs. 25,000 or Rs. 50,000 fixed by a management as a policy decision. Salient characteristics of the method are: 

The buying department establishes the bidders list and invites them to submit bids. A tender or quotation is a written offer from a supplier to tender a specified service or supply materials of the specified quality, at the specified price and within the specified time.



On receipt, bids are evaluated by comparison and the right supplier is selected.

Lowest price is the criterion used except when a supplier quoting the lowest price has questionable delivery time, quality reliability or financial stability.

Seasonal Purchasing: Seasonal buying refers to “buying of the annual requirement of an item during its season”. This method is used for items available in particular season only. Such items may be required for food processing and other similar industries. 

Certain items like oranges, sugarcane, apples, mango, etc., may be available during a particular season only and hence they need to be purchased and stocked in sufficient quantities till the arrival of next season.



The items covered may be small in size but they may be required in large quantities.



Market price is the lowest during the season, therefore, the items can be purchased at the cheapest rates;



Usually the manufacturers are contacted during the season and direct purchases are made.

Group Purchasing: Group purchasing refers to buying of items of trivial value in a single purchase order, Important characteristics of group purchasing are: 

Items required in small quantities are classified into few basic groups, the basic groups being dependent on the source of purchase. For example, drill and taps are placed in one group, plug gauges in another group, screws in yet another group



Minimum and maximum levels are fixed for each item within each classified groups.



One purchase order- one for each group- covering a number of varied item within its group is placed with the supplier.



Quantity, equal to the difference between the “maximum level” and “Stock on hand” is procured for each item.

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WHAT IS KARDEX DYSTEM? This system is widely used by the purchase officers and following information can be obtained from the system: (a) What should be purchased? (b) From whom purchase? (c) At what rate? (d) When the material can be delivered? (e) Has it been delivered? (f) Whether payment made?

For each item of purchase, a separate card is maintained to keep the record form purchase till receipt of material. When requisitioned sends indent, it is entered in the card along with the details or enquiry and quotations and last date of receipt.

When the order is placed, then details of the purchase order are recorded in another card, such as 

Order Number



Date of Order



Quality



Rate Accepted



Delivery Period



The name of the supplier

This above information is very useful, if a repeat order is required to be placed.

EXPLAIN THE PRINCIPLES OF PURCHASE. WHAT ARE THE MAIN PURCHAISNG PRINCIPLES? Right time: This parameter is most critical one due to the consequences of stock out. To determine the right time, information about all the elements of total lead time should be available internal administrative lead time of converting indent into an order, manufacturing and transportation time, inspection lead time.

Right Source: Following are the main sources for the procurement of items: 

Authorized dealers of original manufacturers.



Local dealers.



By getting them manufactured.

While selecting a source of supply; timely supply, reliability, price and service facilities offered should be considered.

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Right Price: Lowest acceptable price consistent with quality, timely supply etc. Should be considered.

This is lowest ultimate cost and not the lowest initial cost.

Right Quality: While inviting the tenders or placing the enquiries, quality specifications mentioning tolerance etc. Should be clearly spelled out. Right quality means suitability of an item for its intended purpose.

Right Quantity: The problem of determining the right quantity is interlinked with the right time. The quantity will be different for each category of manufacturing items or spares such as maintenance, overhaul, insurance of storable spares. Broad guidelines are given by the concept of Economic Order Quantity and Economic Batch Size as described in the chapter on “Inventory Control�.

Right Place of Delivery\ Transportation: In most of the cases, items are supplied directly to the consuming units, which may be located at far distant placed from the head-quarter. The palace of delivery should be clearly mentioned in the supply order.

Right Procedure: Right procedure to be adopted has to be formally developed for the pre-purchase, ordering, and post purchase system. Pre-purchase system means initiating the purchase through indents requirement, planning, selection of suppliers, obtaining quotations and evaluating them.

With purchase order generally an acknowledgement copy is also sent to the supplier, who then return it as a written acceptance of supply order and to abide by the terms and conditions mentioned in the order.

Post purchase system include follow up with the suppliers.

Right Contract: Purchase order is a legal document that binds selling company with the buying company regarding various terms and conditions such as insurance, sales tax, customs, excise, breach of contract, settlement of dispute, F.O.B., F.I.R., C.I.F., etc. Should be clearly mentioned.

VENDOR DEVELOPMENT AND RATING Introduction Most large manufacturing organizations depend on small and medium industries for their requirements of components, sub- assemblies and special items. Small unit need guidance in the form of know-how and assured orders for commercial viability. In fact, they have to be nursed by the bigger industries in the initial stages. This interdependence is fully recognized and this forms the basis of a sound and harmonious vendor-vendee relationship.

Any organization should realize that the development of vendors is a planned effort and does not happen by itself. Vendors are considered an important link of a factory and their quality control activities are extension of the factory quality assurance effort. Purchase and quality control are jointly responsible in implementing the vendor development system. They make full use of expertise of production engineering and research and development departments in vendor development.

Material Hanallng.

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According to American Material Handling Society, material handling amounts for 15 to 25% of total cost of product. Material handling is the art and science involving the movement, handling and storage of materials during different stages of manufacturing.

Out of the total time-spent for manufacturing a product, 20% of the time is utilised for actual processing to them while the remaining 80% is spent in moving from one place to another, w~iting for the processing or storage (temporary).

Definition of Material Handling According to the International Material Management Society "Material handling is the art and science involving the movements, packaging and storing of substances in any form".

Raymond A. Kulwice defines "materials handling is a system or combination of methods, facilities, labour and equipment for moving, packaging and storing the materials to meet specific objectives".

Material Handling Activities and Functions In a manufacturing organization, the handling activities include 1. Transportation and handling at suppliers' end.

2. Material handling at manufacturing plant.

3. Transportation and handling from warehouse to customer (physical distribution).

But we are more concerned in this chapter with material handling the plant.

The material handling activity in the plant begins with the unloading 0f the material after receipt from suppliers, and extends throughout the process from raw material stage till it is manufactured and stored in the warehouse be despatched to the customer.

Relation between Plant Layout and Material Handling - There is a close relationship between plant layout and material handling. A good layout ensures minimum material handling and eliminates rehandling.

Material movement does not add any value to the product so, material handling should be kept minimum. This is possible only through the systematic plant layout. Thus, a good layout minimises handling.

The productive time of workers will be wasted unnecessarily, if they are required to travel long distance to fetch materials, tools, etc. Thus, a good layout ensures minimum travel for workmen and enhances the production time.

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Space is an important criteria. Plant layout integrates all the movements of men, material through a well designed layout with material handling system. Good plant layout helps in building an efficient material handling system. It helps to keep material handling faster and economical. A good layout reduces the material backtracking, unnecessary movement of workmen. Thus, a good layout always ensure minimum material handling.

Objectives of Material Handling (i) Selection of machines/equipment and plant layout to minimise material handling requirements. (ii) Selection of appropriate, efficient and safe material handling equipment. (iii) Prevention of damage to materials (iv) Safety in material handling through improvement in working conditions. (v) Increase the productive capacity of the production facilities and enhancingproductivity. ) We can minimise the cost of material handling by: (a) minimising movements of semi-finished goods during production (b) planning the movement of optimum number of pieces in one Unit ( c) minimising the distance moved. (d) increasing the speed of material handling operations through mechanisation. (e) eliminating / minimising backtracking and duplicate handling. (t) utilising gravity for handling. (g) standardising materials and methods. (h) training the operators.

Importance of Material Handling Material handling accounts for approximately 15 to 25 per cent of the cost of production. Though material handling operations add no value to ~end product, the operations may help in reducing the cost of production sin~ : material handling operation offers enough scope for minimisation of handling costs provided materials are moved quickly and safely. Poor material handling operations result in delay. Delay reduces speed which obviously leads to idling.' of materials and equipment adding to carrying costs and slowing down ~ production. The importance of material handling lies in fact that the cost and the ti1rt of material handling can be reduced to a greater extent by adopting a sow.: system of material handling procedures which result in the following:

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(i) Increased productivity of labour. (ii) Increased production capacity of the plant. (iii) Full utilisation of plant capacity. (iv) Savings in man-hours. (v) Reduction in inventory. (vi) Clean shop-floors enabling smooth and efficient functioning of factory (vii) Less utilisation of available space. (viii) Less wastage, spoilage and damage. (ix) Minimum supervision due to minimisation of interruption in production schedule. (x) Reduction in fatigue of workers.

Economic utilisation of materials brings prosperity to the organisation. This fact has now been realised and organisations have become very conscious ~ this factor.

Symptoms of Bad Material Handling 1. Frequent interruption in production due to delay in handling and supply of materials to the point of use.

2. Skilled labour performing duties like storing, movement and handling of materials.

3. Damages to materials in view of frequent handling.

4. Accumulation of work-in-process and materials in different locations.

5. Reworking and rejections due to handling defects.

6. Crowded floor space with scrap and materials strewn all round.

7. Congestion at receipt, production and inspection areas.

8. Awaiting long for material handling equipment to pick up and deliver materials.

Factors Influencing the Selection of Material Handling System Material handling system mainly depends on following primary factors:

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(ij Nature of Operations: By this we mean whether material flow is temporary or permanent, continuous or intermittent, or even vertical or horizontal. For intermittent industries with process layout, prime requirement of material handling is the volume of load. The equipment can be mobile trucks, tractors, trains, cranes, etc. For continuous industries using line or product layout, some direct means of transportation between various operations are required. (ii) Layout of the Plant: Layout and material handling problems are not separable so they should always be considered jointly. One important consideration in planning the details of a labour is to provide easy access' to all operations by providing an efficient material handling system. (iii) Building Construction: Once a btVlding has been erected, it is not possible, at a reasonable cost, to make too many changes in the construction merely for the purpose of in stalling Material handling equipment. The equipment used for material handling should be such that no undue loads or other strains be placed on the structural members of the building.

Other Factors that are taken in to account while selecting material handling equipment are listed below: (iv) Material to be handled: (a) Size and shape of the material, (b) Quantity and weight of the materjal, (c) Material characteristics and (d) Susceptibility 10 damage during handling.

(v) Distance over which the material is to be moved: (a) Fixed distance, (b) Long distance and (c) Work station (vi) Installation and operating costs: (a) Initial investment, (b) Operating and maintenance costs.

(vii) Engmeering factors: (a) Door and ceiling dimensions, (b) Floor conditions and structural and (c) Traffic safety strength.

(viii) Equipment reliability: (a) Use of standard components, (b) Service facilities and (c) Supplier reputation (xi) Standardisation Principle: Standardise methods as well as types and sizes of handling equipment consideration. Standardisation does not mean that only one type or make of equipment must be used. It should be interpreted to mean fewer number of types makes, models, sizes, etc. (xiij Flexibility Principle: Use methods and equipment that can perform a variety of tasks and applications.

Equipment that can perform a wide range of handling tasks and which has a variety of uses and applications can be utilised.

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(xiiij Dead-Weight Principle: Reduce the ratio of mobile equipment deadweight to pay load. Excess weight of mobile equipment not only costs more money, but may require additional power and be slower to operate. It is, therefore, unwise to invest in a heavier-weight piece of equipment than is required by the task to be performed. (xiv) Motion Principle: Equipment designed to transport materials should be kept in motion. This principle implies that mobile equipment should be' kept moving, i.e., performing the function for which it was designed. It should not be tied up for unduly long periods of time for loading and unloading. (xv) Idle- TIme Principle: Reduce idle or unproductive time on both handling equipment and manpower.

Idle time is undesirable in any industrial or commercial activity, and especially so in the use of material handling equipment or manpower. Therefore, every effort should be made to plan methods and schedule equipment to permit full use of both equipment and manpower. (xvij Maintenance Principle: Plan for preventive maintenance and scheduled repair of all handling equipment. The suggestions for application of several of the previous principles have implied the importance of preventive maintenance and scheduled repairs to the effectiveness of material handling activities. (xvii) Obsolescence Principle: Replace obsolete handling methods and equipment with latest methods and equipment. As with any other type of physical equipment, material handling devices are subject to obsolescence, as well as depreciation. New equipment may be faster, more efficient, etc., and may result in a lower cost per unit handled even though it does require a capital investment. (xviii) Control Principle: Use material handling equipment to improve production control, inventory control and order handling. Since material handling equipment is used to move material through the plant and the production processes, its use can have a great effect on the control of the items being moved. (xix) Capacity Principle: Make optimal use of handling equipment to help achieve full production capacity. (xx) Performance Principle: Determine efficiency of handling performance terms of cost per unit handled which is to be primary Criteria (xi) Standardisation Principle: Standardise methods as well as types and sizes of handling equipment consideration. Standardisation does not mean that only one type or make of equipment must be used. It should be interpreted to mean fewer number of types makes, models, sizes, etc. (xii) Flexibility Principle: Use methods and equipment that can perform a variety of tasks and applications. Equipment that can perform a wide range of handling tasks and which has a variety of uses

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and applications can be utilised. (xiii) Dead-Weight Principle: Reduce the ratio of mobile equipment deadweight to pay load. Excess weight of mobile equipment not only costs more money, but may require additional power and be slower to operate. It is, therefore, unwise to invest in a heavier-weight piece of equipment than is required by the task to be performed. (xiv) Motion Principle: Equipment designed to transport materials should be kept in motion. This principle implies that mobile equipment should be' kept moving, i.e., performing the function for which it was designed. It should not be tied up for unduly long periods of time for loading and unloading. (xv) ldletime Principle: Reduce idle or unproductive time on both handling equipment and manpower.

Idle time is undesirable in any industrial or commercial activity, and especially so in the use of materia I handling equipment or manpower. Therefore, every effort should be made to plan methods and schedule equipment to permit fun use of both equipment and manpower. (xvi) Maintenance Principle: Plan for preventive maintenance and scheduled repair of all handling equipment. The suggestions for application of several of the previous principles have implied the importance of preventive maintenance and scheduled repairs to the effectiveness of material handling activities. (.'(Vii) Obsolescence Principle: Replace obsolete handling methods and equipment with latest methods and equipment. As with any other type of physical equipment, material handling devices are select to obsolescence, as well as depreciation. New equipment may be faster, more efficient, etc., and may result in a lower cost per unit handled even though it does require a capital investment. (xviii) Control Principle: Use material handling equipment to improve production control, inventory control and order handling. Since material handling equipment is used to move mat(:rial through the plant and the production processes, its use can have a great effect on the control of the items being moved. (xix) Capacity Principle: Make optimal use of handling equipment to help achieve full production capacity.

Material Handling Costs The cost of material handling includes the cost of owning and maintaining equipment and the cost of operating the system. Every effort should be made to reduce material handling costs, as they do not add any value to a product. How to reduce handling costs? There are three fundamental ways of minimisingthe costs: a. Eliminating the handling itself whenever and wherever possible. b. Mechanising the movement by conveyors and power driven trucks. c. Making the handling operations more efficient.

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The primary requisite for any action to be taken towards minimising handling costs is to have a record maintained for them.

MATERIAL HANDLING EQUIPMENT Various types of equipment available for material handling can be divided on the basis of types of services rendered, into three major divisions. They are: 1. Lifting and lowering devices.

2. Transporting or moving devices (horizontal motion).

3. Combination devices (lifting & lowering and transportation) for stacking and portioning.

1. Lifting and lowering equipment. It includes - . (a) Block and tackle

(b) Winches

(c) Hoists

(d) Elevators

(e) Pillar crane

( e) Overhead crane

2. Transporting equipment. It includes (a) Hand truck (c) Narrow-gauge rail road 3. Combination equipment. It includes (a) Spiral chute (c) Dolly (e) Low lift truck (g) Car dumper (i) Power-operated tail board type (k) Wheel gravity conveyor (m) Pneumatic tube (0) Screw conveyor (q) Portable conveyor

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Some of the important material handling equipment that are commonly used in industries have been explained below.

1. Lifting and lowering equipment: All handling equipment that comes under at this category has only vertical motion. Some of them are discussed below) Material Handling Block and Tackle: flgure 32.2 shows a Block and Tackle arrangement of lifting loads through a vertical distance. This is one of the oldest and simplest equipment. It is used even now by moving men and in hoisting machinery into position. It depends iri general on manpower and gives only Ihe mechanical advantage that is possible for the various rope formations. It ~ the most inexpensive in cost but the most wasteful of manpower. shows the winch. This is Used to lift loads vertically by winding the rope or cable on a drum. Here, it is It is possible to use manpower or other power, to get a much greater mechanical advantage than with a Block and Tackle. It is fiequently used in loading heavy equipment into ships, construction equipment into buildings ) and in other similar jobs \, between fIxed guide rails, for lifting things vertically.

There is an infInite variety of hoists suitable for different purposes. The simplest is the chain hoist, which is operated by hand. There are also hoists operated by compressed air or by electric power. The hoists are similar to elevators except that, a hoist does not carry the operator in it but is operated from one or two other points Hydraulic Elevator. This is differentiated from hoist by the fact that the operator rides with the load.

Although, there are different types of drives for such elevators, in general the only important type is the electric one. Hydraulic elevators are used Overhead crane: Fi re 32.6 shows an overhead travelling crane. Today all the big workshops such as foundry, power house, chemical plants, huge repairing shops, etc., have these cranes.

These cranes have the advantage of providing large service area and freedom from obstruction on the floor. In these all the movements are controlled by the driver seated in this cabin.

2. Transporting Devices: Under this type, those devices which allow horizontal motion are dealt. (a) The simplest transporting devices are wheel barrows and hand trucks. These are still in use in a number of small industries all over the country. Figures given below show, both wheel barrows and hand trucks which are used to carry materials inside the machine Shop.:) All such equipment involve more manpower for a relatively small load The chief advantage of these equipment is there very low cost, greater flexibility~ and easy portability from one job to mother.

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(b) Narrow-gauge Rail road: In general, little use is made of such equipment because it requires a heavy investment in laying road-bed and tracks, has little flexibility and is difficult to change at a eater date. These were used in the day before the development of equipment having wheels in rubber tyres.

They a still found in metal-working industries (blast furnaces, copper refineries and steel-rolling operations). In mining activities, it is cheaper to lay tracks than~ pave the entire area.

Tractors and Trailers: These are one of the most common methods of, . Horizontal transportation. Greater flexibility is achieved as tractors can be use to haul a variety of different types of trailers. Trailers can be lift loaded and picked up by different tractors. This is one of the most important methods ~ handling materials inside a plant and from one building to another." .

Railway Equipment: Where plants are located at a considerable distance li6-the units handled are extremely large, such as in some steel-rolling, the use of railway equipment. is advantageous. Aerial Tramways: This is also a horizontal transportation system in which 1~load carrying vehicle is supported from the top, usually by means of a cable 1M its equivalent.

Skid$: These are shown in figure 32.10 and they are used with lift trucks. goods may be loaded into skids and then picked up with lift trucks. The skid wiII be loaded as a unit and transferred from position to position without sequent loading and unloading. Both skids and pallets raise the l~ off the supporting surface and allow easy insertion of the conveying me Some materials are stored on dollies figure 32.10 (c). This can be moved on meters. Other materials are stored on skids. The most common skid, which can be picked up in either direction, consists of a wooden platform and four steel legs.

Pipelines: Pipelines and pumps are also used for horizontal transportation of commodities. . Most obvious among these is oil, which is pumped at great distance through pipelines. Natural gas is-also carried through pipelines. Water is similarly transported.

Combination Equipment (a)

Chute: One of the simplest equipment that has both vertical and horizontal motion is a chute which may either be straight or spiral. In this, gravity is utilised to move the material. Ch1,1tes are common in railway and air line terminals for handling packages and baggage. Chutes are also used in departmental stores in a spiral form to bring the :.tock reserves from on the upper floors to the lower floors. Lift Truck: Figure 32.11 shows the lifting feature in lift trucks, it provides 'clearance from the floor for the skids and permits horizontal transportation. ma.Crane Truck: Small crane trucks as shown in figure 32.12 operate on the belt., same principle as lift trucks.

These are used for materials that cannot be put on handling. skids. This moves quickly over smooth, even and hard ground. In these cranes ~ solid rubber tyres are US . The cranes are of

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rotary type, so that loads can be the lifted from any position.

Production and Materials Management Cable conveyor: This is moved by chains or cables in horizontal direction and is installed flush with floor or a little above it. This is used for movingbarrels and heavy boxes.

Pipeline conveyor: This is largely used for transporting dry, pulverize or granular materials, chemical powder, sand, cement, etc. It can be operate~ by gravity, air pressure or some mechanical means.

Screw conveyor: This tyPeis used for transmitting, materials in the past or powder form with the application of rotating screw)

MATERIAL HANDLING ANALYSIS When one liewith a material handling problem for a number of years, h~ she becomes so accustomed to the existing situations that problems are not recognized as such. The recognition of a material handling problem constitutes! major step towards its solution. Occasionally, one finds that an expert in the field can recognize material handling problems upon a somewhat cursory observation, The systems which are noticeable to such experts include production delay, backtracking, considerable manual lifting, too much handling at work stations and excessive damage in transit, to name a few.

One can fmd that the same methodical and detailed approach is used here as is used in studying methods and plant layout projects. Even those who might recognise a material handling problem without making a single chart or diagram find such tools to be very helpful when a project is attacked seriously.

Method handling, and layout work are so interrelated that require a great deal 01 coordination between functional specialists in the three areas, and the tools an~ techniques used in handling studies are generally the same as those discussed in previous chapters on methods and layout. However, the analyst may find the symbols shown below helpful in his work.

Material Handling Symbols A symbols is a significant indication, mark, character, or group of character which may consist of figures, letters, or signs chosen to typify or represent an ideal or item. A system of coloured symbols facilitates distinction and easy identification, However, the analyst may find the following material handling symbols helpful in his/her work.

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