3. Materials Management ? Introduction

The mechanization of the materials management function must contribute to the overall goal of optimization of profits. A computerized system contributes to the profitability of the company by saving more than it costs to operate. Design and implementation of the sys- tem must respond to the needs of users, the operating environment of the property, and must support the objectives of materials management. Three basic functions interact within the scope of materials management. They are inventory control, purchasing, and warehousing which have the following objectives: 1) Inventory control-to request materials in a timely manner and in quantities that provide the best level of support to users at the lowest cost. 2) Purchasing-to purchase requested materials and services at the required time and at the lowest cost. 3) Warehousing-to efficiently receive, store, and issue materials and to prepare accurate transaction documents for the activities. The development of the mechanized materials management system will require a plan and objective analysis by management and system users of system requirements. A typical plan would include: 1) System Design Objectives-the development of objectives that support mechanization of the materials management function. 2) System Characteristics and Concepts- the development of key system concepts and characteristics, which identify the needs of materials management. 3) System Inventory Item Classification- development and assignment of inventory category codes to inventory items. 4) System Order Decision Rules-the development of decision rules and forecasting techniques to minimize the inventory investment and to provide acceptable support levels. 5) System Report Structure-the development of a report structure to support the goals and objectives of materials management. 6) System Report Design-the development and design of reports for effective utilization of the mechanized system.