Importance of MM
Operational efficiency in an organization is heavily impacted by their material management. If you want your industry to be as efficient as possible in production operations, then mastering material management should be a big part of your plan.
A proper and efficient material management system will also contribute to customer satisfaction and the overall success of the company. In many ways, it is the backbone of the manufacturing process.
The main reasons behind the importance of MM system to the manufacturers are: –
1. Increase inventory accuracy:
A poorly managed inventory has many severe consequences in manufacturing and can result in unneeded expenses. Misplaced, mislabelled or lost materials in the inventory, impact production and can create waste and adds cost. Materials management starts with good inventory management practices and accurate tracking of all the materials in a company’s inventory.
2. Real-Time information
MM system provides real-time information about the operational data for planning, scheduling, and control and helps in decision-making at the operation level.
3. Lean Inventory
Industries need to reduce wastage of materials and for that, they need to keep stock in just the right amount of the inventory. For this to succeed they need control over the supply chain which is not possible without a robust and reliable MM system in place. Industries can use MM system to apply JIT into their inventory which will reduce a significant amount of wastage in inventory and hence result in cutting down expenses.
4. Quality Control
Material management system helps in ensuring that the materials that will be used for production have the correct value. This helps to keep production running smoothly and improves overall finished goods quality.
5. Save Other Costs
Having a reliable MM system can help you in saving many other costs such as:
• Freight cost- When suppliers know what is needed and when accounting lead times becomes easy hence reducing overnight and expedited deliveries cost.
• Inventory carrying cost – It is the total cost of holding inventory. Real-time information and supply chain control by MM system can ensure this cost to be minimum.
• Working capital – Working capital can be managed well by Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials and minimizes reordering costs and hence increases cash flow. This is not possible without a robust and reliable MM system
There are a lot of other factors that show the importance of MM system and why every industry should have one. A robust and reliable MM helps in contributing to the overall growth of the industry and also cuts a lot of costs.