Materials management is about the
functional integration of purchase, storage, and issues that involves planning
and control of the material needs of an enterprise. Since all the three activities
are independent, yet interdependent, they need to be harmonized for achieving
overall functional efficiency. But the hitch lays in the halo of the purchase
activity entailing glamorous prominence that the other two lack. This aberration
is attributable to the functional characteristics of purchasing as well as to
the positional prerogative the department enjoys in an organization.
Functionally, as the purchase
activity involves interaction with willing vendors, the buyers come to occupy
the centre stage of the materials management arena. Besides, the cerebral scope
the purchase activity entails, which besides providing buyers the opportunity
for the flourish of thought and expression in file-noting and letter writing also
affords them an ego satisfaction the circulation of their signature in the same
entails. Moreover, the purchase function being the nerve center of the materials
activity, it provides the up-to-date overview of every aspect of the material
position to the personnel manning it, thereby making it the most sought after
by every other department. This apart, the working atmosphere of the purchase
office, manned as such by relatively better qualified personnel, acquires an
amount of sophistication, which imparts a sense of élan to the department.
But the division of work, as it
exists in most organizations, merely confines the stores function to the
receipt, accountal, and issue of materials, thereby making it lacking in glamour,
a poor cousin of the exalted purchasing function. While in some larger
organizations, the distribution, an allied function, too is brought under the
purview of stores management, yet that fails to bring in any ego addition to
the store-wallas. However, though co-related
to the stores activities, the inventory planning and control, rarely, if ever,
is integrated with the stores for the latter is either looked after by an
independent entity directly reporting to the top management, generally through
the production department, or is loosely associated with the purchase
department.
However, the materials management
relay team comprises of the inventory planning, purchasing, stores, and
distribution personnel with the baton being the materials requisition. No
gainsaying that every member of a relay team is as important as the rest for
winning the race for the strength of the team is only equal to the weakness of
its individual performers, and so are the functional efficiency quotients of
various materials management aspects. Thus, it is imperative that all the four
functions of the material management setup as cited above have to be rationally
organized so as to achieve the desired overall efficiency to help serve the
organization to its full potential.
It must be appreciated that the materials
management concept is among the youngest in the managerial arena, and generally
speaking, it has yet to acquire its optimal shape. Even in those organizations where
the concept is put into practice, it is mostly a case of bringing the purchase
and stores functions under the materials management umbrella, leaving the
inventory planning and distribution outside its gamut. This is attributable, on
the one hand to the lack of managers capable of handling all the four functions
together and on the other to the reluctance of the top managements to take a
bold, yet rational, step in reorganizing the related functions of the materials
management under one department.
Be that as it may, in the present
setup, functional convenience demands that the materials head has to operate
from the organization’s administrative quarters. Needless to say, the purchase
office too, for operational efficiency and customer convenience, is essentially
positioned under his administrative wings. However, stores, for optimal serviceability,
have to be invariably setup nearer to the production and servicing sections of
the unit, generally away from the purchase office. This practical impediment of
the stores layout distances it from the materials management hub that centers around
the materials head. By the same token, the physical proximity of the purchase
department to the materials head, besides its functional closeness to him,
brings in its wake, a sort of emotional nearness as well. All these combine to
make the purchasing activity the blue blood affair of the truly while-collared.
What with the systems and procedures
having been laid out for the receipt, accountal and issues, an element of
routine inevitably crops up in the stores function that is in contrast to the
freshness of approach and the challenge of uncertainty associated with the
purchasing work. And that makes it worse for the personnel manning the
predominantly clerical nature of the stores function. Moreover, the availability
or non-availability of a given material in which the stores has no role to play
robs the stores job the sense of participation in inventory management. Even
the routine documentation, however well designed it may be, tends the stores
job to be monotonous, whereas the very nature of work lends variety to the
purchasing process. Besides, as the stores personnel have to deal with materials
procured by the purchase department in whose working they have no say, it, so
to say, is akin to babysitting for someone else’s child.
The retention, even now, of the
traditional name for this function - stores - at a time when functionally
appropriate and trendy nomenclature is being adopted for various other organizational
activities, in a way illustrates the general nature of neglect of this function.
A traditional buyer has come to be regarded as an exalted purchase officer, a
salesman is respectfully referred to as marketing executive, a factory hand
assumes the designation of an operator of some sort, but a storekeeper is still
a storekeeper. And this, in spite of the fact than an appropriate word – inventory
- which broadly describes stores activity is available. All these factors combine
to make the stores function the less attractive of the materials management activities,
which tend to discourage the talented to opt for a career in it.
It is the aim of this piece to propagate
the concept of an inventory department as a means of enlarged stores function
so as to make it more challenging and rewarding for it to assume greater
importance. Since the ego value of designations on the psyche of the
individuals in an organization cannot be ignored, we shall begin by suitably re-designating
various posts of the department that is after rechristening Stores as Inventory Centre. Accordingly, we shall
have Inventory Manager for Stores Manager, Inventory Officer for Stores Officer,
Inventory Assistant for Store Keeper, with of course, the prefixes of junior,
senior etc., as per the required rungs in the departmental ladder.
That is not all as that amounts only to
cosmetics. The inventory department, headed by inventory manager, under the
administrative control of the materials head, should be tasked with inventory
control in conjunction with the operational heads. Needless to say, as this
enables the inventory to share the materials management table with the purchase
manager, such a functional reorganization of the materials management would
accord enhanced importance to the former. It must, however, be clarified that
this is not meant to belittle the importance of the purchase function in any
way, but the idea is to enlarge the stores function in its scope, content and importance.
Understandably the nucleus of the inventory
department continues to be the stores, nay inventory centre, where the vital material
functions of clearance receipt, inspection, accountal and issue are performed. But
in order to have a coordinated control of inventory, the inventory planning and
control function needs to be integrated with the inventory centre, where the
basic material data is generated. Besides, giving a go by to the duplication of
inventory effort in multiple departments, this measure gives an element of
management aura to the inventory department, as increasingly the inventory is
being monitored electronically.
Likewise, the distribution network
including sub-inventory centres should be brought under inventory department
for effective control and equitable utilization of the inventory. However, in
organizations where multipoint material needs exist, requiring sub-inventory
centres, attaching the same to the concerned departments leads to the loss of
control on the integrated flow of available inventory. This can only be avoided by bringing the sub-centres
under the control of the integrated Inventory department with the necessary
logistics for redistribution of materials whenever needed.
In order to remove the feeling in the
inventory personnel of having no say in the selection of vendors, and to
involve them in this vital aspect of the purchasing activity, vendor analysis
should be brought under the purview of the Inventory department. Vendor
analysis, as we know, is the scientific method of evaluating the performance of
the company’s suppliers on certain parameters that are vital in judging the
overall economics of a supply relationship with them. In fact, the inventory
centre is well placed to carry out such an exercise as most of the required
data inputs for the analysis emanate from there itself. As the suppliers list
is prepared based on the vendor analysis, it thus imparts a sense of
participation in the purchasing activity in the inventory personnel, and helps
in removing the feeling of ‘no say’ in
the selection of vendors.
As was already discussed, there is a
necessity not only to make the inventory department more wide based internally
but also to accord it external exposure in some measure so as to reduce the monotony
and lend variety to its functioning. Towards this end, it is desirable and
indeed logical to bring in the activities connected with the follow up and
expediting of the purchase orders on one hand and the settlement of the rejection
cases on the other under the Inventory department.
As it is the Inventory department
which has the first ‘feel’ of the overall inventory scenery, it is better
placed to decide the timing for expediting or even for rescheduling the
deliveries from vendors. This dual authority imparts as much importance
in the vendors’ esteem to the Inventory personnel as traditionally is the case
with the purchase personnel. This just about fulfills the ego needs of the inventory
personnel without inconveniencing the vendors in any way, save an additional
call on the Inventory department.
The inventory centre’s jurisdiction
over the rejection cases will further enhance its importance in the eyes of the
vendors, and gives rise to an equally important external PR opportunity for the
Inventory department as is the case with the purchasing department. This apart,
it is only but logical that the inventory centre should have an important say
in dealing with the rejected material as it is the custodian of the same.
Reorganizing the inventory department
on the suggested lines will go a long way in not only bringing in dynamism to
the function, but also meets the esteem needs of especially the stores, nay
inventory, personnel. Besides, such a move will help remove the existing
imbalances between the purchase and stores functions that are heavily loaded
ion favour of the former. A fair balance between the two divisions of the materials
management can be achieved in this way, which results in the all round
development of the function. Moreover, this way, job retention, so essential
for job enrichment, can be achieved without giving rise to the feeling of
discrimination in the minds of the material management personnel.