Integrated Materials Management Approach

Having recognized the importance of the materials management function, let us now see why an integrated approach towards the materials management is necessary. As mentioned earlier, the various functions served by materials management include the materials planning, purchasing, receiving, stores, inventory control, scrap and surplus disposal etc. If some of the functions were to be separately handled, normally, a conflict of interests occurs. Purchasing department, if allowed to operate independently, may take decisions which result in sub-optimization. For example, under a separate set up, by the purchase department may treat discount as a very important factor and buy large quantities to avail of the discount without taking into account its impact on the warehousing and carrying costs. In other words, we need to balance the conflicting 

objectives from a total organisation viewpoint so as to achieve optimum results for the organisation as a hole. An expansion, for example, will require planning for the increased requirements, developing new sources, revision in inventory levels, apart from the increased load in receipt of materials, inspection and storing. 

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 coordinate with an overview that ensures proper balance of the conflicting objectives of the individual function. Integration also helps in the rapid transfer of data, through effective and informal communication channels. This is crucial as the materials management function usually involves handling a vast amount of data. Therefore, integrating the various functions ensures that message channels are shortened and the various functions identify themselves to a common materials management department which, in turn, results in greater coordination and better control. Thus, the task involved requires a sound approach in principle and its applications to obtain the desired result. It is this thinking which has given rise to an "integrated materials management approach".