MATERIAL MANAGEMENT

INTRODUCTION

Materials Management is simply the process by which an organization is supplied with the

goods and services that it needs to achieve its objectives of buying, storage and movement of

materials.

Material management is the coordinated function, responsible for planning, acquiring,

stocking, moving and controlling the appropriate material of right quality, right quantity at

right place in right time so as to optimise the usage of facilities and capital funds in order to

provide customer patient service. It is only possible by efficient materials management.

Material management is one of the key factors for improving performance of any health unit.

Proper management of materials, therefore, assumes considerable importance in functioning

of health services as well as national economy. It is generally observed that senior

functionaries of health do not pay desired attention to material management, which results in

inefficiency. 40 per cent of the funds are utilized in providing material. In the absence of

materials manpower will be rendered non-functional.

Materials include equipment, apparatus, and other supplies used for patient care. 'Material'

refers to commodities purchased and stocked by an institution for the purpose of consumption

and rendering service (Bharucha, 1989).

DEFINITION

        in the health service organizations material management includes the complete supply

process from purchase to distribution.

        Material is defined as equipment, apparatus and supplies used by an organization or

institution. Material is an essential resource to achieve the objectives of health

organisation.

        Material management is management and control of goods, services and equipment from

the acquisition to disposition. It is concerned with providing the drugs, supplies and

equipment needed by the health personnel to deliver health services.

        Material management is a scientific technique, concerned with planning, organizing and

controlling the flow of materials from their initial purchase through internal operations to

the service point through distribution.

        "Management of goods services and equipment from acquisition to disposition.” -

Housely

        "Material management is the integrated function of an organization dealing with supply of

materials and allied activities in order to achieve the maximum co-ordination and

optimum expenditure on materials." - Khare and Monga

        According to Judith and Maradole, as applied to nursing services, "the management and

control of medical, surgical and clerical, inter-department services and equipment from

acquisition on floor to disposition of patient care.”

        According to the International Federation of Purchasing and Materials Management,

“Materials management is a total concept having its definite organization to plan and

control all types of materials, its supply, and its flow from raw stage to finished stage so as

to deliver the product to customer as per his requirements in time. This involves materials

planning, purchasing, receiving, storing, inventory control, scheduling, production,

physical distribution and marketing.”

CONCEPT OF MATERIAL MANAGEMENT

The concept of Material management is relatively a new concept in India and in health care

field. Term was unknown in India till 60’s. Terms such as purchasing, store keeping,

transportation, etc. were in use in country which in a vague manner represented the functions

covered by modern material management.

Modern techniques of efficient material management were developed in US of America

during & after 2nd World war which helped industrial developed to make spectacular

progress in improving their productivity.

Many hospitals have started adopting this management concept in whole or in part to

accomplish the objectives of providing efficient patient care due to increasing awareness of

importance of material management in last few years.

Material management is concerned with providing the supplies and equipment needed by

health personnel to deliver health services.

The right supplies and equipment must be at the right place, at the right time and in the right

quantity in order that health personnel deliver health services.

Without proper material, health personnel cannot work effectively, they feel frustrated and the

community lacks confidence in the health services and unless an appropriate material are

provided in proper time and is required quantity, productivity of personnel will not be up to

expectation.

INTEGRATED CONCEPT OF MATERIAL MANAGEMENT

Close coordination of all departments which are concerned with utilisation of materials. If

some of functions are to be separately handled, normally a conflict of interest occurs & there

is bound to be an increase in materials costs.

In an integrated set up, materials manager is responsible for all such inter-related functions &

is in a position to exercise control & coordination with a view to ensure proper balance of

conflicting objectives of individual functions.

Integrated material management concept has recently gained greater importance in India.

Although organizations may not be adopting it in totality, there is a definite tendency to move

towards an integrated approach.

Need for Integrated Concept

The major functions served by materials management include Material Planning, Purchasing,

Receiving, Stores, Inventory Control, Scrap and Surplus Disposal. If handled separately it
may lead to a conflict of interest. Eg: if purchasing is handled separately they may over

purchase to avail discounts without considering the expenditure for stores and inventory

control, which will result in over expenditure.

Advantages of Integrated Material Management

        Better Accountability- Centralization of authority & responsibility for all aspects of

materials functions ensures specific accountability.

        Better Coordination- Coordination of various functions of material management is

facilitated.

        Better Performance- As all inter-related functions are integrated organizationally, an

effective communication & enhanced performance is natural sequelae.

        Adaptability To Electronic Data Processing (EDP)- All information with regard to

materials functions is centralised. This facilitates collection, collation & analysis of data

leading to better decisions. Advanced & efficient EDP systems can be economically

introduced under integrated set up.

        Miscellaneous Advantages- Team spirit is inculcated resulting in coordination &

cooperation. Opportunities of growth & development are better in integrated set up.

IMPORTANCE OF MATERIAL MANAGEMENT

The fast developing Indian economy has placed a tremendous challenge and responsibility

before the-material manpower. It is generally found that materials represent the most

expensive asset of any organization. Mismanagement of this asset leads to serious losses. On
the other hand its judicious management will minimize losses and achieve maximum service

for which they are meant.

As stated by Gopal Krishnan, "The importance of material management lies in the fact that

any significant contribution made by the material manager in reducing materials cost will go a

long way in improving the profitability and rate of return on investment."

PURPOSE OF MATERIAL MANAGEMENT

        To gain economy in purchasing

        To satisfy the demand during period of replenishment

        To carry reserve stock to avoid stock out

        To stabilize fluctuations in consumption

        To provide reasonable level of client services

AIM OF MATERIAL MANAGEMENT

        The aim of material management is to bring about control over acquisition, storage,

retrievability, distribution, use and disposal of supplies and equipment in order to carry the

primary responsibilities of an organization in an efficient, effective and economical

manner.

        Material management seems to ensure availability of –

  The Right material

  The Right quality

  Right quantity of supplies

   At the Right time

  At the Right place

  For the least cost

OBJECTIVE OF MATERIAL MANAGEMENT

        Primary Objective -

  Right price

  High turnover

  Low procurement (Purchase)

  & storage cost

  Continuity of supply

  Consistency in quality

  Good supplier relations

  Development of personnel

  Good information system

        Secondary Objective -

  Forecasting

  Inter-departmental harmony

  Product improvement

  Standardization

  Make or buy decision

   New materials & products

  Favorable reciprocal relationships

PRINCIPLES OF MATERIAL MANAGEMENT

BASIC PRINCIPLES

        Basic principles of material management are following -

  Effective management & supervision

  It depends on managerial functions of

  Planning

  Organizing

  Staffing

  Directing

  Controlling

  Reporting

  Budgeting

  Sound purchasing methods

  Skilful & hard poised negotiations

  Effective purchase system

  Should be simple

  Must not increase other costs

  Simple inventory control programme

ESSENTIAL PRINCIPLES

        There are seven Essential principles of material management which must be kept in mind

to ensure good results. Health managers should follow the principles or rights.

1.      Right Item

2.      Right Quality

3.      Right Price

4.      Right Source

5.      Right Delivery

6.      Right Method

7.      Right People

Techniques to decide/apply the essential principles

Materials can essentially be categorised under three heads that is vital, essential and desirable.

These three categories must determine how much quantity of each item should be stocked by

the storekeeper.

Various techniques are available to decide on right item, quantity, price, source, delivery

methods and people. The technique as follows –

1.      Right Item

  Value analysis

  Standardisation

  Codification
2.      Right Quality

  Purchasing

  Balancing of Inventories

  EOQ (How much to buy and when to buy)

3.      Right Price

  Cost

  Price

  Value analysis

4.      Right Source

  Market Research

  Purchasing Techniques

  Selection

5.      Right Delivery

  Procurement Techniques

  Follow up

  PERT1O.R.

6.      Right Method

  Work Study

  ABC Analysis

  Management Information System

7.      Right People
   HRD

  Organizational Analysis

  Behavioural Sciences

THE PROCESS OF MATERIAL MANAGEMENT

The process of material management include the following steps –

1.      Budgeting and Materials Planning

2.      Demand Forecast

3.      Procurement

4.      Inspection and Quality Control

5.      Storage

6.      Inventory Control

7.      Issue and Distribution

8.      Maintenance

9.      Disposal and Condemnation

BUDGETING AND MATERIALS PLANNING

The listing of materials in terms of units required and their cost estimates would constitute the

materials budget, which should be prepared annually. This preparation of budget would be

based on past levels of performance and on anticipated activity, capital equipment,

consumables and supplies to be procured.

Important budgetary control and reduction of material costs is the concept of standardization.

This involves grouping together similar items depending on their specifications or use so as to

choose one of those more universally acceptable for the purpose. It does not imply just cutting

down on the number of sizes which is generally termed as simplification but adoption of

standards leading to specification of quality, reduction in sizes and varieties, facilitating

interchangeability of components etc.

Concept of value analysis is also related to standardization. This attempt to examine all facts

of the function and cost of product/ item used in order to determine whether the cost can be

reduced without compromising on quality.

Value analysis attempts at addressing the following issues:

        What is the Item?

        What is it intended to do?

        How much does it cost?

        How can an item do the same job?

        What are the suggested alternative costs?

DEMAND FORECAST

After finding out what is require and how much money do we have in hand, we have to find

out how much is required, anticipation of future need is done through demand forecasting

biased on past consumptions patterns.

Estimation of right amount of each equipment is the most crucial factor for maximum use and

minimum wastage. Reduce number and variety of materials will lead to less problem of

management.

Demand estimation of category of material should always be done keeping in view the trend

in consumption pattern over the last 2-3 years, the objective of the organization, change in the

clientele, changing emphasis on various programmes and activities in the health field or

organization this is known as casting and forecasting in nursing service administration.

The common methods are to forecasting the demands are –

1.      Last period demand forecast for the next period is done on the basis of the level of

demand that occurred in the previous period.

2.      Arithmetic average: Average of all past demands is taken for forecasting demand.

3.      Moving average: Forecast for the next period is generated by averaging the actual

demand for last 'n' time periods where 'n' can be about (2-3 years).

PROCUREMENT

Procurement is the acquisition of material from an external source. An effective purchasing

system aims at procurement of items of acceptable quality in appropriate quantity at minimum

price and within an available time.

When you have listed down the requirements the next process is procurement of those items.

Most hospitals have a set of rules and regulations regarding the procedures of ordering

materials. A purchase department may be available and financial authority may or may not be
vested in this department. In some institutions a purchase committee may be established

beyond the purchase department to scrutinize all the indents or demands as per priority for

procurement of materials. The basic principle in all these rules and regulations of procedure is

to maximize the value of money invested in purchase.

Process of Purchase

Generally, most of the institutions have a purchase department it may be centralized or

decentralized or a combination of both. The policy on purchase may vary according to the

size, structure and complexity of the institution. However, this will provide better control over

material management, less of over lapping.

Process of purchase is shown in a diagrammatic way as below:-

Different systems are available for procuring materials from manufacturing companies. Few

of them, which are practiced in our country, are explained here.

1)     Fixed Quantity Contract: This type of contract is generally extended, where firms are

called to offer materials and a definite number are asked to supply.

2)     Running Contract: These are contracts for the supply of an approximate quantity of

materials at a specific price during a certain period of time.

3)     Rate Contract: These are the most important contracts as far as health institutions are

concerned. In this, the firms are asked to supply materials at specific rates during the

period covered by the contract and fixed quantities are not mentioned. The list of materials

required is given to the contractors and they provide materials to the demanding office.

Watch very carefully the progress of rate contract procedures.

A purchase committee or department can provide maximum flexibility in ordering specified

quantities of material at regular interval. This helps us to maintain optimum inventories and

minimize the chance of deterioration or obsolescence of materials. Here the quality of the

material to a large extent is assured because only the needed material is given for contract.

Value Analysis

The basic principle of material use is the right quality of material is done by questioning and

analysing each specification whether it could be amended or substituted so that the use of

materials will be at the maximum level. The process of analysis of the intrinsic value of the
material for achieving the objectives of the organization is termed as “Value Analysis". This

is an important function of a materials manager.

How is value analysis carried out? To carry out Value Analysis we need to answer few

questions for better understanding such as:

1)     Can the material be dispensed with?

2)     Can it be simplified?

3)     Will a standard material do?

4)     Is the value proportional to its cost?

5)     Is anything cheaper but equally good available in the market?

6)     Would it not be better to manufacture it?

INSPECTION AND QUALITY CONTROL –

(Receipt, Inspection, Acceptance and Payment)

As soon as the ordered materials are received in the goods receiving store, inspection should

be carried out. The material should be picked upon a random sampling method and it should

be inspected physically and chemically (where required). The organization should have

inspection policy, procedures and the basic facilities for the inspection and examination.

Investment should be done on sound sampling policy and procedures. This will assure the

right quality of materials supplied to the organization.

Points to Remember
1)     Receive all items.

2)     Check the same against specification and arrange for inspection.

3)     Inform the end users regarding the receipt of materials.

4)     Prepare receipt notes and inform excess or shortage of items received.

STORAGE

Materials after being inspected and received are stored in the storeroom till its distribution

and consumption.

The objective of storage is to ensure that the issue of material for usage of the supplies are

adequately preserved to prevent loss or damage.

The store should be located near the other stores of the hospital. It should be accessible to the

suppliers and indenters. Location should be as per activity of the stores. Size should be

adequate to accommodate all materials such as instruments, appliances steel racks with

shelves. Refrigeration should be available for storing thermo-labile items.

Many stores maintain two bins method or card system. This method separates the entire stock

of each item into two bins or boxes. One bin contains main stock and the second bin contains

enough stock to satisfy the demand during lead-time. Lead-time is the time between

placement of order and receipt of the same order. As soon as the first bin is exhausted,

demand for the order is placed and the second bins item are issued. Part of new stock received

is placed in the second bin as reserve.

INVENTORY CONTROL

Principles of inventory control seek to minimize investment on materials so that sufficient

working capital is available for other important activities of the organization.

The primary aim of inventory control is to decrease material cost by preventing over staking

the material which result in locking up of capital, possible pilferage and obsolescence.

ISSUE AND DISTRIBUTION

Arrangement of materials can be done alphabetically or Group wise. Both are easy for

identification and retrieval.

Items held in inventory by the stores may be issued through indents to the user department on

periodical basis.

Materials should be stored on both sides of open rack. These racks are always filled from

backside and issued from front side. Materials received later from the suppliers should be

stored behind. By this you maintain the principle of "FIRST IN FIRST OUT". "FIFO" means

issuing items first which are received first.

MAINTENANCE

A large variety of materials are used in the hospitals. An average hospital needs more than

3000 items of instrument and equipment’s. This shows the type of stores used for patient care

in the hospital and therefore its management and maintenance itself is very important.
Material management is an important aspect of resource management. Proper management of

materials are very crucial to all the organization and we the nurses play a vital role in

controlling, maintaining and inspecting the materials time to time for efficient and effective

patient care. The nurse in her unit is the user of various equipments, therefore she needs to

maintain the equipment for their longetivity.

        Purposes of Controlling and Maintaining Equipment

  To make materials available in safe and viable condition as necessary for both elective

and emergency situation.

  To increase efficiency of the organization.

  To provide material at an optional cost.

  To cut down material cost through standardization.

DISPOSAL AND CONDEMNATION

Indents are often arbitrarily made with improper scrutiny. This leads to an unofficial

inventory in the nursing units. It is therefore necessary for a nurse administrator to inspect the

stores periodically and return the excess stock to the main store, or condemn articles on the

spot to prevent the store in becoming a dumping place. Usually, all hospitals have a

condemnation committee, whose duty is to review the stock from time to time and assess the

materials that are to be disposed or condemned.

ROLE OF A NURSE IN MATERIAL MANAGEMENT

The nurse as the user of the material is in the best position to cut the cost of materials in her

unit, or to utilize it at its best. Her role as a middle manager is very important in the smooth

functioning of the unit. Hence, her role in material management can be summarized as:

        She should have sound knowledge of the requirements and functioning of her unit.

        Must prepare budget for materials required.

        Forecast the demands for smooth running of the unit (less or more supplies will cause

mismanagement and poor quality of patient care).

        Prepares, assists and maintains the policy about purchasing, inventory, maintenance,

prevention of pilferage and condemnation of the unserviceable items.

        Exercise her powers to control the inventory in her unit.

        Ensures perfect functioning of the equipment in the unit under her control.

        Should be able to provide feedback about the materials regarding their quality to the

purchase department.

        Accurate recording and reporting of the materials required regarding their maintenance

and quality.

        Prepares guidelines and ensures that they are followed properly regarding the breakdown

of equipment, loss of equipment and avoid mishandling of them.

        Research activities to assess the impact of material management on patient care.

        Evaluation, of the procedures, policy and performance of equipment and feasibility of the

policies should be documented.

        Should be able to prevent pilferage and fraud, hence be alarmed at the night time.
CONCLUSION

Material management is an important management tool which will be very useful in getting

the right quality & right quantity of supplies at right time, having good inventory control &

adopting sound methods of condemnation & disposal will improve the efficiency of the

organization & also make the working atmosphere healthy any type of organization, whether

it is Private, Government ,Small organization, Big organization and Household.

Even a common man must know the basics of material management so that he can get the

best of the available resources and make it a habit to adopt the principles of material

management in all our daily activities

BIBLIOGRAPHY

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3.       Barrett J. Ward management & teaching. 2nd ed. New Delhi. The English book store. 1967.

4.       Kunders G D, Gopinath S, Katakam A. Hospitals planning, design & management. 1st ed. New Delhi. Tata Mc Graw

Hill. 1998.p.282-8.

5.       P. Gopalakrishnan M. Sundaresan, Materials management - an integrated approach