Total Materials Management: The Frontier for Maximizing Profit in the 1990s PDF
Preview Total Materials Management: The Frontier for Maximizing Profit in the 1990s
TOTAL MA TERIALS MANAGEMENT The Frontier for Maximizing Profit in the 19905 TOTAL MAT ERIALS MANAGEMENT The Frontier for Maximizing Profit in the 19905 Eugene L. Magad William Rainey Harper College John M. Amos Center for Applied Engineering University of Missouri-Rolla M COMPETITIVE anufactnring SER IES ~ Springer Science+Business Media, LLC Copyright © 1989 by Springer Science+Business Media New York Originally published by Van Nostrand Reinhold in 1989 Softcover reprint of the hardcover 1s t edition 1989 Library of Congress Catalog Card Number 88-29161 ISBN 978-1-4684-6568-6 AlI rights reserved. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means-graphic, electronic, or mechanicai, including photocopying, recording, taping, or information storage and retrieval systems-without written permission of the publisher. ISBN 978-1-4684-6568-6 ISBN 978-1-4684-6566-2 (eBook) DOI 10.1007/978-1-4684-6566-2 Library of Congress Cataloging-in-Publication Data Magad, Eugene L. Total materials management / Eugene L. Magad, John M. Amos. p. cm. Bibliography: p. Includes index. ISBN 978-1-4684-6568-6 1. Materials management. 1. Amos, John M. II. Title. TS 161M34 1989 658.7 -dcl9 88-29161 -VNR COMPETITIVE MANUFACTURING SERIES- Product and Process Design PRACTICAL EXPERIMENT DESIGN by William j. Diamond VALUE ANAL YSIS IN DESIGN by Theodore C. Fowler A PRIMER ON THE TAGUCHI METHOD by Ranjit Roy MANAGING NEW-PRODUCT DEVELOPMENT by Geoff Vincent ART AND SCIENCE OF INVENTING by Gilbert Kivenson RELIABILlTY ENGINEERING IN SYSTEMS DESIGN AND OPERATION by Balbir S. Dhillon RELIABILlTY AND MAINTAINABILlTY MANAGEMENT by Balbir S. Dhillon and Hans Reiche APPLlED RELIABILlTY by Paul A. Tobias and David C. Trindad Manufacturing (hard) INDUSTRIAL ROBOT HANDBOOK: CASE HISTORIES OF EFFECTIVE ROBOT USE IN 70 INDUSTRIES by Richard K. Miller ROBOTIC TECHNOLOGY: PRINCIPLES AND PRACTICE by Werner G. Holzbock MACHINE VISION by Nello Zuech and Richard K. Miller DESIGN OF AUTOMATIC MACHINERY by Kendrick W. Lentz, jr. TRANSDUCERS FOR AUTOMATION by Michael Hordeski MICROPROCESSORS IN INDUSTRY by Michael Hordeski DISTRIBUTED CONTROL SYSTEMS by Michael P. Lukas BULK MATERIALS HANDLlNG HANDBOOK by jacob Fruchtbaum MICROCOMPUTER SOFTWARE FOR MECHANICAL ENGINEERS by Howard Falk Manufacturing (soft) WORKING TOWARDS jUST-IN-TIME by Anthony Dear GROUP TECHNOLOGY: FOUNDATION FOR COMPETITIVE MANUFAC TURING by Charles S. Snead FROM IDEA TO PROFIT: MANAGING ADVANCED MANUFACTURING TECHNOLOGY by jule A. Miller COMPETITIVE MANUFACTURING by Stanley Miller STRATEGIC PLANNING FOR THE INDUSTRIAL ENGINEERING FUNCTION by jack Byrd and L. Ted Moore v vi VNR COMPETITIVE MANUFACTURING SERIES SUCCESSFUL COST REDUCTION PROGRAMS FOR ENGINEERS AND MANAGERS by E. A. Criner MATERIAL REQUIREMENTS OF MANUFACTURING by Donald P. Smolik PRODUCTS LlABILlTY by Warren Freedman LABORATORY MANAGEMENT: PRINCIPLES & PRACTICE by Homer Black, Ronald Hart, Orrin Peterson Materials Management TOTAL MATERIALS MANAGEMENT: THE FRONTIER FOR MAXIMIZING PROFIT IN THE 19905 by Eugene L. Magad and John Amos MATERIALS HANDLlNG: PRINCIPLES and PRACTICE by Theodore H. Allegri, Sr. PRACTICAL STOCK AND INVENTORY TECHNIQUES THAT CUT COSTS AND IMPROVE PROFITS by C. Louis Hohenstein Preface Materials management has become an important activity in both manu facturing and service organizations. Rapid changes in the industrial envi ronment, such as the introduction of automation and Just-In-Time, and demands for increased productivity and quality have increased the need for alI personnel to be concerned with total control of materials. Clearly this trend will continue, and materials management wilI play an increasingly vital role in organizational success, especialIy for operations that are be coming automated. Materials management will be more critical in many service organizations where the materials group has received little attention in the past. This book covers the basic materials management function and provides valuable insights into various other major functions related to it. We believe that each of these-manufacturing, marketing, finance, quaIity assurance, and engineering-is vitalIy involved in materiaIs management, and any coverage of the subject that excludes these functions offers too narrow a perspective. With increasing demand for materials managers, human resource re quirements will be satisfied by individuals trained within the discipline and by personnel who have worked in other fields. The dimensions of materials management have grown so rapidly that many practicing managers are not aware that they are fulfilling material management functions. It is impor tant that alI individuals have the basic knowledge required to perforrn their roles in these organizations. This book was written primarily for use in an advanced undergraduate college course or a graduate course, and for use by companies in internaI development programs. We intend it also for individuals who read inde pendently to improve their effectiveness in various areas of materiaIs management. The book deals largely with concepts, but includes many examples from various industries to clarify the concepts. IndividuaIs already involved in materials management will discover that they are using some of these ideas intuitively. This book offers new systematic ways of looking at both famil iar and unfamiliar concepts, relating them to other major functions. Our purpose has been to integrate these ideas into a body of knowledge, to help vii viii PREFACE the reader gain insight and confidence, which are essential for anyone who wishes to become an effective materials manager. The book is divided into four parts. Part I deals with the needs and activities of materials management in the organization and its relationship to other managerial functions. Part II discusses matters relating to the planning and controlling of materials management. The reader is intro duced to various techniques of long-range planning, inventory control, production control, materials requirement planning, and distribution re quirements planning. Part III discusses subfunctions closely related to materials procurement, movement, physical control, and distribution. Part IV covers some of the control and financial considerations future materials managers wiII experience in effectively implementing a total materials management program. The authors are indebted to countless individuals who have helped us along our way. We are grateful to students who have helped by testing the product and to coIIeagues in our respective departments. Special apprecia tion is expressed to our coIIeagues in industry who have provided the motivation for our writing the book and have made many valuable com ments and suggestions. Finally, we express our heartfelt thanks to our wives Janet Magad and Ruth Amos for their continued support and encouragement. Eugene L. Magad John M. Amos Contents Preface / vii PART 1. MATERIALS MANAGEMENT CONCEPT AND ORGANIZAn ON / 1 1. Introduction to Total Materials Management / 3 History and Evolution of Materials Manatement / 3 Materials Management Subfunctions / 11 Role of the Computer in Materials Management / 15 Benefits of Total Materials Management / 18 Pitfalls and Problems of Materials Management / 27 Summary / 28 Bibliography / 30 2. Organization of Total Materials Management / 31 Key Elements for Materials Management Organization / 31 Types of Organization for Effective Materials Management / 35 Relationships of Materials Management to Other Company Functions / 47 Requirements of the Materials Manager / 53 Summary / 57 Bibliography / 58 PART 2. PLANNING AND CONTROL OF MATERIALS MANAGEMENT / 61 3. Materials Management Planning / 63 The Nature of Planning in Materials Management / 63 Steps in the Materials Management Planning Process / 71 Forecasting Methods / 76 Implementing Plans / 81 Evaluating the Planning Process / 88 Information Sources for Planning Materials Management / 90 Relationships with Other Company Functions / 96 Summary / 99 Bibliography / 101 ix x CONTENTS 4. The Integration of Inventory Control in Materials Management / 102 Influence of Inventory Control Objectives / 102 Role of Inventories in Materials Management / 106 Inventory Cost Information for Materials Management / 109 Effects of Inventory Management Techniques on Materials Management / 115 Effects of Poor Inventory Management on Materials Management / 130 Relationships with Other Materials Management Subfunctions / 132 Relationships with Other Company Functions / 135 Summary / 138 Bibliography / 140 S. Roles of Production Control in Materials Management / 141 Production Control Objectives / 141 Typical Production Control Activities / 147 Influence of Production Control Systems / 166 Effects of Materials Management in Designing Production Control Systems / 168 CRP and Capacity Control Measures / 173 Just-In-Time Production / 176 Relationships with other Materials Management Subfunctions / 179 Relationships with Other Company Functions / 182 Summary / 185 Bibliography / 187 6. The Impact of Material Requirements Planning and Distribution Requirements Planning on Materials Management / 188 Material Requirements Planning (MRP) Related to Materials Management / 189 Materials Management Planning with the MRP System / 194 Materials Management Information from MRP / 201 Materials Management with MRP System / 205 Distribution Requirements Planning (DRP) / 209 Materials Management and DRP / 215 Relationships with Other Management Functions / 217 Summary / 219 Bibliography / 221
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