Internal Factor of Operating Environment in Material Management.

Operating Environment in Material Management.
Operations management works in a complex environment affected by many factors.
Among the most important are government regulation, the economy, competition, customer
expectations, and quality.

Government. Regulation of business by the various levels of government is extensive.
Regulation applies to such areas as the environment, safety, product liability,
and taxation. Government, or the lack of it, affects the way business is conducted.

Economy. General economic conditions influence the demand for a company’s
products or services and the availability of inputs. During economic recession, the
demand for some products may decrease while demand for others may increase.
Materials and labor shortages or surpluses influence the decisions management
makes. Shifts in the age of the population, needs of ethnic groups, low population
growth, increased free trade between countries, and increased global competition
all contribute to changes in the marketplace.

Competition. Competition is more severe today than ever before.

■■ Manufacturing companies face competition from throughout the world. They
find foreign competitors selling in their markets even though they themselves
may not be selling in foreign markets.
■■ Transportation and the movement of materials are relatively more efficient and
less costly than they used to be.
■■ Worldwide communications are fast, effective, and cheap. Information and data
can be moved almost instantly around the globe. The internet allows buyers to
search out new sources of supply from anywhere in the world as easily as they
can from local sources.

Customers. Both consumers and industrial customers have become much more
demanding, and suppliers have responded by improving the range of characteristics
they offer. Some of the characteristics and selection customers expect in the products
and services they buy are:

■■ A fair price.
■■ Higher (exact) quality products and services.
■■ Delivery lead time.
■■ Better presale and after-sale service.
■■ Product and volume flexibility.

Quality. Since competition is international and aggressive, successful companies
provide quality that not only meets customers’ high expectations but also exceeds
them.

The operating environment in material management refers to the set of internal and external factors that influence the management of materials within an organization. It includes various elements and considerations that impact how materials are procured, stored, handled, and utilized effectively. Here are some key aspects of the operating environment in material management:

Internal Factors:
a. Organizational Structure: The structure and hierarchy of the organization can affect how material management functions are organized, delegated, and coordinated.

b. Policies and Procedures: The presence of clear policies and procedures related to material management ensures consistency and efficiency in handling materials throughout the organization.

c. Information Systems: The use of technology, such as material management software or enterprise resource planning (ERP) systems, can streamline processes, track inventory, and facilitate data analysis.

d. Facilities and Infrastructure: The availability of suitable storage facilities, equipment, and transportation resources impacts the handling and movement of materials within the organization.

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