Introduction Material Management

Introduction Material Management.
The wealth of a country is measured by its gross national product—the output of goods
and services produced by the nation in a given time. Goods are physical objects, something
one can touch, feel, or see. Services are the performance of some useful function
such as banking, medical care, restaurants, clothing stores, or social services.
But what is the source of wealth? Wealth is measured by the amount of goods
and services produced, but where does it come from? Although rich natural resources
may exist in an economy, such as mineral deposits, farmland, and forests, these are
only potential sources of wealth. A production function is needed to transform these
resources into useful goods. The transformation process begins with extracting minerals
from the earth, farming, lumbering, or fishing, and then using these resources to manufacture
useful products.
There are many stages between the extraction of resource material and the final consumer
product. At each stage in the development of the final product, value is added, thus
creating more wealth. If ore is extracted from the earth and sold, wealth is gained from the
efforts, but those who continue to transform the raw material will gain more and usually
far greater wealth. Japan is a prime example of this. It has very few natural resources and
imports most of the raw materials it needs. However, the Japanese have developed one of
the wealthiest economies in the world by transforming the raw materials they purchase
and adding value to them through manufacturing.
Manufacturing companies are in the business of converting raw materials to a form
that is of far more value and use to the consumer than the original raw materials. Logs are
converted into tables and chairs, iron ore into steel, and steel into cars and refrigerators.
This conversion process, called manufacturing or production, makes a society wealthier
and creates a better standard of living.
To get the most value out of resources, production processes must be so designed
that they make products most efficiently. Once the processes exist, operations are managed
so they produce goods most economically. Managing the operation means planning
for and controlling the resources used in the process: labor, capital, and material. All
are important, but the major way in which management plans and controls operations is
through the flow of materials. The flow of materials in turn controls the performance of
the process. If the right materials in the right quantities are not available at the right time,
the process cannot produce what it should. Labor and machinery will be poorly utilized.
The profitability, and even the existence, of the company will be threatened.

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