Introduction:

Alloacation of material is a process of the study of the material flow of the firm.

It is broad as it caters to the holistic approach. 

The responsibility of an organization is to know the requirement of the material at the different stages.

The material could be useful for a longer period. , it is necessary to store the material properly to have that perishability.

Requirement for the allocation of material:

Material management is important as companies invest a hefty amount in the purchase of material. The requirement of material starts from the requirement of the material to purchasing and managing it. 

Most of the time, material contributes as the necessary item to the different processes. Wrapping paper from a gift shop is not a necessity, but their absence can affect their sales experience.

The material requirement is the right amount of inventory in the organization. Excessive ordering of inventory to avoid shortfalls or deficit ordering of inventory to avoid the blockage of the funds is not the ideal situation.

Demand for the material makes it a costly affair. Management should handle material properly to avoid the wastage of stocks and money.

When the company is not aggressively investing in materials, it increases the profits.

Smooth material management contributes to the high quality of the end product.

Material management helps in the storage of the inadequate product for future use.  

Objectives of the Material Management:

• It negotiates at the least possible prices.
• It contributes to the optimum utilization of the organization’s capital.
• It manages the requirement of the inventory in the organization.
• It contributes to having a good reputation among the suppliers.

Functions of Material allocation:

Production control:

The production control aims at the movement of goods through the manufacturing cycle.

There are four types of departments.

Purchasing department

Purchasing is one of the most important aspects of an organization as an organization can’t fulfill the whole raw material need internally. Purchase of required raw material or tools seems to be the most reliable option in such situations. Sometimes, companies get a better deal by purchasing it from the external market.

The importance of purchasing is out to test with the selection of raw material to make it into finished goods. The quality of the raw material is crucial for the organization to have properly finished goods.

Receiving department

The responsibility of the receiving department is to process the incoming shipments of materials. Many firms combine this department with the purchasing department.

Unpacking and quality checking are also some of the many responsibilities of the receiving department.

Raw material inventory department

Inventory is the stock available to the organization in any form and at any stage. Inventory includes raw material, work-in-progress, and finished goods in the supply chain. Inventory levels in the organization depend upon the levels of demand and supply.

Inventory control helps the organization to analyze and meet the inventory cost and requirements.

Inventory control provides a clear idea of how much stock is needed in the business currently and how much should be the turnover period.

Inventory control could be different for different departments of an organization.

In the same organization, factories need to maintain the stocks of raw materials while the showroom needs to keep the inventory of finished goods produced by the factory.

Production department

The production department manages the complete flow of inventory at the time of production.

Some of the important tasks of the production department are:

• Monitoring the flow of work-in-progress throughout the process
• Identifying and omitting the production deficiencies
• It helps in computing and adjusting the storage capacity in the organization.

Inventory control:

Production of the goods is a significant aspect of inventory management.

Consistent production is the requirement of the organization.

Hence it is advisable to have a regular production cycle and store the words for the appropriate time.

For Example, The Demand for heaters will only be high in the winter. The organization should produce heaters throughout the year and keep them in the stocks to reduce the burden.

Organizations hold inventory to fulfill the need of the customer.

If the production is stopped for a shorter period, companies can satisfy the customer’s needs.

After Sales Services From the organization makes the customer feel special.

Organizations Also take care of the product if maintenance is needed to help the customer.

Organizations maintain adequate amounts of inventory to battle this problem.

It helps the firm to utilize favorable conditions and to get prepared for adverse situations.

For instance, the stock of raw materials is crucial for the sudden rise in the price of the raw material inventory of finished goods is necessary to fulfill the sudden outbreak in demand for the product.

Inventory planning helps the organization to have a plan for the future.

Inventory costs are the cost associated with the order the manager makes for the number of goods.

It is one of the first costs in the level of production.

The manager has to decide the order quantity as per the requirement of the production of goods.