Total Materials Management: Achieving Maximum Profits Through Materials/Logistics Operations

581 Pages·1995·13.51 MB·English

by  Eugene L. Magad

I Is
TotCl MClteriCl
MClnClgement
&
(~apman Hall
Materials Management/logistics Series
[ugene l. Magad, Series [ditor
William Rainey "arp~r (ollP9~
Total Materials Management: Achieving Maximum Profits
through Materials/Logistics Operations, Second Edition
by Eugene L. Magad and John M. Amos
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Paul Murphy & Daniel Wardlow
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by Bud Cohan
Bulk Materials Handbook, by Jacob Fruchtbaum
Practical Handbook of Industrial Traffic Management,
Seventh Edition, by Leon Wm. Morse
Look for these Forthcoming Titles
MRP II, by John W. Toomey
Distribution: Planning and Control, by David F. Ross
Automatic Identification, by T.H. Allegri, P.E.
Tot<ll MClteri<lls
M<ln<lgement
Achieving Maximum
Profits Through
Materials/logistics Operations
S[(OND [DillON
l.
[ugene
M~g~d
Professor, Materials/Logistics Management,
William Rainey ~arper College
Jo~n M. Amos
Adjunct Professor, Industrial and Manufacturing Systems fngineering,
Kansas State University
Professor fmeritus, fngineering Management,
University of Missouri-Rolla
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1 23456789 10 XXX 01 0099979695
Library of Congress Cataloging-in-Publication Data
Magad, Eugene L.
Total materials management: achieving maximum profits through materials/logistics
operations / by Eugene L. Magad and John M, Amos.-2nd ed.
p. cm.-(Materials management/logistics)
Includes bibliographical references and index.
ISBN-13: 978-1-4684-6452-8 e-ISBN-13: 978-1-4684-6450-4
DOl: 10.1007/978-1-4684-6450-4
1. Materials management. I. Amos, John M. II. Title. III. Series.
TS161.M34 1995 94-47971
658.7--dc20 elP
British Library Cataloguing in Publication Data available
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Contents
Preface / xi
PART 1. MATERIALS/LOGISTICS MANAGEMENT CONCEPT AND
ORGANIZA TION / 1
1. Introduction to Total Materials/Logistics Management :3
History and Evolution of Materials/Logistics Management 3
Subfunction Activities / 12
Achieving World Class Competitiveness / 15
Benefits of Total Materials/Logistics Management / 20
Summary / 29
Bibliography / 30
2. Organization of Total Materials/Logistics Management / 32
Key Elements for Materials/Logistics Management Organization 32
Types of Effective Organization / 36
Organizational Trends / 47
Relationships of Materials/Logistics Management to Other Management
Functions / 49
Requirements of the Materials/Logistics Manager / 55
Summary / 58
Bibliography / 59
PART 2. PLANNING AND CONTROL OF MATERIALS/LOGISTICS
MANAGEMENT / 61
3. Materials/Logistics Management Strategies / 63
Strategies for Materials/Logistics Management / 64
Materials/Logistics Management Strategy Process / 71
Forecasting Demand / 76
Implementing Strategies / 81
Strategies and Controls / 88
Methods for Developing Strategic Information 90
Relationships with Other Management Functions / 97
Summary / 99
Bibliography / 10 1
4. The Integration of Inventory Control in Materials/Logistics
Management / 103
Reasons for Inventories / 103
v
vi CONTENTS
Inventories Affecting Materials/Logistics Management / 108
Inventory Information for Materials/Logistics Management
Decisions / 110
Inventory Management Techniques for Materials/Logistics
Management / 117
Affects of Inventory Management on Materials/Logistics
Management / 128
Relationships with Other Materials/Logistics Management
Subfunctions / 135
Relationships with Other Management Functions 137
Summary / 141
Bibliography / 142
5. Applying Production Control in Materials/Logistics
Management / 144
Production Control Strategies Related to Achieving Total Materials/
Logistics Management / 144
Production Control Systems / 150
Influence of Control Systems / 165
Effects of Materials/Logistics Management in Designing Production
Control Systems / 167
CRP and Capacity Control Measures / 171
Increasing Efficiency / 174
Relationships with Other Materials/Logistics Management
Subfunctions / 175
Relationships with Other Management Functions 178
Summary / 181
Bibliography / 182
6. Just-In-Time (JIT) / 183
HT Overview / 183
Benefits / 185
Human Resource Management / 192
Total Quality Commitment / 193
Facilities Design / 196
Purchasing / 199
Equipment Utilization / 201
HT Applications in Service & Distribution Industries / 205
Summary / 208
Bibliography / 209
7. Utilizing Material Requirements Planning and Distribution
Requirements Planning for Materials/Logistics Management / 211
Material Requirements Planning (MRP) Benefits to Materials/Logistics
Management / 212
CONTENTS vii
Material Requirements Planning Concepts / 218
Materials/Logistics Management Information from MRP / 223
Materials/Logistics Management with MRP System / 227
Distribution Requirements Planning (DRP) / 232
Relationships with Other Management Functions / 238
Summary / 241
Bibliography / 242
PART 3. PROCUREMENT, MATERIALS FLOW, AND
DISTRIBUTION / 245
8. Purchasing / 247
Purchasing Objectives Related to Achieving Total Materials/Logistics
Management / 247
Significant Purchasing Activities / 252
Legal Aspects of Purchasing / 270
Value Analysis / 272
International Sourcing / 274
Ethical Standards / 280
Relationships with Other Materials/Logistics Management
Subfunctions / 283
Relationships with Other Management Functions / 285
Summary / 288
Bibliography / 289
9. Receiving and Stores / 291
Receiving and Stores Objectives Related to Achieving Total Materials/
Logistics Management / 291
Significant Receiving and Stores Activities / 296
Relationships with Other Materials/Logistics Management
Subfunctions / 319
Relationships with Other Management Functions / 322
Summary / 324
Bibliography / 325
10. Materials Handling / 327
Materials Handling Objectives Related to Achieving Total Materials/
Logistics Management / 328
Materials Handling Principles / 336
Materials Handling Problem Analysis / 341
Typical Equipment and Applications / 353
Relationships with Other Materials/Logistics Management
Subfunctions / 362
Relationships with Other Management Functions / 366
viii CONTENTS
Summary / 369
Bibliography / 370
11. Physical Distribution / 371
Physical Distribution Objectives Related to Achieving Total Materials/
Logistics Management / 371
Significant Physical Distribution Activities / 377
Transportation Management / 399
International Physical Distribution / 406
Analysis of Operations / 409
Relationships with Other Materials/Logistics Management
Subfunctions / 411
Relationships with Other Management Functions / 413
Summary / 415
Bibliography / 417
PART 4. IMPLEMENTATION AND CONTROL OF MATERIALS/
LOGISTICS MANAGEMENT / 419
12. Automation / 421
Materials/Logistics Management Systems / 421
Improving Materials/Logistics Management Operations Through Re-
engineering / 426
Materials/Logistics Management Information Systems / 428
Decisions Techniques for Materials Logistics Management / 434
Computer Aided Manufacturing (CAM) / 438
Materials/Logistics Management in Flexible Manufacturing Systems
(FMS) / 450
Relationships with Other Materials/Logistics Management
Sub functions / 459
Summary / 461
Bibliography / 463
13. Managing a Successful Materials/Logistics Management
Operation / 465
Defining and Zeroing in on Operational Problems / 465
Politics / 477
Marketing Materials/Logistics Management Strategies / 482
A Successful/Productive Materials/Logistics Operation / 487
Materials/Logistics Management of the Future-Profit Center 493
Future Materials/Logistics Management Strategies / 498
Summary / 503
Bibliography / 504
CONTENTS ix
14. Control of Materials/Logistics Management Functions / 507
The Control Concept I 507
Budgets I 514
Work Standards I 517
Efficiency Indices I 521
Management by Objectives I 526
Summary I 533
Bibliography I 534
15. Financial Considerations Related to Materials/Logistics
Management / 535
Role of Financial Officer I 535
Basic Financial Statements I 539
Financial Ratio Analysis I 545
Cash Flow I 551
Long-Term Investment Decisions I 556
Terminology I 560
Summary I 562
Bibliography I 563
Appendix A: Professional Societies I 565
Index I 567
Preface
In an ever-changing world where every operation is affected by some other
operation, which may even be in another part of the world, everyone is
becoming more specialized. Materials/logistics management is faced with an
even more demanding business environment, requiring the function to respond
and provide services never before realized. Today, and in the future, materials/
logistics management is a vital part of every company's organization. The
function is an important part of our educational process. Materials/logistics
management has received minor attention in the past, such as in the service
sector of our economy. Service industries are now recognizing the importance
and contribution of materials/logistics to their "bottom line" profits.
The 2nd edition includes all of the basic functions of materials/logistics
management. Logistics is emphasized as well as materials management be
cause the term logistics is becoming more accepted. Today, many organiza
tions include logistics in their organizational structure, often composed of
the same subfunctions as materials management. These terms are even used
interchangeably by companies and professionals when viewing their opera
tions.
With the increasing importance of materials/logistics managers in all sectors
of the economy, there is a growing need for individuals educated in the
discipline. Often, these personnel are being retrained from other occupations.
In addition, it is important that personnel working in all other major company
functions have basic knowledge of materials/logistics management in order to
effectively perform their roles. This would include manufacturing, marketing,
finance, engineering, quality assurance, and other major functions. Therefore,
the book covers these basic relationships; any form of study that excludes
these functional relationships offers too narrow a perspective of materials/
logistics management. Unfortunately, many oftoday's problems (even legal)
in both manufacturing and service organizations are due to the lack of adequate
attention to the materials/logistics management function.
The authors have designed this book for both advanced undergraduate and
graduate courses, for company on-the-job development programs, and for
individuals who study independently to improve their competency in the
various subfunctions of materials/logistics management.
This text has been enhanced by including proven concepts with examples
based upon the authors consulting business experience, with explanation to
clarify these concepts. The book provides a formal system in studying these
concepts, especially relating them to other major functions and relationships,
xi