Presented by :-Mr. Manjunath halkeriM.Pharma 1st yr (Pharmaceutics)BLDEA’s College of pharmacy,Bijapur.

Under the guidance of :- Dr C.C.Patil,M.pharm,Ph.D Dept. of Pharmaceutics, BLDEA’s College of pharmacy, Bijapur.

CONTENTS Definition

Objective and importance

Principles of material management

Functions of material management

Materials – Quality and Quantity

CONTENTS

Value analysis

Purchasing

Vendor development

Buying techniques

Purchasing cycles and procedure

Advantages of material management

DEFINITION

It is defined as an organizational concept, which has the authority and responsibility of all activities, concerned with the flow of materials in the organization

or

Material management is a scientific technique, concerned with Planning, Organizing &Control of flow of materials, from their initial purchase to destination.

OBJECTIVES AND IMPORTANCE

Efficient use of the working capital. Responding to the market changes related to any

product. Ensuring the cooperation of all departments. Providing best services to the king of the market i.e

customer. Lowering inventory investment and increasing the

inventory turnover. Right quantity of supply ,at right place and

time

PRINCIPLES OF MATERIAL HANDLING

Simple inventory control programme

Least handling is the best handling.

Minimize the distance

Lengths and number of move to be minimized

Unit loads

PRINCIPLES OF MATERIAL HANDLING

The materials handling service should not interfere with the production flow.

The design of the container e.g. shippers are used for storing finished bulk. & for raw materials as per the property of materials they are stored- plastic containers ( light weight containers)

Re-handling and back tracking of the materials should be avoided.

CLASSES OF MATERIALS

Raw materials:- These are materials that are used in the product which is in an unprocessed condition.

Supplies:- These are consumable goods used in the process of manufacturing.

Purchased Parts:- These are the items used in the assembly of the product.

In-progress materials:- They are called ‘work in progress’ inventories. These goods require further processing.

Finished materials:- These are fully manufactured goods, inspected and ready for delivery to the customers.

FUNCTIONS OF MATERIAL MANAGEMENT

MATERIALS-QUALITY & QUANTITY

Four factors affecting the purchase of raw materials are 1) Quality :- The suitably of an item to accomplish the intended

work. The raw materials should satisfy the following

requirements.i. Efficiency of the material.ii. Cost and the shelf –life.iii. For equipments, power consumption and power

requirement.

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2) QUANTITY

From the inventory point of view, quantity standards are decided on the following parameters;

i. Maximum inventory

ii. Minimum inventory

iii. Standard order

iv. Reorder point

3) Price

4) Delivery Date

VALUE ANALYSIS

Definition:- It is a systematic study of every element for it’s cost in a part, material or service to make certain that it performs it’s function at the lowest possible cost.

Benefits of value analysis:-i. Decrease in existing cost of the product or service.ii. Unnecessary expenditure is identified and

eliminated.iii. Product value improves for new materials and

processes.iv. More profits.

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TYPES OF VALUE

User value: properties that accomplish use, work or service.

Ex:- self sealing tape

Cost value: properties that are the sum of labour, material, overheads & other costs, required for producing that object

Ex:- mixing, granulation & drying are done in single equipment.

Value ratio: it is expressed as Value =function

Total cost

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PURCHASING

Centralized :- the purchasing procedure of materials for different department is done together from one purchasing department. This is seen in small organizations.

Advantages Efficient system Bargaining capabilities

increased Good raw material obtained at

lower price

Decentralized:- different department purchase their requirement seperately. This is basically seen in large organizations.

Advantages Flexible purchasing system Procurement is faster

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VENDOR DEVELOPMENT

The supplier or the person who sells the required materials or services for the production is known as a vendor.

The purchase of raw materials/service from a specific vendor is known as the vendor development.

There are four stages of vendor development:-

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Stage Name Development

1st

Survey stage Identifying the potential sources of suppliers. Seeking information. Provisional vendors list.

2nd

Enquiry stage Analysis of information in standard enquiry format. Accreditation, FDA approval, ISO certification. Personal visits.

3rd

Negotiations and selection stage

Quality control specifications, clarification, credit, quantity discounts.

4th

Experience and evaluation stage

Performance appraisal, Quality, delivery time.

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Four stages of vendor development

1) SURVEY STAGE

The following sources are considered for informationTrade directories :- e.g.

Yellowpages.eindiabusiness.comTrade journals:- e.g. PharmatimesTelephone directoriesSupplier’s catalogueSalesmen

Other ways are like interchanging of information with other companies, tracing of public tenders and advertisements in the press.

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2) ENQUIRY STAGE

After getting the information of the suppliers, detailed analysis of the supplier is being carried out. A comparison is being made between the different suppliers on basis of the following points:-

a. Technological competition,

b. service competition,

c. price competition,

d. delivery time.

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The following aspects can be verified by the first hand visit:-

Internal facilities of the vendor Financial adequacy, stability and reputation of the vendor Location of vendor’s factory After sales service Industrial relations

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3) NEGOTIATION AND SELECTION STAGE

The vendors who clear the enquiry stage are selected and negotiations are being carried out with them.

The various aspects such as credit, quantity discount, quality specifications are being discussed.

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4) EXPERIENCE AND EVALUATION STAGE

The buyer evaluates and appraises the performance of the vendor.

The objective is to improve the performance of the vendors.

Few ways of evaluating a vendor are:-o Categorical methodo Weighted point method

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CATEGORICAL METHOD

The buyer sets up some category on which the evaluation of the vendor is done. Specimen

of supplier’s evaluation form is given below.

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Grading

Factors Always9 8 7

Usually 6 5 4

Seldom3 2 1

Never 0

Supplies are as per quantity selected

Deliveries are on time

Rigorous follow up is not necessary

Willing to accommodate when production schedules are suddenly changed

WEIGHTED POINT METHOD

Here the rating points are divided between quality, delivery and price.

For eg quality – 50 points

delivery- 30 points

price – 20 points so total is 100 points.

The rating can be obtained by following equation.

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WEIGHTED POINT METHOD

Quantity rating = (no. of lots accepted/ no. lots

received) ×rating points

Delivery rating = (no of lots delivered on time/ no

of lots delivered) × rating points

Price rating =(least offer received/ supplier’s offer)

× rating points

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BUYING TECHNIQUES

Purchasing of material , machinery and services is done by purchasing department.

For buying the material company has to pay up a price, the value that a seller sets on his goods in the market is called as the price of that good.

Price is one of the greatest variables in the purchasing of material.

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HOW IS THE PURCHASING DONE????

Quotations :- It is a kind of an enquiry done to know whether the vendor can supply the desired material and at what price.

They are not the purchase order. They just contain all the details including freight, taxes and many other costs.

The highly used quotation techniques areSpot quotationsFloating a limited enquire

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HOW IS THE PURCHASING DONE????

Spot quotations:- this is basically used for the small items not related to the technical purpose.

The prospective buyer goes to the market and gets the quotations from the different suppliers.

Floating a limited enquire:- this method is used when the value of the purchase is small. In this technique the reliable vendors are called upon and asked to provide the quotations.

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HOW IS THE PURCHASING DONE????

Tenders:-

It is a written letter or a published document that is aimed at finding the price for procuring certain materials.

Tenders are invited from recognized firms. A few types of tenders are:

single tender Open tender Closed tender or limited tender

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HOW IS THE PURCHASING DONE????

Single tender:- It is invited from one reliable supplier. This kind of tender is floated only when the itms are required urgently.

Open tender:- Also known as ‘ press tender’. This is used when the value of item to be purchased is very high. It is used to locate more suppliers.

In this tender procured, a small amount of the deposit money is taken from the supplier so that they do not withdraw from the submitted rates.

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HOW IS THE PURCHASING DONE???? Closed tender or limited tender (Negotiations):- It is done to arrive

at the mutual understanding between the supplier/vendor and the buyer.

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Negotiations

It may be defined as an art of arriving at a common Understanding through bargaining on the essentials of a Contract such as delivery, specifications, prices and terms.

HOW IS THE PURCHASING DONE????

What’s the need for negotiation? prices are related to large volumes or to a large

value. terms and conditions are required for large volumes. contract is desired for a longer period. variations in quantity to be purchase are possible. when supplies or services can be obtained from only

one source. when no acceptable quotations are received from the

other vendors.

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HOW IS THE PURCHASING DONE????

Process of negotiations:- It is a kind of win-win situation. Both the parties try to benefit to the maxima through the negotiation.

It is not a kind of bargaining but a mutual understanding between the two parties.

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HOW IS THE PURCHASING DONE????

Discounts:- They are cash concessions offered by the vendor to the buyer, in order to enhance the volume of the business opportunities.

Reasons for offering discounts?????

! When there is a bulk purchase.

! When the bills are cleared immediately.

! And also to maintain the good rapo with

the buyer

Types of discounts:-

1) Volume contracts.

2) Deals

3) Discounts

4) Consignment terms04/10/2023 34

HOW IS THE PURCHASING DONE????

Volume contracts:- This kind of discount is offered proportionate to the volume of material ordered.

Cash discount:- Cash discount is given on the basis of the time of the payment done by the purchaser. The normal credit period is 90 days.

Cumulative discount:- It is a method of offering the discount on the basis of actual purchases and appropriate to the quantity range in a year.

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PURCHASING CYCLE AND PROCEDURE

The purchasing department of the company is responsible for the purchase of all the raw materials as well as the requirements.

The following steps are followed in the purchasing cycle. 1) Recognition of need and receipt of requisition: The requisition includes the following information:-

- Name

- Quality and quantity specifications

- Date by which material is required

- Place at which material is to be delivered

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PURCHASING CYCLE AND PROCEDURE

2) Selection of potential sources of supply3) Making request for quotation4) Receipt and analysis of quotations - material specifications and quality - price of the material - taxes - terms of payment - place of delivery - delivery period - guarantee period - validity of tender

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PURCHASING CYCLE AND PROCEDURE

5) Selection of right source of supply

6) Issuing the purchase order

7) Follow-up of the order

8) Receipt of materials,reports and analysis

9) Checking and approving of vendor’s invoice for payment

10) Closing of completed order

11) Maintenance of record and file

Purchasing cycle flow chart has been given in the following slide.

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Need recognitionSpell out of specifications & requirements

Official requisitions

Check specifications, prices/supplies

Select suppliers

Quotations & analysis prices and terms, negotiations, finalisation

Purchase order for supply

Suppliers’ acceptance

Specifications file

Purchase records

Supplier’s record

Enquiry tender

Follow-up

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Contd ….

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Delivery of materials

Materials & reports, analysis

Payment made

Checking of invoice with purchase order

Objectives : Minimum wastage of space Maximum ease of operation Minimum handling cost Minimum other operational cost

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Store should be located adjacent to the manufacturing area.

It depends up on nature and value of items to be stored and frequency with which items are received and issued

Location of Stores :

FACILITIES OF STORE

Inspection centerQuarantine roomWashing roomCentralized weighing department

Adequate space

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GENERAL FUNCTION : Maintenance of Stock (materials and

tools)

Maintenance of hygiene, sanitation, and pest control

Maintenance of material handling equipment

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Functions of stores

SPECIFIC FUNCTIONS :

Receiving & recording of raw materials Quarantine storage – Sampling & approval by QC Positioning & Storage Issuing & recording of materials Receiving & Dispatching of finished goods Distribution

Optional functions :

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Functions of stores

MATERIALS HANDLING

The movement of materials (raw materials, scrap, semi finished and finished) to, through, and from productive processes; in warehouses and storage; and in receiving and shipping areas.

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GOALS OF MATERIAL HANDLING

The primary goal is to reduce unit costs of production

Maintain or improve product quality, reduce damage of materials

Promote safety and improve working conditions Promote productivity

material should flow in a straight line use gravity! It is free power move more material at one time mechanize material handling automate material handling

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GOALS OF MATERIAL HANDLING

Promote increased use of facilities Reduce tare weight (dead weight) Control inventory

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IMPORTANCE OF MATERIAL MANAGEMENT

Increase in cost of raw materials & finished products

Delay in production schedule & long cycle Increase in in-process inventories Damage or loss of material & employee

safety liabilities Employee frustration & reduced morale Customers dissatisfaction

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APPLICATIONS OF MATERIAL MANAGEMENT EQUIPMENT IN PHARMACEUTICAL INDUSTRY

Production department Stores department

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FUNCTIONS OF MATERIAL HANDLING

Handling of unit load :-the principle of containerization, unit-load & palletization are employed for moving an optimum number of pieces at a time to their ultimate destinations.

Placement of equipment :-In production operations, appropriate plant layout & proper placement of equipment minimizes the movement of materials.

Appropriate material handling equipment :-Mechanical aids should be employed in place of manual handling.

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SELECTION OF MATERIAL HANDLING SYSTEMS

The best equipment is one that :Permits smooth & continuous production flowInvolves less number of accidentsReduces production cycles timePromotes better working conditionLessens fatigue to the operatorsBrings down total material handling cost

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Nature of material to be moved :- the size, weight, delicacy, nature (solid, liquid, gas) of material & chances of getting damaged during handling should be considered.Plant building & layout :-A multi-storeyed building facilitates the use of gravity for material flow.The door locations,sizes,ceiling heights, roof& floor strenghts,columns,etc..Production machines :-Different machines have different outputs per unit time.

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Type of material flow patterns :-A vertical flow pattern requires elevators,conveyors,pipes etc.,whereas horizontal flow patterns need trucks, overhead bridges, cranes, conveyors etc.

Type of production :-Conveyors are more suitable for fixed routes for continuous process & powered trucks are suitable for batch operation.

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Cost of material handling equipment :-The initial cost of handling equipment are high. when human contact with product must be minimized, equipment is the alternative, hence cost does not limit the installation.

Handling costs :-Economy in material handling can be achieved by employing gravity-aided movements & minimizing the distance of material travel. A system that allows the product directly fall over the material handling equipment is more ideal.

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Life of equipment :-Proper periodic insepection,repairs & maintaences of equipment increases its life. smoothen the flow of materials & economize the production system.

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MAINTENANCE OF MATERIAL HANDLING EQUIPMENT Inspection :-all parts, open or covered are

inspected for wear & tear. Worn out or unworkable components such as wire ropes, bearing & bolts, are identified & remedial measures are taken. Breaks are adjusted & lubricated wherever & whenever necessary.

Repairs :-After inspection, all repairable parts are corrected & minor defected are rectified. open gear transmission, coupling, riveted & bolted joints, trolleys, breaks, guards etc., require frequent repairs.

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Overhaul:-involves dismantling the complete mechanism & replacing the damage components. Crane structure, buffers, rails, open gear transmission, pulley blocks etc., may be overhauled & various sub mechanisms may be aligned & adjusted.

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UNIT-LOAD, PALLETIZATION & CONTAINERIZATION It is easier & faster to move a hundred small

parts by grouping them into one unit than moving them individually one by one. these are collectively known as unit-load.

For example, each formulation of tablet contains a number of ingredients. For a lot size, ingredients(raw materials) are weighed & packed individually & loaded onto a pallet.

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Pallet is one unit load these are moved to the production department by suitable handling system.

Depending on the types of item to be transferred, a suitable pallet can be designed. for example, items of irregular in shape are liable to be damaged by crushing, for such items, a post pallet is useful. small items can be placed in a wire mesh-box.

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Containerization uses the principle of unit load. in this system, a big metal container is filled with a number of small products. many such containers are placed on a truck or trailer that is pulled by tractor or truck. such containers can be loaded on railway trailers & transported.

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TYPES OF MATERIAL HANDLING SYSTEMS

Conveyors:-are employed for transporting materials in a fixed path, which may be horizontal, vertical or inclined to different locations of a factory. these prove economical, if the flow of material is continuous.

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BELT CONVEYORS

It is used in transporting containers (bottles) for filling, capping, sealing, labeling, visual inspection etc.,in production of injectables,liquid orals, ointments & jellies.

Several types of other conveyor are available. example are roller conveyor, slat conveyor, wheel conveyor, apron conveyor, pusher bar conveyor, & bucket conveyor.

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Belt Conveyors◦ Conveys materials

along horizontal, and slightly inclined paths

◦ Driven by power operated roll mounted underneath the conveyor or at the one end of the conveyor.

◦ supported on either rollers or on metal slider pan and we call them roller conveyor and slider conveyor respectively

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BELT CONVEYORS-ADVANTAGES Belt can be made of asbestos fibers, neoprene,

Teflon, & vinyl polymer. cord belt are also used. Belt conveyors are for general purpose installation

& available in relatively large sizes. these can travel several kilometers as in case of coal mines.

Routine maintenance is easy. It is economical. Disadvantage-it is expensive.

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PNEUMATIC CONVEYOR

Pneumatic conveyor or pipeline conveyor is one of the most commonly used handling techniques in chemical industry. it is employed when the material is light & bulky, for example, formulation of powder insufflations.

This type of conveyor is a closed system, handling of unpleasant & injurious substance is easy. it is used for transporting of granular(example,wheat)or pulverized material(example,salt)through the pipes.

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PNEUMATIC CONVEYORS

Involves the transportation of a wide variety of dry powdered and granular solids in a gas stream.

In most cases the gas is normally air.

Where special conditions prevail, different gases are used.

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WHY PNEUMATIC CONVEYING?

Advantages Dust free transportation of a variety of

products. Flexibility in routing. Low maintenance and low manpower costs. Multiple use. Security. Ease of automation and control.

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WHY PNEUMATIC CONVEYING? Disadvantages

High power consumption Wear and abrasion of equipment Incorrect design can result in particle

degradation Limited distance By virtue of the complex flow phenomenon

which take place, there is a requirement for high levels of skill to design, operate and maintain systems

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FORK-LIFT TRUCKS

It consist of forks attached to a column of the truck. fork can be lifted upto the desired height with material(boxes) on them. the material can be stacked at the proper place very close to the roof in warehousing & shinning area. fork-lift trucks are used for short distance(40 to 70 meters) travel. these are used for indoor applications.

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Platform truck (low-lift) is used for transporting the palletised raw materials of a lot-size manually from the warehouse to the production area.

Platform trucks (high lift) is used for loading the tablet granules into double cone blender.

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Three wheel fork lift

Four wheel fork lift

CRANES

Cranes are employed for lifting & lowering of bulky items, packages & boxes. these find applications in heavy engineering industry & generally in intermittent type of production.

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HOISTS

Hoists means lift or pull something up to higher place (overhead position) with ropes. this equipment is mounted on single rail fixed at the height nearer to the roof. hence, material are transferred along fixed path. hoists find application in industries employing chemical cleaning. Cranes are used for heavy items & hoists are employed for small items.s

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Air operated Hoist Electric Hoist

SLIDES, CHUTES & LIFTS

Slides can be straight, spiral & vibrating, & made up of wood or steel. these transfer small jobs that can slide down under gravity. vibrating slides transport material up & inclined.(example,cigar-ette factories)

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CHUTES

Chutes have sheet metal or roller base for transferring components down the incline. chutes generally deliver the feed material directly onto the conveyor to reach the destination further.

Spiral chutes are used for transporting sealed vials from aseptic area to packing section using gravity principle.

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LIFTS

Lifts are used to transport material up in multi-stored plants. it is a fast & flexible equipment for floor to floor travel.

buckets or trays are mounted on the endless chain running from the ground floor to the top floor. the material can be loaded into trays automatically.

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TRACTORS & TRAILERS Three wheeled or four

wheeled tractors are employed & fitted with an IC engine drive. these are used for outdoor applications.

Trailers are loaded with the material & attached to the tractor. it can be either uncoupled from the tractor or the material can be dumped in respective stations.

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REFERENCES

Pharmaceutical Production & Management by C.V.S. Subrahmanyam, Vallabh Prakashan, first edition, pg. no. 260-267.

Modern business organization & Management systems approach by Prof.S.A.Sherlekar,V.S.Sherlekar, Himalaya publishing house, 5th edition,pg.no.5.38–5.58.

Applied production & operation management by Evans, Anderson, Sweemey & Williams, 3rd edition, West publishing company ltd.

Management (Task, responsibility & practices) by Peter F. Ducker, Allied publication, Bangalore.

The eastern pharmacist-1993

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