ETHICS IN MATERIAL MANAGEMENTPresented byAkshay TichkuleMayuresh Chavan

Materials ManagementMaterials are any commodities used directly or indirectly in producing a product such as raw materials, component parts or assemblies.

Materials management is the grouping of management functions supporting the complete cycle of material flow, from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product.Thomas F. Wallace & John R. Dougherty

Functions of Materials ManagementMaterials planning and programmingRaw material purchaseReceiving, store keeping, and warehousingIssuing of material Inventory controlValue engineeringTransportation of materialsVendor developmentVendor ratingDisposal of scrap and surpluses

Focus of Material ManagementTo procure right materialsIn Right QuantityOf Right QualityAt Right TimeFrom Right sourcesAt Right prices5 Rs, principles of purchasing

Primary ObjectivesBuying the best item at the lowest costReduction in inventory cost and High inventory turnoverMaintaining the flow of productionMaintaining the consistency of qualityOptimization of acquisition and possession, resulting in lower costCordial relationship with suppliersMaintaining good recordsContribution towards competitivenessPersonnel development

Secondary ObjectivesPromotion of standardisation with suppliersDevelopment of reciprocal relations with customersCommittees to decide on economic make or- buy decisionsDevelopment of inter departmental relationships

ETHICS IN MATERIAL MANAGEMENT.Ethics: The inner guiding moral principle, values and belief that people use to analyze or interpret a situation and then decide what is right or appropriate way to behave.

BUINESS ETHICS

Ethics represents eternal & prevalent moral standard, personal values, corporate code of conduct. Essence of socio-economic ethics- awareness in contributing towards efficiency & humanizing our outlooks & actions. Business ethics: Self generated system of moral standards in the realm of business to which substantial majority of executives give voluntary asscent. The conduct of individual/ corporate professional involves destiny of corporate bodies or society.

ETHICS IN BUYING

Discipline which points out the obligation between person or a group of person, based on written code of civilized conduct.

Tries to set standard in absolute terms, as ethical behaviour gets a man respect, social recognition moral strength & internal satisfaction.

The personal character of buyer will determine what other people think of him.

The reputation of an organization relies on the thoughts action & deeds of Purchase personnel.

Buyer can purchase everything.

The ethics & intigrity of purchasing personnel should be such that the supplier should always trust them. Good buyer-

Confidence in his own judgement, Fair dealing, Relating to source selection & development, Negotiation in price, Inspection, Documentation, The buyer seller relationship should be fair, cordial & long lasting.

ECIFPMM: Members shall not use their authority or office for personal gains& shall seek to uphold and enhance the standard of purchasing.

Maintaining an unimpeachable standard of integrity in business relations. Complying with the letter & spirit of laws.

Loyalty towards the company & faith in his profession are the basic codes of purchasing professional.

Code of professional org. by IIMMTo consider total interest of ones org. in all transaction without impairing the dignity & to ones office.To buy without prejudice, to obtain max. ultimate value for each rupee spent.To subscribe & work for truth & honesty in buying and selling.To accord a prompt & courteous reception to all who call up on legitimate business mission.To respect ones obligations & those of ones org. consistent with good business practices.

Problems in ethicsTempting environment for purchasing executives.Influence of other department on purchasing decisionsAttitude of people towards briberyPolitical and business environment

e.g. scandals like bofors, commonwealth games

Backdoor sellingBackdoor buying by self-styled experts, bypassing purchase department

e.g. engineers often try to bypass buyers in the purchase of spares, fabricated itemsSteps should be taken to build trust by adequate technical knowledge with buyers

Over dependent buyer is in trouble

Backdoor sellingBuyer should be loyal and honest to all his colleagues so that backdoor selling is minimized in short run and eradicated in long runPolitical pressure and interference from top causes backdoor selling

Tips for ethical buyingAdhere to corporate/ departmental codesGive fair treatment to all suppliersDo not make personal purchase invoice in companys nameAvoid switching of orders like quantity changes, postpone or cancel order Avoid discussion of one vendor with others and maintain confidential informationDiscourage revision of quotation after receipt of tenders

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Tips for ethical buyingAvoid vendors with unethical natureObserve the truthfulness of all transactions with suppliers Quick testing, sampling and inspection process to make quick decisions of payments Rely on commonsense approach rather than legalistic frameSettle disputes on the basis of facts and fairness

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