History of Materials Management
Material management as a discipline was rather slow to evolve as compared to production and marketing function. The growth of Material Management as a field of study and one of great relevance of business performance is of recent origin and have its root in the US economy. Over the years from the simple mechanism of exchange of goods and services it has transformed into a complex system of industrial production and commercial system.
The supplies for manufacturing organization got disrupted during WW1, the shortage during the war and heavy inventories build up both contributed to a better realization of inventories problem, this helped in understanding the importance of material management.
With the advent of the industrial revolution as a result of improved technology coupled with economic prosperity, the focus shifted from mass production and marketing. The population explosion along with income revolution further fuelled the demand for a whole range of product. The 1970’s witnessed significant changes in the character of material management.
Material Management’s concept was used in World War-I before WWI people were unaware of the importance of Materials Management, Inventory Control, and Supply Chain Management.
Here is how Material Management evolve during WWI
Slowly Evolved, Recent origin
• The root of evolution – US Economy: World War-I
• Before World War I (Before 1914): Material Availability Large Qty.
• World War I (From 1914 to 1918): Threat of materials shortage during the war
• 1920-21: Heavy inventory during a business collapse
• 1920: Control of materials management and the maintenance and repair of materials was the responsibility of purchasing managers in some industry.
• 1926-29: Plotless prosperity, prolonged depression, all contributed to a better understanding of the inventory problem
• 1930: Better understanding of Inventory Problems which led to Improved means of transportation and communications, recognition of unnecessary costs of excessive inventory, rapid technological changes in product and manufacturing
Further advancement in MM
1939-1945: Increase in military personnel and materials requirement in US Defence force, entered as a single largest buyer with increasing emphasis on quality standards
1945: After World War II:-
• Shortage of Material
• Increased Production, Population
• Increased Demand
• The need for Material Management
• Birth to an entirely new approach and idea in the management end i.e. Material Management
How Material Management evolved in India
The evolution of material management was a little slower in India than the rest of the world. The armed forces were the first one to adopt various practices of Material Management by the name “Logistics Management”. Establishment of Indian Stores Department in 1922 was the precursor of Material Management adoption in India. In the corporate sector, TISCO was the first one to establish a central purchase department.
Evolution of globalization meant new challenges for Indian corporate world as it meant that corporates have to move from government protected system to an environment where they had to contend with market forces, large corporations with significant brand equity and who follow different sources strategies and practices. This led to the realization of the importance of efficient processes in Indian corporate
To compete in the global level some of the Indian corporates have adopted new technologies especially information technology and are slowly integrating themselves with the rest of the world and understanding future global trends to work towards finding a place among the leading economies.
But, most of the industries have still not adapted to the recent trends. This is proving to be a barrier to further growth of these industries and can be the cause of their ultimate downfall.