Material Control in Venezuela project:
We researched on Supply Chain Management Cost, and we designed and implemented a method for material control.
The amount of total budget of project was estimated.
According to previous project statistics, a significant amount of project fund is allocated to materials. More details are visible in the image below:
As you see in the above pie chart, the largest part of the budget assigns to the Material, accounting for 45% of the total project budget.
A little more than a third of the project’s budget is spent on wages of employees and contractors, and the remaining 20 percent relate to other costs and margins.
So based on Pareto principle (80/20: The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes. ) We decided to reduce material costs to reduce the total budget.
What should I do to control material?
Each department of the project that is dealing with the material, plays a role in controlling the material.
Either directly or indirectly!
The following departments are involved in material control:
- WareHouse and logistics
- Project Control
- Material Control
- Engineering and technical office
- (Execution (Direct o Contractor
- (Transport(if applicable
The above departments play a role in material control with a definite mechanism and close connection to the specified framework.
Responsibilities and duties of units
The Procurement and Procurement Unit is responsible for supplying the required materials according to the confirmed deficiency reports.
The warehouse plays the role of physically storing the material. Of course, in JIT systems, the warehouse is responsible for the availability of goods at a specific time and place.
Project control is responsible for preparing, controlling and accurately expressing future plans as well as past physical progress.
It is responsible for controlling and validating various inputs.
And if there is a discrepancy, it should take action to eliminate the discrepancies.
On the other hand, it is responsible for monitoring the performance of other above units.
The technical and engineering office unit is responsible for preparing the product tree or the so-called BOM.
The facilitator must:
According to the approved material list, the technical office should submit material requests to the material control unit regarding the program.
And the consumption of each item proceeds in accordance with the set standards
In case of exceeding the specified tolerance, the description of the discrepancy must be reported to the material control unit.
In some projects, the transportation unit is responsible for transporting materials.
And it is specified exactly where the desired material will be used.
In such cases, the transport unit will be responsible for delivering the goods to the desired location.
Assuming that the clerk has accurately estimated the required amount of materials for each component of the project.
According to the plan of the project planning and control unit, we know when and how much of each material item will be needed for the project.
The warehouse unit is also responsible for storing the materials in the order of arrangement according to the plan as well as the type of materials.
And reports on the instantaneous inventory of each item.
The executor submits his request to the material control unit to start work according to the periodic need.
The request is recorded in TMCS Material Control Software.
And in case of systematic approval of the software for each item of goods, the goods will be allowed to leave the warehouse. If there is a transport unit, the requested goods will be delivered to the executor at the desired location.
Just as the project control unit has forces as a site visitor, so does the material control unit.
The Material Control Unit visits the project daily to ensure the following:
The process of correct distribution of materials
Imaging and reporting of discarded material
Verify inventory information provided with reality
Matching the correct method of using materials in the agenda with the actual execution
Real perception of the progress of material consumption
Types of material control reports
With the correct implementation of the working method and the use of material control software, you can create useful reports in various formats and formats: PDF, Excel, and. . . Get output:
Types of software reports:
Material balance separately for each contractor
Reporting materials used more than less than allowed
Material balance cost report separately for each contractor
Report by place of consumption
User performance reports
The following video shows a summary of the beginning, how and achievements of this system. This film was presented to the top managers of Kayson Company in 2013. And received their admiration.