HOW MATERIALS HANDLING SYSTEMS (MHS) ENHANCES PRODUCTIVITY IN A LOGISTIC SYSTEM

Having worked in a supermarket set up, a large building materials store and studying a course in Materials and Stores Management, I know and understand a few concepts regarding inventory management. Here we go.

Material Handling System:

Materials handling is concerned with the movement of materials for short distances generally within a warehouse, or between storage areas and transport. The British Standards Institution defines materials handling as “techniques employed to move, transport, store or distribute materials with or without the aid of mechanical appliances”. Goods movement theory suggests that systems and procedures should be put in place so as to ensure that materials are handled as little as possible.

Material Handling System is therefore an integrated mechanism of how materials are handle and stored. This may include mechanical appliances, human resources, warehouse and warehouse modification designed to store materials efficiently. Activities involved in materials handling involves:

a)      receiving and issuing of supplies;

b)      quality control or verification;

c)      storage of goods;

d)      how to control stock movement;

e)      documentation flow;

f)        how to detect and deal with stock losses;

g)      how rejected material will be managed; and

h)      how to deal with unwanted material, obsolete and scrap, disposal

Productivity:

Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average,

expressing the total output divided by the total input. Productivity is a measure of output from a production process, per unit of input.

In Material handling, productivity it is concerned with reduction of operating costs such as direct operating costs, improve performance of material handling functions, tasks, and activities, identify effective levels of mechanization, improve management controls and improve productivity associated with the movement, handling, and storage of products through the business in response customer service requirements.

Material handling system therefore will enhance productivity in the following ways:

Meet customer requirements

Meeting customer’s needs is always at the heart of the business. Without customers, one cannot purport to run a business. The needs of the customer come first. Materials handling systems ensures that materials or stock are stored in way that eliminates damages, ensures quick retrieval, availability of stock as per customer demands and show professional handling. This ensures return customers, referrals, retention and obtaining new customers. The more customers a business has the better since marginal cost per customer reduces hence enhancing productivity.

Cost Reduction

Productivity is associated with cost reduction. Proper Materials Handling Systems ensures that materials movement is minimized, time taken to move materials from one location to the other is fully minimized, damages and wastage is eliminated to accepted level if not fully. Space taken for storage is utilized effectively and other stores running costs are at optimum.

Production Interruptions:

Where manufacturing is involved, proper MHS reduces interruptions in the production. Delays in delivering materials in the production system result to machines and labour idle time resulting in inefficiencies. MHS ensures that materials are delivered as and when required in the most efficient manner. For instance, movement of heavy items required in the next line of production can be delayed when manual systems are being used as a result of human fatigue.

Warehouse/store layouts

Effective MHS ensures that warehouse layout is consistent with the kind of materials store therein making use of every space. This ensures safety of personnel and materials, ease of movement and retrieval, locating items in the shortest time possible and storage of goods as per manufactures conditions. This ensures that space is fully utilized and there is no unnecessary waste of space, lighting and heating or congestion. This enhances productivity by reducing the amount of space required, eliminates damages, safety of personnel (if injured results in interruptions), effective use of resources like lighting and heating systems. MHS ensures stores are designed with the nature of materials in mind eg materials that are bulky, heavy, light, that requires certain temperatures like daily products, dangerous materials etc

Reduces Damages

MHS ensures quality of finished goods, raw materials, work-in-progress and during production. This results in less rejections therefore improving productivity. When these materials are handled without care by using the wrong systems or methods, it may result in interruptions in the production line and this can cause damage to machines, result in mass rejection at the quality control stage or damage the entire production in the line. For instance, at Coca Cola bottling plant in Nairobi, automated systems are used and this eliminates introduction of wrong ingredients during productions.

Reduces loss of materials

Proper materials handling system reduces and eliminates losses of goods through pilferage and poor storage. This reduces the firm’s profitability hence increasing cost per material unit. A good MHS therefore increase productivity by reducing unnecessary costs due to such losses.

References:

Leenders, M. Purchasing & Materials Management (10^th Edition)

Biederman, David. "Reversing Inventory Management." Traffic World (12 December 2004)

Stevenson, William J. Production Operations Management. Boston, MA: Irwin/McGraw-Hill, 2005.

Sucky, Eric. "Inventory Management in Supply Chains: A Bargaining Problem." International Journal of Production Economics 93/94: 253.

Buisness Reference: Iventory Management - http://www.referenceforbusiness.com/management/Int-Loc/Inventory-Management.html#ixzz1jWsaUzzZ

World Vision International Food Programming Manual, 2011

WFP Emergency Field Logistics Manual

ICRC Logistics Field Manual – Chapter 6 Warehouse Management pp 285-362

J. Mageto, Moi University, class notes - Materials handling and stores management, January 22, 2012