Promoting the Efficiency and Effectiveness of Materials Management

Abstract The basic function of Materials Management is to provide materials and spare parts for the operational requirements of a company in such a way that on the one hand, every requirement of the user department can be fulfilled so that the operation of the company can run smoothly and on the other hand suppressing the quantity and type of stock so that the investment in stock can be minimized. This function is even more important if one has to deal with stock of materials with a magnitude of 430.000 items amounting to US$ 300 millions. Carrying out such contradictory function is not an easy job. Every time materials or spare parts are not available, the user department tends to blame the logistics or materials function, although often the cause is not always due to its fault. This matter unavoidably also occurs within Pertamina organization, especially in its relation with the refinery operation. A corporate approach by involving the trio : materials/logistics - the user - the financial departments can assist in solving said problem, i.e. promoting efficiency (stock level) and concurrently the effectiveness (service level) in material management. In addition, certain quantitative criterions, can be agreed upon which can measure the performance of the materials/ logistics function objectively. This will also enable the management to know whether the materials/logistics function can execute its task, especially in providing the materials and spare part for the smooth operation of the company.