Materials management: The key is people management (five brief case histories)
Authors: Aggarwal Sumer C. 
Published: October 2002

This article outlines the basic functions of materials management and then comments on the state of affairs as currently experienced by companies around the world. It also points out that the findings of past research have not been very helpful to the practicing managers. Nearly 80% of the companies remain frustrated with problems in their materials flow systems in spite of their concentrated efforts and huge expenditures on consultants, employee training, and computers and software.

The author of this article puts forth a hypothesis that “All the problems of materials management have their roots in management of people.” He attempts to prove this hypothesis with the help of five case studies in which he has participated himself as a consultant. A brief description of each of these is provided, and certain descriptive analyses and arguments are presented to indicate that in every case, the root cause of failure of the materials management function could be attributed directly to loose discipline, poor employee training, ineffective reward systems, lower caliber of personnel, bad habits, misdirected motivations, or negative attitude of employees in general.

The first case illustrates an irresponsible behavior of an outgoing plant manager that led to many headaches and serious problems related to materials. The succeeding plant manager had to deal with a real mess that could have been avoided had the outgoing plant manager or the top management of the company handled the situation in an intelligent, scientific, and disciplined way.

The second case study is about an intelligent, aggressive, but dishonest pharmacist who used the sanctity of the garb of a medical man to cheat his hospital of substantial sums of money. He did not even hesitate in stealing costly, illegal drugs from the pharmacy for which he was supposed to be the protector and caretaker. He brilliantly succeeded in finding certain suppliers who joined hands with him and shared the booty. He could do all this because he succeeded in hiring the weak and the incompetent staff and because he could hide his real self by maintaining meticulous inventory records on paper.

The third situation involved a large hotel's nutritionist, again an intelligent, aggressive, and ambitious person but a believer in personal gains no matter through what means. This person used the well‐respected technique of forecasting and the related forecast errors to his advantage. He hired only the meek, inexperienced, and marginal personnel to look after the flow of materials. Using a front of an excellent analyst and efficient manager, he was actually taking kickbacks from the raw food suppliers.

The fourth company used a highly sophisticated software package for managing its purchase, storage, and inventory control functions, but the employees utilizing this package were not following any of the prescribed procedures and disciplined approaches required for continually updating the computer memory records. The bad habits of employees were causing all the materials management problems one could imagine.

The fifth case study deals with a small company. This company was trying to use a highly complex and sophisticated software package for managing materials. The employees working with this package did not understand the logic behind the computer‐generated reports; for them it was a black box. They constantly disagreed with the action items and recommendations of the computergenerated reports. It was a total mess. After a great deal of hassle, the automated materials control system was replaced with a simple, transparent, easily understood “Kardex” system, and soon after most of the problems disappeared.

In conclusion, we can emphatically say that it is the people (employees), their understanding of the methods, procedures, and installed systems, and their sincerity and motivation that make or break a materials management system. So far, as top management is concerned, the system (irrespective of its complexity and sophistication) is only a tool and in no way a remedy. Only the people can make it work and provide the desired results.