The materials management will have to work in close co-ordination with production, marketing and finance departments. Only an atmosphere of mutual trust will ensure that these departments will work towards the total organizational objectives.
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For instance, production will have to keep the materials management department informed about its plans and schedules so that materials requirement department informed about its plans and schedules so that materials, requirements can be planned in advance. Even the adjustments in sales forecasting, or the changes in schedules must be duly conveyed to materials management.
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In the same way, the materials management department must keep the production department informed about the list of suppliers, availability of new materials and anticipated delays so that re-scheduling of production could be done and costly stock-outs avoided. The expertise of the materials department could be profitably used by the production department in purchasing capital equipment’s.
The finance department also has to work in close co-ordination with materials in anticipating funds requirements, payment of bills to suppliers, insurance and so on. Such close co-ordination will ensure prompt payment of bills and improve relationships with the suppliers.
Marketing department will have to give advance information on forecasts and special requirements so that planning can be done effectively. Materials management through efficient operations can keep the prices at a competitive level and thus helps the marketing department in its operations.
In many organisations, format committees consisting of executives drawn from marketing, production, finance and materials management departments are formed to finalize (periodic) annual sales targets, production programmes, total budget, materials budget etc. Formal organizational arrangements help in furthering inter-departmental relationships.