MTO is an activity characteristic of almost every organization. The abbreviation stands for "logistical support." This is the main topic of the article. In addition to the definition, we will consider the functions, forms, organization of the MTO, its management, preparation of support plans and other important issues on the topic.
Definition
Material and technical support is one of the types of commercial activity that provides the organization with material and technical resources, respectively.
And a more detailed definition. Material and technical support - a system for the use and circulation of fixed assets, working capital of the organization (raw materials, machinery, semi-finished products, etc.), means of labor. As well as their further distribution by business units, structural departments, consumption in the production process.
The main goal of the MTO is to provide material and technical resources to the production in the agreed volumes, in the specified location.
Functions
The logistics functions are two categories: technological and commercial. Consider them.
The commercial functions of the MTO, in turn, are divided again into two groups. The main ones are directly buying or renting technical and material resources. The auxiliary functions of the MTO are as follows:
- Marketing. Decision on the choice of a particular supplier, justification of trust in this partner.
- Legal Legal support for the purchase / lease of resources, protection of the spectrum of property rights, as well as support for business negotiations. The conclusion of transactions and control over their execution.
Technological functions of the material and technical support of the institution:
- Solving issues on the processes of delivery and storage of resources.
- Unpacking, procurement, conservation of resources.
- Preliminary processing of raw materials and other resources.
The main responsibilities of the department
Material and technical support of the activity is the execution of a number of sequential and interrelated tasks:
- Resource planning for an organization. The basis is taken data on two indicators of production - capital productivity and material consumption. The information determines the optimal reserves of resources necessary for a specific production cycle or a separate release of a specific batch of products / services.
- The procurement task. MTO conducts operational and procurement work on the basis of the enterprise in accordance with needs plans. It also controls the processes of concluding supply contracts, analyzes the "errors" of production.
- Storage of materials and prepared raw materials. Organization of a warehouse nature. In addition, the responsibilities of the department include the development of instructions and instructions by which the storage and use of stocks should be carried out.
- Accounting for prepared resources. Strict control over their issuance to structural units.
MTO forms
The logistics center may be different. It all depends on the specifics of the enterprise or company.
Consider the most common forms of logistics organization:
- Supply of semi-finished products, finished products or technical services for economic direct relations.
- Wholesale trade in certain means of production, goods. It is carried out through warehouses, stocking bases, a store network.
- Borrowed, exchange operations undertaken in case of lack of resources, cash, investments.
- Recycling of production waste or the use of secondary resources.
- Leasing is one of the main tools in the world of finance, through which it is possible to make long-term investments in the modernization and re-equipment of production. It creates a stable material and technological base, contributes to increased competitiveness and better quality of manufactured goods.
- Purchase of raw materials and resources through special commodity exchanges. Organization of import purchases under relevant cooperation agreements with foreign firms.
- Development of subsidiary farms (example: manufacturing containers, extraction of any raw materials). Implementation of further centralized allocation of resources.
Classification of forms of MTO
The forms of logistics processes can be divided into two categories.
1. Transit (direct). Products are delivered to the consumer from the manufacturer. From suppliers, purchased goods are distributed to retail outlets. Accordingly, there are no intermediaries, and the buyer-seller relationship is a direct economic relationship.
Positive point: significant acceleration of the supply process, strong economic ties, lack of intermediary, intermediate operations. All this translates into a definite plus: a significant reduction in transit costs. This form of MTO organization is advisable with constant cooperation, with a large amount of resources being sold.
2. Warehouse. Products are delivered through distribution, intermediate storage terminals and complexes. It is convenient for those cases when materials and raw materials are consumed in small quantities. Initially, resources are purchased here at wholesale prices, then they are sent to warehouses, and from there to the final consumer. Inventories begin to decline, and the turnover of funds increases.
The company gets the opportunity to import resources at a convenient time, in the quantity needed "now." This gives intermediaries the opportunity to prepare the goods in advance for transportation in order to deliver it at the first request of the consumer organization. But for such convenience, the costs are borne by the buyers themselves - the so-called warehouse margins are introduced. With all the advantages, this form of MTO organization still increases the overall cost of production.
Organizational structure
Logistics management is the organization of two processes: procurement and supply management. Let's analyze it in more detail.
Organization of procurement:
- Procurement management of certain jobs.
- Organization of the purchase of necessary raw materials, equipment. This is the management of the procurement of materials, equipment and services.
- Management procurement consulting assistance.
Now the second process. Supply management is the following activity vectors:
- Inventory Management.
- Supply chain management.
- Managing the distribution of resources within the organization itself.
Forms of organization of management
Logistics management - the choice of one of three proposed forms of resource delivery:
- Decentralized. Workshops, departments of the enterprise themselves export the raw materials they need from production warehouses. Used official vehicles. This form is more suitable for those enterprises that carry out individual or small-scale production.
- Centralized. On the contrary, it is suitable for enterprises that are already aimed at mass production. Warehouses according to a pre-compiled schedule transfer workshops a certain amount of required material resources. Such an organization provides an opportunity to prepare in advance for delivery, it is more advisable to use transport, auxiliary work departments that are directly engaged in the distribution of the required raw materials in the shops. Centralized delivery of resources, in addition, greatly simplifies the system of accounting and control over the passage of raw materials, equipment, materials from the main warehouse to a specific workplace.
- Mixed. With this form, there is a sharing of both centralized and decentralized forms. Accordingly, some resources are delivered to certain workshops according to the established schedule. At the same time, the raw materials of a different quality are taken out of the organization’s units by themselves, using official vehicles.
Management structures
The enterprise is characterized by the systematization of services, departments of material support. Three main management structures are distinguished:
- Functional. Each unit performs its strictly defined function. This division is typical for enterprises engaged in small-scale or single-unit production, having a small nomenclature and small volumes of materials.
- According to the commodity principle. Here, individual units of the MTO are doing the whole range of work on the supply of raw materials. Such management is most characteristic of mass, large-scale production, which is distinguished by a wide range of products, large-scale reserves of raw materials.
- Combined. Some of the department’s specialists are busy with issues of external resource supply. Other employees are engaged in the intra-production movement of raw materials, equipment and other necessary resources.
Shortcomings in the organization of MTO
If the logistics program is not built correctly, then this can lead to a number of negative consequences for the entire enterprise. For instance:
- Shortage of products. This leads to lower profits.
- The increase in systematic costs due to downtime (due to lack of resources for production).
- Defective product release.
- Reduced product competitiveness.
- Losses due to spoilage of raw materials unclaimed due to excessive stocks.
MTO Plan
MTO planning is the receipt of a basis for making a decision on the purchase of raw materials. The following planning steps are highlighted here:
- Market research. This is the collection, analysis, processing and evaluation of data on offers, their assortment, the cost of necessary materials and raw materials. Analysis of the costs of their delivery.
- Calculation of the needs of the enterprise in these resources based on the balance of the MTO. Both external and internal sources of collateral are taken into account.
- Drawing up procurement plans.
- Analysis of the purchase.
