Material handling (MH) involves “short-distance movement that usually takes place within the confines of a building such as a plant or a warehouse and between a building and a transportation agency. It can be used to create “time and place utility” through the handling, storage, and control of material, as distinct from manufacturing (i.e., fabrication and assembly operations), which creates “form utility” by changing the shape, form, and makeup of material.
It is often said that MH only adds to the cost of a product, it does not add to the value of a product. Although MH does not provide a product with form utility, the time and place utility provided by MH can add real value to a product, i.e., the value of a product can increase after
MH has taken place; for example:
• The value (to the customer) added by the overnight delivery of a package (e.g., Federal Express) is greater than or equal to the additional cost of the service as compared to regular mail service—otherwise regular mail would have been used.
• The value added by having parts stored next to a bottleneck machine is the savings associated with the increase in machine utilization minus the cost of storing the parts at the machine.