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Materials Management: Definition, Process, Benefits

Materials management is an aspect of supply chain management and planning. The primary purpose of materials management is to ensure that manufacturers have all the raw materials they need to make goods.

Materials management also focuses on ensuring that no components are wasted and optimizing  inventory maintenance and management. While materials management requires understanding what materials are needed and where to source them, it is also heavily involved in inventory management and storage.

Many industries incorporate and rely on high-quality materials management, including process manufacturing , construction, hospitals and healthcare, textiles, oil and gas, pharmaceuticals, and more. Any industry involved in the movement and supply of many raw materials requires material management expertise.

Materials management can save organizations and manufacturers lots of work, money, and time. Supplying the right quality of materials to the right places at the correct times can be extremely difficult for individual companies and organizations. This difficulty is part of the reason why many companies decide to outsource or create specialized material management departments.

Indirect Materials and Direct Materials

Materials managers deal with both direct materials and indirect materials. Direct materials are the components that cost the most and are the most essential to the production line. Indirect materials include raw materials, natural resources, and other supplies needed to create products.

Indirect materials are less cost intensive than direct materials and involve less measurement. Examples of indirect materials include gloves, PPE, and maintenance supplies.

Materials Management Definition

At its core, materials management is the process of ensuring the correct materials get to the right people at the right time.

Materials management is also referred to as asset management, hardware management, property management, and material handling. How material management is referred to and how it is defined can shift depending on the industry.

Materials Management Process

The process of materials management includes all steps from purchasing materials to receiving materials. This includes storage and warehousing, transport, and receiving. Each step has its own goals and process.

• Purchasing: Purchasing the right amount of goods is important for two reasons. First, it ensures the end-user has everything they need to operate. Second, this process can minimize the amount invested in storage and stored inventory.
• Storage: The goal of storage is to invest in the correct amount of warehousing space in the right places to facilitate the transport of goods in the next step. Storage can also act as a buffer between material production and materials used to mitigate the effect of shortages or material product mistakes.
• Transport: Transporting the correct materials to manufacturers or others at the right time is such a large and involved process that some companies occasionally separate it into its own department.
• Receiving: Receiving in materials management involves checking and distributing components to the correct customers.

Benefits of Materials Management

Well-executed materials management can be transformative for manufacturers and other industries. There are countless benefits, many of which are industry-specific.

Some benefits are more ubiquitous, however, such as the ability to perform just-in-time inventory control, reduce material waste, increase inventory accuracy, and optimize material transport.

JIT Inventory Management

Accurate materials management can allow for just-in-time inventory management (JIT). JIT is an inventory management style that involves delivering components right as needed, i.e., just in time.

JIT allows companies and organizations to minimize the amount of inventory they hold before it is needed, reducing risk. Overall, JIT is an excellent way for companies to reduce risk, save money, and improve efficiency if done correctly.

JIT would be difficult for manufacturers and organizations to perform without the oversight of specialized or outsourced materials management, which can handle the smaller, more frequent storage orders and supply chain risks.

One of the most significant risks of JIT is that it magnifies the impact of differences between planned and actual results. Designating the job of material management can mitigate some of these risks. Dedicated materials managers will be able to anticipate material requirements more accurately than non-dedicated departments, making JIT a more reasonable solution.

Reduction of Material Waste

By overseeing inventory and managing the timing of material delivery, material managers can reduce receiving errors and waste. Reducing waste is important to save costs and conserve resources.

Increased Inventory Accuracy

Knowledge of accurate direct material inventory levels can help increase production efficiency and reduce inventory loss. Preventing the loss of materials is an essential step in reducing the cost of raw materials.

Optimization of Material Transport

By creating specialized materials management departments and focusing on better management techniques, production companies can fully optimize the transportation of materials and the supply chain.

This optimization is done by choosing the correct storage locations and using good transportation techniques. Optimizing material transport can help provide a more consistent raw material flow for manufacturers.

Materials Management in Supply Chain Management

Extended supply chain research and supply chain management can significantly impact materials management. Extended supply chain analysis aims to understand customers’ needs beyond the manufacturer.

Material managers working to understand the extended supply chain usually collaborate with others in their organization. For example, a material manager working in supplies for a construction company will collaborate with developers and sales managers on new projects.

By working with those in other sections of the organization, a materials manager can work on sourcing materials beyond current needs. This can make it easier for managers to navigate potential material shortages, large increases in production, or other circumstances they may not have otherwise been able to anticipate.

Materials Management in Construction

One of the most significant industries that requires intensive materials management is construction. Obtaining and shipping materials (i.e., material management processes), not labor, makes up most of the cost in most construction projects.

Getting the right materials of the right quality to the right people is the core function of materials management, and all of these factors can change significantly depending on the construction project.

These challenges create the need for different material management specialties within different construction sectors.

The goal of every materials management construction job is to reduce waste and costs while ensuring that construction companies have everything they need to complete a project on time.

In construction, materials management also aims to provide correct inventory levels to prevent lost or stolen goods on sites that may not have the resources to manage inventory levels independently.

What is Sustainable Materials Management (SMM)?

According to the EPA, sustainable materials management is “a systematic approach to using and reusing materials more productively over their entire life cycles.” (EPA, n.d.). Sustainable materials management can significantly reduce emissions, waste, and environmental impact.

How to Incorporate Sustainable Materials Management Into Your Company

Sustainable materials management is a growing area of concern for many material managers. While SMM techniques hold obvious importance for environmental and ethical reasons, they can also serve to reduce overall costs in many industries.

The Impact of a Life Cycle Assessment on SMM

One of the first and most essential steps to an effective SMM strategy is understanding the life cycle and environmental impacts of goods and materials. A material manager can  understand the life of a product  by performing a life cycle assessment (LCA).

Life cycle assessments are performed in four key steps: the scope and goal, life cycle inventory, life cycle impact assessment, and interpretation.

Scope and Goal

Before the research portion of an LCA can be performed, the project’s scope needs to be defined. In defining scope, researchers will determine impact categories (environmental sectors) to be observed, and the scope of the product life cycle up for consideration. For example, some LCA projects may consider the end consumer, while some may stop with the manufacturer.

Life Cycle Inventory

The second step in an LCA is a life cycle inventory. In this process, researchers analyze the flows of energy and materials for a product or good created within the defined scope.

Flows observed usually include materials or energy out of or into the ecosystem.

Life Cycle Impact Assessment

Using the defined flows of energy and material, researchers can then measure the inventory’s estimated or actual impact. Research areas can include effects on habitats, climate, pollution, etc.

While performing the impact assessment, researchers will classify and characterize their results. This process involves normalizing research results for easier comparison and selecting the most important categories for further analysis.

Interpretation

Researchers will take previously collected data and interpret the information in a review process. This process involves evaluating data quality,re-assessing scope, identifying the most significant issues, and outlining points for future change.

The Impact of Sustainable Material Procurement on SMM

Sustainable material procurement is a method for performing SMM. To meet sustainable material procurement goals, material procurement may be altered to follow guidelines that outline better material sources. For example, the EPA has a comprehensive set of guidelines for material procurement to reduce environmental and human health impacts (EPA, n.d.).

Organizations can meet sustainable material procurement goals by choosing different raw material providers, placing restrictions on current material providers, or finding ways to select other materials altogether.

The Impact of Circular Economy Strategies on SMM

Recycling strategies, especially circular economy campaigns, have had impacts on SMM. A circular economy is a goal for a type of material management in which supplies and end-of-life plans for products are anticipated.

Circular economic strategies can include things like second-hand stores, electronics designed to be repaired, and returns programs for broken goods, but they can also include broader goals, such as recycling plastics into usable pellets for future manufacturing.

Many tools are available for material managers and materials management departments that want to move towards sustainability. SMM tools are available for many industries and materials managers working in all sectors.

As materials management is so significant in construction, SMM tools for construction materials managers are available in all construction sectors. We can use the tools available for better disposal of construction and demolition as a case study to explore the impacts of SMM tools.

Many organizations will collaborate with material management to build a more circular economy for the construction sector. For example, a non-profit called Build Reuse maintains an index of construction materials that can be reused across the United States.

This index allows those building new projects to source materials from those demolishing buildings or who have extra materials from a completed project. These materials may have otherwise gone to waste because  finding and communicating with potential buyers was not worth the cost and effort.

Build Reuse is just one example of a tool for SMM. Many third-party tools are available that can transform various industries and make it easier for materials management to become sustainable materials management.

Related Concepts to Materials Management

Many industries operate in conjunction with or close to materials management. For example, the following sectors are reliant on or work in conjunction with materials management departments:

• Supply chains
• Inventory management
• Enterprise resource planning
• Production management

Wrapping Up

Materials management applies broadly to many industries. Materials management techniques deeply impact any economic sector that deals with raw materials sourcing.

As such, the development of sustainable materials management has the potential to profoundly impact the environment and reshape the future of the planet.

Strategies for sustainable materials management are vast. Departments and research teams work hard and use many resources to understand the current environmental impacts and areas of concern, which doesn’t even touch on attempts to reduce that impact.

Fortunately, there are guidelines and tools available for companies to use to create the best possible sustainable materials management techniques for each sector—many current strategies to reduce the environmental impacts of materials management attempt to employ a circular economy.

A circular economy is an economy in which the end-of-life destination for products is anticipated from their conception.

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What is Material Management? (Definition, Types, and Objectives)

Materials management is a crucial aspect of the supply chain and plays a significant role in the success of businesses in the United States. In fact, according to the National Association of Purchasing Management, materials management accounts for approximately 60% of a company's total costs.

With such a high percentage of resources devoted to materials management, companies in the US must understand the importance of this function and implement best practices to achieve success.

Materials management is an essential function within an organization that ensures the smooth flow of materials from suppliers to production and eventually to customers. It involves the planning, procurement, and control of materials to ensure that the right material is available at the right time, in the right quantity, and at the right cost.

Materials management aims to balance the conflicting goals of ensuring material availability, minimizing inventory costs , and maximizing customer satisfaction.

This article will delve into the various aspects of materials management, including the objectives, best practices, challenges, and future trends of this essential function.

Whether you are a seasoned materials manager or new to the field, this article will provide valuable insights into materials management. So, let's dive in and explore this exciting and vital aspect of modern-day business.

Here’s what we shall cover in this post:

What Is Material Management?

Objectives of material management, what does a material manager do, material management best practices, challenges in material management, future trends in material management, key takeaways.

Material Management is a system that effectively controls and manages materials and supplies used in an organization. The goal of material management is to ensure that the right materials are available at the right time and in the right quantities, to support the production process and meet customer demand.

Here are some key points to consider when exploring material management:

• Material management plays a crucial role in the success of an organization by ensuring that materials are available when needed and in the right quantities.
• It helps to minimize waste and reduce costs by ensuring no over-stocking or under-stocking of materials.
• It helps to improve customer satisfaction by ensuring that orders are delivered on time and with the correct items.
• The critical components of material management include material planning, procurement , inventory control, and distribution.
• Material planning involves forecasting demand, determining the materials needed, and developing a plan to acquire those materials.
• Procurement involves sourcing and purchasing materials from suppliers.
• Inventory control involves managing the flow of materials into and out of the organization and monitoring inventory levels to ensure they remain within acceptable limits.
• Distribution involves the physical movement of materials from the organization to the customer.

Types of Material Management

The following are the different types of material management:

• Inventory Management

Inventory management involves the maintenance of a company's stock of raw materials , semi-finished goods, and finished products. It includes identifying the optimal inventory level to be maintained, determining the reorder points , and ensuring that the inventory is stored correctly.

Inventory management in an AI powered ERP aims to strike a balance between the costs of holding too much inventory and the costs of running out of stock.

• Purchasing Management

Purchasing management involves procuring raw materials, supplies, and services required for production. It consists of the selection of suppliers, negotiation of prices, preparation of purchase orders, and management of supplier relationships.

The objective of purchasing management is to buy the required materials at the best possible price and quality while ensuring timely delivery.

• Warehouse Management

Warehouse management involves the storage and handling of materials, as well as the management of the physical movement of goods within a warehouse. It includes receiving, storing, and shipping materials, as well as managing inventory levels and the location of materials within the warehouse.

The goal of warehouse management is to optimize the use of space and minimize the cost of storing and handling materials.

• Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a computer-based inventory management system used to plan production schedules and manage the procurement of materials.

MRP considers the lead time for ordering materials, the time required for production, and the inventory levels of materials. MRP aims to ensure that suitable materials are available at the right time and in the correct quantity to meet production needs.

• Transportation Management

Transportation management involves the physical movement of materials from one location to another. It includes the selection of carriers, negotiation of freight rates, preparation of shipping documents, and management of delivery schedules. Transportation management aims to ensure that the materials are delivered on time and at the lowest possible cost.

The following are the five primary objectives of material management:

• Right Material

The first objective of material management is to ensure that suitable materials are available for production. It involves identifying the materials required for production and ensuring that they are of the correct quality, specification, and quantity.

By ensuring that the right materials are available, companies can minimize the risk of production delays and ensure customer satisfaction.

The second objective of material management is to ensure that the right materials are available at the right time. It involves managing the movement of materials within the warehouse, reducing lead times, and improving the efficiency of delivery processes.

• Right Amount

The third objective of material management is to ensure that the right amount of materials are available for production. It involves determining the optimal inventory level to maintain and implementing processes to manage the movement of materials within the warehouse.

By ensuring that the right amount of materials are available, companies can minimize the risk of stock shortages, reduce the cost of storage and handling, and increase efficiency.

• Right Price

The fourth objective of material management is to ensure that materials are purchased at the right price. It involves negotiating with suppliers to obtain the best possible prices and implementing cost-saving measures, such as reducing waste, reducing lead times, and improving the efficiency of delivery processes.

• Right Sources

The fifth objective of material management is to ensure that materials are sourced from the right sources. It involves identifying reliable suppliers, developing partnerships with suppliers , and ensuring that materials are purchased from approved suppliers only.

By sourcing materials from the right sources, companies can reduce the risk of defective materials, minimize the risk of production delays, and ensure customer satisfaction.

Importance of Material Management

• Cost Reduction

One of the primary objectives of material management is to reduce the cost of materials. It includes reducing the cost of purchasing materials, as well as reducing the cost of storing and handling materials.

Cost reduction can be achieved through effective planning, procurement, and storage processes, as well as through implementing cost-saving measures such as reducing waste, reducing lead times, and improving the efficiency of delivery processes.

• Improved Quality

Another objective of material management is to improve the quality of materials and products. This includes ensuring that the materials and products used in the production meet specified standards of quality and implementing processes to prevent defects.

Improving the quality of materials and products can help ensure customer satisfaction, improve the company's reputation, and reduce the cost of rework and warranty claims.

• Timely Delivery

A third objective of material management is to ensure the timely delivery of materials and products. This includes ensuring that the right materials are available at the right time and in the right quantity to meet production needs and implementing processes to prevent delays in the delivery of materials.

Timely delivery is critical to any business's success and can help improve customer satisfaction, reduce inventory costs, and improve production process efficiency.

• Inventory Optimization

Another objective of material management is to optimize inventory levels. This includes determining the optimal inventory level to maintain and implementing processes to manage the movement of materials within the warehouse.

Inventory optimization can help to reduce the cost of storage and handling and minimize the risk of stock shortages or obsolescence.

• Efficient Supply Chain

A final objective of material management is to ensure the efficiency of the supply chain . This includes reducing lead times , improving the efficiency of delivery processes, and optimizing the movement of materials within the warehouse.

An efficient supply chain can help to reduce the cost of materials, improve customer satisfaction, and increase the competitiveness of the business.

A material manager oversees the procurement, storage, and delivery of materials required for production. This professional plays a vital role in ensuring the efficiency and success of a company's supply chain. The following are the main tasks and responsibilities of a material manager:

1. Facility Management

A material manager is also responsible for managing the facilities used for storing and handling materials. This includes ensuring that storage areas are secure, accessible, and compliant with safety regulations.

A material manager must also be able to manage the maintenance of facilities to ensure that they are in good condition and ready for use at all times.

2. Inventory Management

A material manager is also responsible for managing the movement and storage of materials within the warehouse. This involves determining the optimal level of inventory to be maintained, monitoring stock levels, and ensuring that materials are stored safely and efficiently.

3. Operations Management

A material manager ensures that operations are running smoothly and efficiently. This involves coordinating with production and logistics teams, monitoring performance metrics, and ensuring that materials are delivered to production on time and in the correct condition.

4. Production Planning

A material manager is also responsible for supporting production planning by ensuring materials are available when needed. This involves managing inventory levels, monitoring lead times, and ensuring that materials are delivered to production in the proper condition.

5. Cost Management

A material manager is responsible for managing the cost of materials, including reducing the cost of purchasing materials and reducing the cost of storage and handling. This involves negotiating prices with suppliers, reducing lead times, and improving the efficiency of delivery processes.

Here are some best practices that organizations can follow to ensure the effective and efficient management of their materials:

• Develop a comprehensive material management plan: A comprehensive materials management plan outlines the goals, objectives, and strategies for managing materials. This plan should be developed in collaboration with stakeholders such as suppliers, production teams, and logistics providers.
• Implement inventory management practices: Inventory management involves tracking and managing the flow of materials to ensure that the right materials are available at the right time. This can be achieved by using tools such as inventory software, barcoding systems, and real-time monitoring systems.
• Maintain strong supplier relationships: Strong supplier relationships are critical to the success of materials management. Organizations should work closely with suppliers to ensure that materials are delivered on time, to the correct specifications, and at a competitive price.
• Continuously monitor and analyze data: Data analysis is a critical component of materials management. Organizations should collect and analyze data on materials consumption, supplier performance, and inventory levels to identify trends and make informed decisions.
• Adopt digital technologies: Digital technologies such as artificial intelligence, machine learning, and the Internet of Things can significantly improve materials management processes. Organizations should adopt these technologies to automate and streamline their operations, reduce costs, and improve decision-making.
• Foster a culture of continuous improvement: Continuous improvement is critical to the success of materials management. Organizations should regularly review their materials management processes and make changes to improve efficiency, reduce waste, and enhance customer satisfaction.

Materials management is a critical function that involves procurement, storage, and delivery of materials required for production. Despite its importance, materials management is not without its challenges. The following are some of the critical challenges faced by materials managers:

• Supply Chain Management

One of the biggest challenges in materials management is managing the complex supply chain. This involves coordinating with suppliers, logistics providers, and production teams to ensure that materials are delivered on time and to the correct specifications. Materials managers must also be able to respond quickly to changes in demand and adjust the supply chain accordingly.

• Cost Control

Cost control is another major challenge in materials management. A material manager must be able to negotiate prices with suppliers, manage logistics costs, and ensure that materials are purchased at the best possible prices.

• Quality Control

Ensuring materials meet the required quality standards is another key challenge in materials management. A material manager must be able to work with suppliers to ensure that materials are manufactured to the correct specifications and delivered in the correct condition.

• Data Management

Managing data is another major challenge in materials management. A material manager must be able to track and manage large amounts of data, including supplier information, logistics information, and production information.

Material management is an ever-evolving field that is being impacted by new technologies, changing customer demands, and the growing complexity of the supply chain. The following are some of the key trends that are shaping the future of materials management:

• Digital Transformation

Digital transformation is one of the most critical trends in material management. This involves using new technologies such as artificial intelligence, machine learning, and the Internet of Things to automate and streamline materials management processes.

Digital transformation is helping materials managers to make more informed decisions, reduce costs, and improve the speed and accuracy of their operations.

• Sustainability

Sustainability is another key trend in materials management. This involves reducing the environmental impact of materials management processes and ensuring that materials are sourced, manufactured, and delivered environmentally and sustainably.

This is becoming increasingly important as consumers and businesses become more conscious of their environmental impact and demand sustainable products and services.

• Collaboration

Collaboration is another significant trend in materials management. This involves working more closely with suppliers, logistics providers, and production teams to ensure that materials are delivered on time and to the correct specifications. Collaboration helps materials managers to reduce costs, improve delivery times, and enhance the overall efficiency of the supply chain.

• Predictive Analytics

Predictive analytics is another key trend in materials management. This involves using data to predict future demand and adjust materials management processes accordingly. Predictive analytics is helping materials managers to reduce waste, improve inventory management, and enhance the overall efficiency of the supply chain.

Blockchain is another trend in materials management. This involves using blockchain technology to create a secure and transparent supply chain. Blockchain is helping materials managers to reduce costs, increase transparency, and improve the security of the supply chain.

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Materials management is an essential function in any organization, as it helps to ensure the effective and efficient flow of materials from the point of origin to the point of consumption. Materials management aims to ensure that the right materials are available at the right time, in the right amount, and at the right price.

To achieve this, organizations should develop a comprehensive materials management plan, implement inventory management practices, maintain strong supplier relationships, continuously monitor and analyze data, adopt digital technologies, and foster a culture of continuous improvement.

By following these best practices, organizations can ensure the effective and efficient management of their materials, reducing costs, improving customer satisfaction, and enhancing their competitive advantage.

• Materials management is the process of planning, organizing, and controlling the flow of materials from the point of origin to the point of consumption.
• Materials management aims to ensure that suitable materials are available at the right time, in the right amount, and at the right price.
• A comprehensive materials management plan should be developed in collaboration with stakeholders such as suppliers , production teams, and logistics providers.
• Inventory management is a crucial component of materials management and involves tracking and managing the flow of materials.
• Strong supplier relationships are critical to the success of materials management.
• Data analysis is a critical component of materials management, and organizations should collect and analyze data on materials consumption, supplier performance, and inventory levels.
• Digital technologies such as artificial intelligence, machine learning, and the Internet of Things can significantly improve materials management processes.
• Continuous improvement is critical to the success of materials management, and organizations should regularly review their processes and make changes to improve efficiency.
• Materials management can help organizations reduce costs, improve customer satisfaction, and enhance their competitive advantage.

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Materials Management – Definition, Benefits, Best Practices

Implementing proper materials management practices allows businesses to make sure the correct materials with the best price and quality reach the shop floor at the right time and in the correct quantity. Follow these best practices to get more control over this essential segment of the supply chain.

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Table of Contents

What is materials management?

Materials management refers to the strategic planning, coordination, and control of all activities involved in the procurement, storage, handling, and utilization of materials within a manufacturing organization. The process is aimed at managing the quality, sourcing, and price of materials, as well as their location and movement within the manufacturing pipeline.

The goal of materials management is to ensure that the right materials are available in the right quantities, at the right time, and in the right condition, while minimizing costs and optimizing efficiency. The job of the materials manager is to achieve this goal by ensuring close coordination between inventory, procurement, and production, and setting up procedures for communicating material requirements and distributing raw materials down the supply chain.

While some organizations may consider materials management a subsection of overall procurement management, other companies treat them as separate entities that serve different areas of a business. Others still may divide the functions of materials management between many business departments like procurements, supply chain, logistics, etc. This is often the case for larger manufacturing or construction enterprises.

As part of procurement management , materials management includes everything related to the sourcing and purchasing of materials. However, if treated as a separate subsection of supply chain management, it becomes a link between procurement and production, dealing mostly with material requirements planning , coordinating material deployment and replenishment, and conducting quality control and inventory analysis for direct materials.

It is worth mentioning that the materials used in manufacturing are usually divided into direct and indirect materials. Direct materials are the raw materials that are used in the products a company produces: rubber in tires, sugar in soda, etc. Indirect materials are items and materials used in the manufacturing process that do not make up the product itself. These may include adhesives, staples, equipment, or spare parts. In most cases, materials management includes controlling the flow of both.

Easily manage the flow of your materials with MRPeasy

What is Sustainable Materials Management (SMM)?

Sustainable Materials Management (SMM) is an approach to promoting resource and energy efficiency that considers the entire lifecycle of a product or material . This includes the design, manufacture, use, and management of products and materials, as well as solid waste management, in a way that minimizes their impacts on the environment, conserves resources, and reduces waste.

The SMM approach, as defined by the U.S. Environmental Protection Agency (EPA), is based on the principle that our economic well-being and environmental health are intrinsically linked. It seeks to:

• Use materials wisely, reducing the amount and toxicity of waste we generate.
• Conserve resources and minimize the environmental impacts associated with the materials we use.
• Promote innovative products and processes that can significantly reduce environmental impacts.

SMM involves a change in how a society views and uses materials, transitioning from a linear model of ‘take-make-waste’ to a more circular model where materials are reused, recycled, or composted at their end of life. The ultimate goal of SMM is to ensure that material use contributes to the sustainable future of our planet, promoting not just environmental health, but also economic prosperity and social wellbeing.

Benefits of materials management

Implementing effective materials management processes comes with an array of benefits that could reverberate throughout your operation.

• Streamlined procurement. Materials management ensures the procurement of the right materials in the right amount, which allows companies to streamline procurement processes and eliminate excess costs. Precise procurement prevents wastage and can result in significant savings.
• Efficient inventory control. One of the key aspects of materials management is maintaining optimal inventory levels. This can prevent both overstocking and stockouts , reducing the costs related to unnecessary storage or rush ordering, leading to overall cost-effectiveness.
• Effective warehousing: Proper organization and control of warehousing operations lead to better space utilization and reduced costs. Materials management plays a key role in achieving this operational efficiency.
• Accurate production schedules. Effective materials management enables precise planning and execution of production schedules. By accurately forecasting the demand for and availability of materials, businesses can ensure that production processes run smoothly and without interruption. This on-time production not only reduces downtime but also boosts overall operational efficiency and customer satisfaction, as on-time deliveries become the rule rather than an exception.
• Promotion of sustainability. With the concept of Sustainable Materials Management, organizations can reduce environmental impacts and conserve natural resources. This life-cycle approach promotes resource efficiency and contributes to corporate social responsibility initiatives.
• Enhanced quality control. Rigorous material management processes can help ensure the quality of materials used in the production process. This not only improves the manufacturing process but also enhances the final product quality, leading to better customer satisfaction.
• Reduced waste. By adopting the principles of the circular economy and effective waste management, materials management can contribute to reducing solid waste. It maximizes the use and reuse of resources, which is not just cost-effective but also helps in conserving natural resources.

In conclusion, materials management, when executed properly, can provide economic, operational, and environmental benefits. It ensures efficiency and sustainability in the use of materials, aids in meeting customer demand effectively, and plays a crucial role in the performance of any manufacturing company.

Materials management best practices

Effective materials management involves several best practices that can significantly enhance operational efficiency and sustainability. Here are some key best practices:

Set standards for material specifications and quality

The materials manager is the ultimate decision-maker when it comes to quality control and approving raw materials for purchasing. However, the materials manager cannot be at the helm of every purchasing process and every quality check, so they need to set standard operating procedures to be followed by those participating in the process. That includes putting material specifications as well as quality and sourcing requirements in place. This is the basis for maximizing product conformity and minimizing non-conformity.

Conduct regular quality checks and evaluate supplier performance

Effective quality control starts before the production process. Of course, no company is capable of assessing the quality of every unit of raw materials they receive, but quality control checks should be done on a regular basis, as often and as thoroughly as financially viable. In most cases, failures due to bad quality (especially internal failures, i.e. those detected by the customer, the ones necessitating returns, repairs, etc.) are more expensive than measures taken to ensure good quality . Partner with suppliers that can reliably provide the right materials, in the right amounts, at the right time. Evaluate suppliers based on factors such as cost, quality, reliability, and sustainability practices.

Read more about Supplier Performance Management .

Know the exact amount and location of your direct/raw materials

In order to provide the factory floor with the needed materials at the right time, you will have to know where and in which quantity the materials are. Correct markings and good warehouse organization are imperative in every company dealing with physical inventory. Physical counts should be conducted periodically to detect inconsistencies or misplacements, but technological solutions such as inventory management software or MRP software should be used to account for inventory in the day-to-day.

Keep track of your direct/raw materials inventory costs

A substantial portion of the average manufacturer’s expenses comes from direct material costs. Therefore, it is absolutely essential to make sure that excess inventory is not tying up cash that could be put into good use elsewhere. Furthermore, holding inventory for too long could result in perished or damaged goods. This is especially true in the case of materials that have an expiry date. Manufacturers should consider different inventory valuation methods (e.g. FIFO, LIFO, Weighted Average) according to the nature of their business.

Create a plan and follow it

Material planning is a vital part of materials management. After demand planning, i.e. predicting the product quantities you will sell during a set period, you can use the bills of materials of your products to calculate your material requirements for the period. Then, looking at the material quantities you already have available in stock, you can determine the amount of materials you have to order and create a material delivery schedule to make sure that raw materials are constantly fed into production and work would not stop because of a material stockout.

Use inventory control techniques

Using proven inventory control techniques might give you better insight into the performance of your SKUs and provide you with the knowledge that would help you minimize your inventory costs.

ABC (+XYZ) analysis

By applying the Pareto principle (or 80/20 rule) to inventory management, ABC analysis allows you to prioritize your SKUs according to their consumption value. Conducting an ABC analysis will divide your materials into three categories:

–  A for about 20% of the total SKUs that make up about 80% of the total consumption value. These items will receive the most attention: higher service levels, more review time, etc.

–  B for about 30% of the SKUs making up around 15% of the total consumption value. These will receive less attention than A-category items and more attention than C-category items.

–  C for about 50% of the SKUs that make up only 5% of the total consumption value. These will have the least amount of resources allocated to them.

In case only one parameter proves to be too basic in prioritizing your items, adding XYZ analysis into the mix also lets you account for fluctuations in the consumption patterns of the SKUs.

Read more from this article about ABC and XYZ Analysis .

Safety Stock and Reorder Point

Safety stock is the buffer of materials you hold to avoid stock-outs and continue production in case irregularities occur in the supply chain due to shifting supply or demand.

The reorder point is the set level of inventory at which an order for an SKU is triggered when it is time to replenish its stock.

Having only a reorder point set means that when delivery times exceed the expected time to a stock-out, your materials will be exhausted and production will stop until new materials arrive. However, having a safety stock will prevent that from happening as well. Both of these values need to be mathematically defined, however, in order to ensure that they provide the most value to your business.

You can find out more about these techniques from our blog posts about Safety Stock and Reorder Point .

Just in Time

Just in Time is not just an inventory control method but also a general approach to manufacturing that aims to minimize the time a product spends in the supply chain – from the supplier of the materials to the end consumer. This way, manufacturers can avoid overproduction, reduce bottlenecks and waiting time in production processes, and avoid holding excess inventory .

When talking about materials management, the general idea of JIT is to provide materials as they are needed, as closely according to demand as possible. As a consequence, the movement of materials is streamlined while inventory levels along with holding space and costs are drastically reduced.

Read more about Just in Time Manufacturing .

Minimize search time by using material kitting

Material kitting means bundling the components of a BOM into a ready-to-consume set before arriving on the production floor. This technique simplifies line-side inventory and improves order picking speed, reporting, and quality control processes.

As a general rule, the practice of kitting would be most beneficial when dealing with large varieties of small components, customized products with different variables, or a lack of space on the shop floor that does not allow for much line-side inventory.

Read more about how to set up kitting processes .

Utilize technology to make processes more efficient

There are loads of technological solutions available that can aid manufacturers and materials managers in improving their business processes. Barcoding, RFID and IoT devices, and warehouse management software aid in managing and closely tracking your inventory. But what complements all areas of materials management along with all the other departments of a manufacturing company is a manufacturing ERP system .

A good manufacturing ERP allows manufacturers to coordinate their whole business in one single program. This includes material management processes like material requirements planning, material deployment and replenishment, supplier management, quality control, inventory control and analysis, kitting, etc.

In addition, a manufacturing ERP system streamlines other manufacturing operations management processes, including production planning and scheduling, order management, return merchandise authorization (RMA) , and much more, improving management practices and efficiency across the company.

Key takeaways

• Materials management involves the strategic planning, coordination, and control of activities involved in the procurement, storage, handling, and utilization of materials. It aims to provide the right materials, in the right quantities, at the right time, and in the right condition, while minimizing costs and optimizing efficiency.
• Sustainable Materials Management (SMM) is an approach that promotes resource and energy efficiency, taking into account the entire lifecycle of a product or material.
• Effective materials management can streamline procurement, control inventory efficiently, improve warehousing operations, and maintain accurate production schedules.
• Best practices include setting standards for material specifications and quality, conducting regular quality checks and supplier performance evaluations, keeping track of direct/raw materials inventory and its costs, and having a comprehensive material plan.
• Inventory management software or MRP/ERP software can assist in tracking, organizing, and planning for inventory, thereby increasing material management efficiency.

Frequently asked questions

An example of materials management is a car manufacturer organizing the procurement, storage, and usage of specific raw materials like steel, rubber, and glass, ensuring they are available in the right quantities and at the right time to produce a particular model of a car. They might use manufacturing ERP software to accurately forecast demand, manage inventory levels, and schedule procurement, ensuring a smooth production process.

Supply Chain Management (SCM) involves managing the entire flow of goods and services, from raw materials procurement to delivering final products to customers. Operations Management (OM) oversees the day-to-day production processes within a company, focusing on the efficiency and effectiveness of operations. Materials Management (MM), on the other hand, specifically handles the sourcing, acquisition, storage, and allocation of materials required in the production process.

Yes, materials management is a part of logistics as it involves the storage, control, and movement of materials within and from an organization, which are crucial aspects of the logistics process.

You may also like: Material Planning – Definition, Tools, and Tips

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Madis Kuuse

Madis is an experienced content writer and translator with a deep interest in manufacturing and inventory management. Combining scientific literature with his easily digestible writing style, he shares his industry-findings by creating educational articles for manufacturing novices and experts alike. Collaborating with manufacturers to write process improvement case studies, Madis keeps himself up to date with all the latest developments and challenges that the industry faces in their everyday operations.

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Materials Management

Publication Date :

02 Feb, 2023

Blog Author :

Kosha Mehta

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya, CFA, FRM

Table Of Contents

What Is Materials Management?

Materials management refers to a more efficient administration of materials or firms' input. It will invariably result in a rise in the effectiveness of the company as a whole. Therefore, it is necessary for every industry that deals with distributing and delivering a significant number of raw materials and is a part of their supply chain management.

Materials management focuses on the right supplier, the right amount, the right pricing, the right quality, and the right timing. In addition, it entails the planning and control of materials, the procurement of raw materials, the planning, and control of inventories, production planning, and waste management.

Table of contents

Materials management explained, best practices, frequently asked questions (faqs), recommended articles.

• In materials management, controlling the flow of materials is one of the primary focuses.
• It ensures that producers have access to the specific resources they require precisely when needed.
• Material management ensures that the materials are of good quality and purchased from reliable vendors.
• It involves techniques like MRP - Material Requirement Planning and ERP - Enterprise Resource Planning.

Materials management is responsible for successfully satisfying production demand . It requires a significant amount of coordination, particularly with the operations of material flow , coordination, sequencing, and the return of transport goods.

The materials handling task group is comprised of experienced members of the industry who are responsible for the design of material racks, as well as the enhancement of density and quality characteristics, to facilitate the efficient transit of goods into assembly facilities. The "life cycle" study of racks and the best practices around the recycling and life-maximization of shelves, including safety issues, exhaustion, and load management, is the current topic among the organization's members.

The management and planning of the supply chain include a component called materials management. The basic objective of materials management is to supply manufacturers with all the raw materials required to complete their wares' production.

In addition, the management of materials emphasizes preventing the loss of any individual components and achieving the highest possible efficiency in the maintenance and administration of stock. Therefore, in addition to being significantly involved in inventory management and storage, materials management needs a grasp of what materials are required and where they can be obtained to function properly.

Functions of Materials Management

#1 - production and the management of materials.

The production manager is responsible for preparing production schedules that will be carried out in the future. The production schedules are the basis for determining the requirements for the various components and materials. Orders that have been placed or estimates of future demand for a product are considered when developing production schedules. To ensure that manufacturing runs without a hitch, every category or component of the raw materials is made available.

#2 - Purchasing

The purchasing department can create purchase agreements based on other departments' requisitions. This section maintains contracts with the various suppliers and regularly gathers quotations and other relevant information. This division will make every attempt to make purchases of appropriate items of appropriate quality at affordable costs.

Purchasing is a management action that extends beyond the basic act of buying and involves the planning and policy activities spanning a wide variety of activities that are connected to and complementary to one another. This means that purchasing is more than just an act of buying something.

Stores not used in producing non-production items such as office supplies, perishable tools, maintenance, repair, and operational supplies are kept in stock according to the company's requirements. One may not need these retailers daily, but having them available is necessary. Furthermore, labor can halt if these kinds of businesses are unavailable.

#3 - Transportation

One of the most significant functions of materials management is transporting materials from various suppliers. The responsibility for coordinating transportation service falls on the shoulders of the traffic department. Either the company will have to buy the cars themselves or find a third party to provide them on a rental basis. Everything relies on the amount and the frequency of the material purchases. The goal is to secure economic and practical transport facilities for the commodities .

It concerns the flow of materials inside a production organization, and the cost of handling materials is controlled. It is also observed that no material losses or wastages occur while the materials are being moved. For material handling, specialized apparatus may be purchased.

#4 - Receiving

The receiving department is in charge of unloading commodities, counting the units, verifying the quality of the items, and sending them to retailers, among other responsibilities. In addition, the purchasing department is kept apprised of the arrival of various materials.

1. Material Requirement Planning

MRP stands for material requirement planning . A business must conduct accurate resource planning to guarantee that its manufacturing processes and activities are carried out correctly. Without such planning, the businesses risk being confronted with issues associated with the supply chain , such as production, output, etc.

MRP is a scheduling, project planning, and inventory planning methodology. It gives managers the ability to anticipate the number of raw materials that will be required for manufacturing. As a result, it makes it simpler for the managers to oversee, arrange, and put together the components.

2. Enterprise Resource Planning

ERP is an updated version of MRP, whereas MRP was exclusively used for material planning. ERP stands for " Enterprise Resource Planning ." It encompasses the planning of all company-related operations. It refers to the business software essential to managing an organization's resources effectively. ERP gives the materials manager access to several useful and important tools that assist in administrating production resources, including materials and other resources.

In addition, the ERP has a consolidated database that streamlines procedures while cutting down on manual labor. It came about as a result of companies' subsequent realization that managing their office operations and MRP systems was important.

• The proportion of the overall cost devoted to materials is maintained at an acceptable level. The application of scientific purchasing assists in procuring resources at more affordable costs. The efficient storage of resources also contributes to the reduction of the wastage of such items. These aspects contribute to the overall cost-effectiveness of the items.
• The price of indirect materials is closely monitored to ensure accuracy. However, because there is not always enough control over indirect inputs, the cost of those items might sometimes contribute to an increase in the overall cost of manufacturing.
• There are no equipment breakdowns because of the late delivery of materials since there is no delay in the materials supply.
• There is no reduction in the amount of direct labor .
• The transportation of the materials and the stage of storage where they are maintained are monitored closely to prevent any unnecessary material waste.
• The delivery of the products is on time. There are just a few cases where they were late.
• Both under and over-stocking are prevented, which helps to keep the expenses related to the supplies under control.
• As a result, there is less crowding in retail establishments and the various production phases.

#1 - Use Explicit Rules For Material Quality

Maintaining control over the material quality is helpful by ensuring that the person responsible for buying is extremely careful while making their selections. However, having a predetermined list of criteria that must be satisfied before purchasing or utilizing an item is a foolproof method for staying on top of this situation.

Having these company-wide rules eliminate any misunderstanding. It also ensures that standards can be maintained even in the absence of particular individuals.

#2 - Make Smart Selections Of Providers

Firms will want to select vendors with a history of earning a reputation for offering high-quality materials. On the other hand, various additional traits may be investigated, which may prove useful from a strategic standpoint. For example, when a last-minute order comes in, the geographic location of any given source may affect how soon one can get their hands on things.

The potential partner's degree of adaptability, level of transparency, and proficiency in communicating are all qualities that should be taken into consideration throughout the selection process. In the long term, firms will want to work with a provider that comprehends their requirements and is compatible with their business's values.

#3 - Employ A Specialist As Materials Manager

It is essential to have a person in a position of authority who is in charge of monitoring all aspects covered up to this point. Accountability is established when a specific worker is assigned to perform a task. As a result, there is a greater likelihood of meeting the duties.

Having a focal point also ensures that other employees always have someone to go to if they face significant obstacles. This key individual will be able to organize and execute strategies and implement plans. The strategies that they have developed will also act as a model for others to follow.

#4 - Use The "Just-In-Time" Inventory Control Approach

Many approaches to stock control may be utilized to increase the productivity of resources. Just-in-time manufacturing is one idea that illustrates this type of scenario. This strategy adheres to the thinking that one should not begin sourcing materials until after a client has already placed an order with the company.

This strategy can include risk, but if carried out correctly, it will lower the quantity of material inside the supply chain at any given time. It is possible to apply several different techniques, such as lean manufacturing or six sigma; nevertheless, the most important thing is to pick the successful one.

#5 - Maintain A Well-Organized Warehouse

The area where the goods are stored must have some organization in the architecture of the space. This will make it simpler to locate products at the precise moment they are required. Also, it will reduce the likelihood of anything going wrong because there will be less confusion.

Procurement Handling and Inventory Management are two functions handled by the SAP MM (Materials Management) module, which is part of the SAP ERP software package. Materials management in SAP includes all of the activities inside the supply chain, such as consumption-based planning, planning, vendor assessment, and invoice verification.

Material management is a scientific approach that focuses on planning, organizing, and controlling the flow of materials from where they are first purchased to where they are ultimately used. In general, inventory refers to the materials that are held in stock. Additionally, it is referred to as the idle resource of an organization.

"Double handling" is the primary issue in materials handling management. It is a term used to describe circumstances in which items are handled more frequently than required. Additionally, this can happen due to human mistakes, which can lead to shipping and receiving problems, which in turn cause erroneous inventory levels and inaccurate material inventory counts.

This has been a guide to what is Materials Management. Here, we explain it with its functions, importance, techniques, and best practices. You can learn more about finance from the following articles –

• Management Buyout (MBO)
• Management Information System
• Quality Management System

Marketing91

Materials Management – Definition, Types, Benefits, and Objectives

June 12, 2023 | By Hitesh Bhasin | Filed Under: Marketing

Material Management is an important component of any successful business. It involves planning, controlling, and monitoring the movement of materials from suppliers to manufacturers and then to distributors and customers.

Materials management also includes tracking inventories, monitoring stock levels, managing purchasing orders, and ensuring that materials are delivered on time and in the right quantities. Materials Management ensures that businesses can meet customer demands and stay ahead of the competition by keeping their operations running smoothly.

Moreover, it is an important task to determine the right quantity required for the production process; otherwise, there will be two outcomes; first is the excess of material, and the other is the lack of material. Both scenarios are not desirable for production or materials management.  Therefore, material management is considered the core of supply chain management.

Table of Contents

What is Material Management?

Material Management is the practice of overseeing and coordinating the movement of raw materials, direct materials, components, and finished goods from point of origin to point of use. It is the responsibility of a Materials Manager to ensure that these materials and goods are moved efficiently and cost-effectively, while also ensuring that inventory levels are managed appropriately.

Materials management refers to all the activities such as planning, controlling, directing, and coordinating the materials and other commodities required for the production process. Materials management starts from the quality and quantity of the material necessary for the production process and ends when the final goods are ready to be delivered to the final consumers of the products .

Material Management processes can be used to track and analyze the planned and actual results of supply chain, production, and inventory management activities. Organizations are increasingly striving to define and implement sustainable Materials Management systems that reduce the environmental impact of their operations by minimizing their consumption of resources.

Materials Management Process

• Purchasing: Material management begins with the purchasing process. This includes selecting suppliers and evaluating their ability to meet your requirements. It’s important to ensure that you are getting the best quality products at the most competitive prices.
• Storage: Material management also involves the storage of goods once purchased. This should be done in a way that maximizes efficiency and minimizes costs while ensuring optimal product quality is maintained.
• Transport: Material management also involves transporting goods from one location to another, either internally or externally. Proper planning needs to take place to make sure that all deadlines are met and no damages occur during transport.
• Receiving: Material management also involves receiving goods when they arrive at their destination. A strict protocol should be put in place to ensure that all goods arrive in good condition and are checked for accuracy. This is an important step to ensure the quality of your products.

Benefits of Materials Management Systems

Just-in-time inventory management (jit):.

Materials Management helps you to create a just-in-time inventory system by allowing for automated ordering and delivery of materials as needed. This helps reduce the risk of overstocking or understocking and ensures that your supply chain is quickly able to move the right amount of materials at the right time.

Optimized Inventory Accuracy:

Materials Management also enables optimized accuracy when it comes to tracking and managing material items within your supply chain. With Material Management, you can easily monitor inventory levels to ensure that there are always enough supplies on hand while avoiding any unnecessary costs associated with stocking too much material.

Reduction of Material Waste:

Materials Management helps reduce waste in terms of both raw materials and indirect materials. By optimizing the use of existing resources, Material Management minimizes the need for additional materials and keeps costs low.

Optimization of Material Transport:

Materials Management allows you to optimize material transport throughout your extended supply chain. By tracking materials in real-time and using predictive analytics, Material Management can help you plan and identify the most cost-effective routes for transportation.

In addition, Material Management helps businesses to achieve their sustainability goals by reducing waste through more efficient use of resources. Through Material Management, businesses can replace production materials with sustainable options more easily and quickly as well as extend their reach of sustainable practices outside of their traditional supply chain boundaries.

All in all, Material Management provides great benefits that can be utilized by businesses looking to streamline their supply chain and become more efficient and sustainable. By optimizing the use of raw materials, indirect materials, and transportation routes, Material Management can help any business achieve its goals.

Objectives of Materials Management

The followings are the main objectives of material management in supply inventory:

1. to select the right quality.

The selection of the right quality of material is the responsibility of material management. The quality of the final product depends on the quality of the material used to make it. Therefore, it is crucial to make sure that the right quality material is used in the production process.

Make sure that companies ask for material samples from different suppliers before placing an order for large quantities of material and select the supplier with the optimum quality of the material. The work is not done just here.

The quality control manager regularly checks the quality of the material supplied to make sure that the supplier is maintaining the same quality of the material.

2. To meet the production requirements

The work of production entirely depends on the availability of the material in the organization. Therefore, it is vital that the right amount of material is available in the organization at all times so that the production process can go on without any interruption.

However, ordering material in abundance is also not the right solution. Because this might end up wasting your money to buy material that will never be converted into final goods. The material manager keeps check on the material available in inventory and regularly meets the production team to learn about the material requirements and place orders with suppliers.

3. Purchasing at the Lowest price

Every organization wants to buy the best quality material at the lowest prices possible to maximize its profits. This can only be done by proper use.

Therefore, another important objective is to get the highest quality of material at the lowest prices. To do this, the material manager of the organization asks for quotations from different suppliers and choose the suppliers based on the quotations’ amount and the quality of the material.

4. Selection of suppliers

The role of a supplier is significant in the production process. For example, if your supplier fails to provide the material on time and fails to meet the unexpected demand for the material, then it will have a direct impact on business.

Therefore, the selection of suppliers is an integral part. Rather than relying on one supplier, a company supplies material from at least 2 or 3 suppliers so that the supply of material never stops.

5. Limit the wastage

An essential objective within the organization is to make sure that low or no amount of material is wasted. For this, the employees are trained so that they work efficiently and do not waste material.

In addition to this, the material manager supervises the production work to make sure that the material is appropriately used and not wasted.

6. Forecasting

Forecasting is also objective and it is part of the job role of a material manager to keep track of the supply material in inventory and place orders with the supplier beforehand.

Forecasting is essential to make sure that material is always available in the organization to meet the demand. Moreover, it is the responsibility of a material manager to inform the supplier beforehand about the requirement of the material so that he can prepare the material to be supplied.

7. Product enhancement

The role of a material manager is crucial when it comes to the improvement of the quality of a product. The quality of a product can be improved by the usage of a material of good quality.

The material manager works with the product manager to decide what is to be done to improve the quality of the product and what quality of the material is required to do so. Then it becomes the job of a material manager to obtain the required from the suppliers.

8. Standardization Process

Standardization of quality is also an objective. A material manager should ensure the standard of quality of the product and the material used to manufacture that product.

9. Relationship with suppliers

It is necessary to maintain good relations with suppliers. Having a healthy relationship with suppliers means you keep constant communication with your suppliers.

That means you have open communication with your suppliers about the material supplies and the quality of the material.

10. Consistency of quality

An essential objective of material management is to ensure the quality of the material. The material manager checks the quality of all the supplied material before it is used for manufacturing purposes and discusses with the supplier if any difference is observed in the quality of the material.

Types of Material Management

Material requirements planning:.

Material Requirements Planning (MRP) is the process of managing all the replacement production materials needed for a manufacturing process, taking into account all the raw materials and components. This includes scheduling when each material should be delivered to ensure that there are no delays in the flow of materials.

Purchasing:

Purchasing is an important aspect of Material Management that involves buying the necessary materials from reliable suppliers. A construction company needs to have a well-thought-out purchasing plan that allows them to maintain a good relationship with their vendors, while also getting the best possible prices.

Inventory Control:

Inventory control is also an important part of Material Management and involves tracking the inventory of materials used in the production process. It is important to have an inventory system that allows for easy tracking and adjustment of stock levels when needed.

Material Supply Management:

Material supply management is a process that involves managing the flow of materials from suppliers to customers. This includes ensuring that all materials are received on time and of the correct quality.

Quality Control:

Quality control is an important part of Material Management and involves ensuring that all materials used in the manufacturing process meet certain standards. Quality control also includes inspecting products to make sure they meet customer expectations. This helps ensure a company’s reputation for quality products remains intact.

What do Material Managers do?

Product & supply chain planning.

The materials managers are required to have the capabilities for supply chain management and supply chain planning . It is the job role of a material manager or overall management department to determine the quality and quantity of material required for the production process.

The production or manufacturing department conveys its requirements for different types of material needed for the production process to the management department. It is the responsibility of the material manager to determine the quantity requirement of materials in the organization. The process is not as simple as it seems. There are a lot of things that a manager is required to take into consideration before preparing a final order for material procurement, such as demand in the market , inventory level, etc.

Negotiation

Materials managers are also responsible for contacting suppliers and coordinating with them so that the right quality and quantity of material are supplied on time. The material manager is responsible for negotiating the best possible terms with vendors and suppliers.

This could include pricing, delivery schedules, payment terms, and quality standards of materials. Material Managers must remain informed about market conditions to secure the most favorable deals.

Forecasting:

Material Managers must manage resources effectively by forecasting future needs. They must analyze historical data and trends to determine the necessary inventory quantities and ideal delivery times.

Material Managers must also consider factors such as seasonal demand, product cycles, and market conditions when making forecasts.

Material Managers must often coordinate with different teams such as supply chain, logistics, and production to ensure that materials are delivered on time and within budget.

Material Managers must also track shipments and ensure that materials arrive in the right quantities and at the right quality level to meet production requirements.

Inventory Management:

Material Managers are responsible for monitoring inventory levels and ensuring that there is an adequate supply of necessary materials.

Material Managers must be able to identify potential risks such as stock-outs or overstocking and take preventive measures to avoid them. Material Managers must also keep records of inventory levels, quality assurance results, and supplier performance.

Evaluation:

Material Managers must perform regular evaluations of the materials they manage, including quality control checks and cost analysis.

Material Managers must be able to identify and analyze trends to make informed decisions about the best materials for their organization. There are various roles that material management requires, in addition to material managers such as Material planner, inventory analyst, and inventory control manager.

They coordinate to make sure that the supply of material and inventory is at optimum levels. Also, they make sure that everything goes according to plan and that no deviation from the plan takes place because of poor management.

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What is Materials Management? Objectives, Classification, Systems Approach, Dynamics

• Post last modified: 3 September 2023
• Reading time: 19 mins read
• Post category: Production Management

What is Materials Management?

Materials management refers to a method of planning, organising and controlling activities concerning the flow of materials in an organisation. It is an important function of an organisation which ensures proper planning and acquisition of materials within its supply chain. The materials are required by the organisation to complete its production process. With the change in the economy, technology, society and environment, this function has become more professional and complex.

Table of Content

• 1 What is Materials Management?
• 2 Concept of Materials Management
• 3 Objectives and Importance of Materials Management
• 4.1 Raw Materials
• 4.2 Work-in-Progress
• 4.3 Finished Goods
• 5 Materials Planning
• 6 Materials Planning at Micro and Macro Levels
• 7 Systems Approach to Materials Management
• 8 Dynamics of Materials Management

Materials management requires the delivery of quality products or services on time at the lower price that imparts a superior value and creates a competitive edge. Various manufacturing organisations use the raw materials in their processes to manufacture the products which are more beneficial and useful for the end consumers than the original raw material.

The wood from trees is transformed into chairs and tables, iron ore is the mineral resource that is extracted for converting into steel, and steel is used in the process of manufacturing refrigerators, cars, utensils, etc. This process of transformation through the methods of manufacturing or production helps in making the society wealthier and eventually leads to a better standard of living.

Concept of Materials Management

Materials refer to inputs to the production process. Most of these inputs are converted to finished goods. These materials can be raw materials, work-in-progress, finished goods, spare parts and components, operating supplies such as lubricating oil, cleaning materials, and others, required for maintenance and repair. Materials management is a basic function of the business that adds value directly to the product itself. It involves all activities related to materials except those directly concerned with designing or manufacturing of the product.

For example, a car manufacturing organisation has to purchase various materials for producing a car, such as wheels, engines and windows. The process through which these materials are sourced, purchased, stored and utilised is materials management. Materials management deals with controlling and regulating the flow of materials in relation to changes in variables like demand, prices, availability, quality, delivery schedules, etc. Thus, materials management is considered to be preliminary to the transformation process.

In the words of Bethel, material management end when the correct finished product in proper condition and quantity passes to the consumer. The movement of materials in an organisation goes through three phases; first raw materials are acquired by the manufacturing organisation.

Secondly, raw materials go through the process of manufacturing and ultimately finished goods reach the end consumers through a physical distribution system. This entire process involves many complex stages which include the process of outsourcing, global sourcing, shorter lead time, price determination, logistics issue, mode of transportation, maintaining a long-term relationship with suppliers, methods of information technology, legal issues, etc.

Objectives and Importance of Materials Management

The main aim of materials management is to procure high-quality products at the lowest possible cost by having accurate information regarding the availability of materials. Materials management contributes to the profitability of the organisation through coordinated efforts of stock control, inspection of the material received in the organisation, transportation, material handling operations etc.

Apart from that, the following are some other objectives of materials management:

• To ensure efficient materials planning and scheduling of production
• To make efficient decisions related to buying or purchasing
• To prepare required specifications and standardisation of materials
• To facilitate product’s development and designing
• To forecast the quantity and demand for materials requirements
• To maintain quality control of purchased materials
• To ensure material handling with value analysis and value engineering
• To develop skills of the workforce in materials handling
• To ascertain a smooth flow of materials in and out of the organisation

Let us understand the objectives of materials management with the help of an example.

ABC Ltd. is an Indian water heater producer. One of the company’s plant is located in Bengaluru. The company faced a number of problems related to materials in the previous month. Some of the events that took place were unacceptable and detrimental to the company’s performance.

These events are as follows:

• The production line was on halt as the pressure and temperature relief valves from its suppliers were shipped to its Kanakpura plant instead of Bangalore. This resulted in a delay of one week.
• 100 units of water heaters were scrapped after it was discovered that the anticorrosion anodes were defective. The anodes were not inspected because the warehouse employees forgot to inspect.
• The warehouse manager over-counted the available inventory of insulation tubes, which resulted in delays in completing finished units.

In the above example, the following objectives of materials management are not met:

• The appropriate time of acquisition and purchasing
• Maintenance of standard quality of materials by the shipping and warehouse department
• Effective inventory management practices

Classification of Manufacturing Materials

Manufacturing organisations that produce goods for sale to customers (including merchandising organisations) generally maintain three inventory accounts based on material. The classification of materials is as follows:

Raw Materials

Work-in-progress, finished goods.

Raw materials refer to goods purchased by the manufacturer to produce finished goods for sale. These can be further divided into two subcategories

• Direct materials: These are materials incorporated in the finished product, for example, steel and wood.
• Indirect materials: These are materials that are not a component of the final product, but used as part of the manufacturing process, for example, light bulbs and containers.

Sometimes, raw materials may be declared obsolete since they are no longer required for manufacturing goods or because they get damaged in storage. The significance of raw materials as an inventory is primarily to mitigate disruptions in production planning, and to reap profit from discounts on bulk purchases, safeguard against market volatility etc.

These include materials that have partly fulfilled the production process. Excessive work-in progress hinders process flow; thereby, minimising the amount of workin-process in the production area. If work-in-progress inventory is allowed to build up between work centres during transit, it creates the possibility of a series of defective units to pile up before being discovered.

Apart from building of defective units, the pile of work-in-process can require extra manpower for accelerating the progress which can put the whole production system off balance. To minimise possible problems created by build-up of work-in-process units, work-in-progress inventory should be shifted from one work centre to the next unit at a time.

Finished goods inventory includes items that the manufacturing process has completed, or items that have been procured in finished form and are waiting for resale. When items are procured in finished form they are known as merchandise.

An organisation needs to an adequate level of finished goods inventory for various reasons, such as:

• Better market penetration: Market penetration requires inventory to be readily accessible at all times so that items can be made available to consumers at a short notice at various locations. Non-availability of inventory at a particular location will allow a competitor to take over, thereby necessitating the holding of finished goods inventory at various sales locations.
• Satisfy customer demand: Depending on the location and size of the market, demand pattern, transport and lead times, holding of finished goods at various locations may be necessary to ensure that suitable product stock is available.
• Overcome transportation and physical barriers: At times, the physical location and terrain of the market along with the condition of the transport network result in long lead times for servicing and require storing of finished goods inventory at nearest locations.
• Plan according to local tax and other government regulations: In countries that do not implement GST, regional state taxes may apply. The rules for these may vary state wise, such as tax rebates for some specific product category. This might lead to an increased demand from neighbouring states and require adequate inventory holding.
• Cope with long production lead times: Holding finished goods inventory is necessary in cases where the production lead-times are long.
• Speculative benefits: In case an organisation foresees increases in industry prices, taxes etc. it might result in an overall increase in product. In such case the organisation is likely to buy and hold huge stocks of raw materials at existing prices. It might also hold up finished goods expecting an imminent increase in sale prices.
• Dodge certain costs: Finished goods inventories sometimes help organisations to decrease sales management and ordering costs, stock-out costs and transit costs.

Materials Planning

In a manufacturing organisation, bringing out the perfect output is as important as bringing it out at the right time with the optimal utilisation of resources. Production can probably be deduced as a blend of procurement, manufacturing activities and cumbersome activities which need meticulous planning as in ‘what material to purchase’, ‘when to purchase’ finished product, ‘how best the manufacturing process could be designed’, ‘what could be ideal inventory be’ etc. There is no one solution that fits every organisation.

The needs, processes, requirements and the business as a whole varies from organisation to organisation and the implementation of materials planning in the organisation differs accordingly to align the business. Materials planning alludes at holding the least inventory possible which can cut down costs incurred by the company. In the days prior to the advent of the concept of materials resource planning, great importance was attached stacking and storing a good amount of raw materials (otherwise known as inventory) required for undertaking production activities.

Material requirements planning helps an organisation in the following ways:

• To have the required components and raw materials in-hand for the process of production to run smoothly on a schedule
• To ensure that the process of production is synchronised with the method of Just-in-Time (JIT) by keeping materials and inventory at just the required levels. The required resources should be readily available for keeping the production on track
• To have a proper plan for the production schedules for meeting the demand of the customers on time.

Material requirements planning is basically a part of inventory management that helps production managers in scheduling and placing orders for items of dependent demand. These items are basically components of finished goods, such as raw materials, spare parts and subassemblies. The amount of inventory of these items depends on the level of production of the final product. For instance, dependent demand inventory items in a plant of a bicycle manufacturing organisation might include aluminium, tires, seats and bike chains.

Materials Planning at Micro and Macro Levels

The basis for materials planning is to anticipate the demand for the final products. Materials planning can be defined as a process of determining the requirements of raw materials, components and other items needed for production within the economic investment policies.

It is affected by various micro and macro factors, which are explained as follows:

• Macro factors: These factors include rate trends, business cycles, government’s import and export rules, credit policy and so on.
• Micro factors: These factors include corporate objectives, plant capacity utilisation, working capital, lead times, inventory levels, delegation of power, seasonality, communication system.

Systems Approach to Materials Management

Materials management is perceived as a system of ensuring timely availability of products expected by customers at the best obtainable cost of manufacturing. Any glitches at any stage of production can lead to low organisational productivity. This calls for coordinated actions of materials planning and controlling at various stages of its flow in production or service system.

These coordinated actions address problems that are interdependent and affect each other. For example, the materials management department and inventory department work hand in hand. It is the inventory department that gives signal to the materials management department in case any new orders are to be made. Any problems in the functioning of these two departments can lead to unnecessary delays in production.

Dynamics of Materials Management

The materials management system is a part or sub-aspect of a larger system in an organisation. It aims to provide product or service. An ideal organisation is made up of series of cause-consequence dependent sub systems, i.e., modules which represents division based on functionality and this is a complex process with large numbers of feedback loops which are necessary to keep the operations stick to goal. This interdependence sometimes affects strongly on the final result of behaviour dynamics of organisational business system.

The result of dynamics behaviour of business-production process can be manifested with fluctuation of relevant business variables, such as speed of supplying raw materials, speed of arriving the raw materials, speed of finishing the final products, state of unfinished production, state of finished goods inventory, speed of shipment, state of productive capacities, state of credits, debt, cash-flow, gross income, net income, speed of investment new capacities policies, etc.

Figure shows the business production process dynamics, i.e., organisational production system to be made up of direct or indirect flows influence on some or even all listed indicators (production relevant variables):

Thus, it is requisite to have a prior knowledge of this production process dynamics in order to define relationship between these indicator-variables and between every single module. Furthermore, it is possible to identify ineffective parts of such business organisation system by necessary knowledge of this business-production processes and continuous modelling with system dynamics. Furthermore, with simulation of dynamics processes of production organisation different behaviour of this organisation can be predicted, as response to different stimuli, i.e. test functions.

For stimulus (known as test functions), inputs in such processes in consequence consideration can be taken changes in the markets, such as increase or decrease in credits for sale products or debit of this organisation, introduction of new production equipment, change of supplier of components or materials, etc. Subjecting the production organisation to different scenarios which are stipulated with changes in the market production organisation can become more flexible, adaptive and robust dynamics of materials management can be studied.

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Materials Management 101: Definition, Benefits, Best Practices

What is materials management?

Imagine you're the conductor of a symphony, but instead of managing musicians, you're orchestrating the flow of materials in a manufacturing setting. Welcome to materials management! This strategy is all about the harmonious planning, coordination, and control of everything from procurement to storage, handling, and use of materials.

The endgame? To ensure the right materials are at the right place, in the right quantity, at the right time, and in the perfect condition, all while keeping costs low and efficiency high. The materials manager is the maestro, pulling together inventory, purchasing, and production and setting up the communication lines to keep material requirements and supplies flowing smoothly down the supply chain.

Now, depending on the organization, materials management might play a different tune. Some companies see it as a subset of procurement management, while others view it as its own entity serving different business areas. Still, others might split the responsibilities of materials management between departments like procurement, supply chain, logistics, and so on, often seen in larger manufacturing or construction enterprises.

As part of procurement management, materials management is your one-stop shop for all things related to sourcing and purchasing. But, if it's seen as a separate part of supply chain management, it bridges the gap between procurement and production. Here, it's more about material requirements planning, coordinating material deployment and replenishment, and ensuring quality control and inventory analysis for direct materials.

Speaking of materials, there are two types in the manufacturing world: direct and indirect. Direct materials are the ones that go directly into the products a company makes, like rubber in tires or fragrance in soap. Indirect materials, on the other hand, are used in the manufacturing process but don't make up the product itself, like adhesives, staples, equipment, or spare parts. In any case, materials management takes care of controlling the flow of both types.

Take the stress out of managing your materials with Brahmin Solutions.

What is Sustainable Materials Management (SMM)?

So, you've heard the term "Sustainable Materials Management" (SMM) thrown around, and you're a bit curious. Good news! You're in the right place. Let's unpack this seemingly complex term.

Shedding Light on SMM

At its core, SMM is all about using and reusing resources as productively and sustainably as possible over their entire lifecycles. It's like a well-choreographed dance between materials and the environment. The aim? To minimize environmental impacts and conserve resources.

Unpacking the Process

SMM isn't just a fancy term, it's an approach that helps businesses manage their materials from design and manufacture to use, re-use, and recycling. It's all about thinking ahead, designing products that can be reused, and making the most of resources. SMM is like the ultimate recycling system, but on a grand scale.

Materials management, as per the U.S. Environmental Protection Agency (EPA), is a concept that beautifully intertwines our economic prosperity and environmental wellness. It's all about:

• Being smart with our materials to cut down on waste and its harmful impact.
• Preserving resources and limiting the ecological effects tied to our material usage.
• Encouraging innovative products and processes that can drastically lessen environmental damage.

Materials management isn't just a strategy, it's a mindset shift. It's moving away from the old 'take-make-waste' model and towards a circular one where materials are given new life through reuse, recycling, or composting. The grand vision of materials management? To ensure that our use of materials aids in building a sustainable future for our planet, boosting not just environmental health, but also economic growth and social wellbeing.

SMM in Everyday Life

Think about a soda can. With SMM, the goal would be to design the can so that once you're done enjoying your beverage, it can be reused or recycled with as little environmental impact as possible. It's about making the most of what we have, and leaving as little footprint as possible.

There you have it! A nutshell explanation of Sustainable Materials Management. It's a fascinating concept that's reshaping how businesses think about their materials and resources. And who knows? It could even help your small business become more sustainable and efficient. So why not give it a whirl?

What is the role of inventory management in materials management?

Think of your business as a well-oiled machine. Each part has a specific function, but the machine can't work effectively if one part is missing or underperforming. In the context of materials management, inventory management is that critical cog in the machinery that helps keep operations running smoothly.

Monitoring Stock Levels

Imagine running a bakery and suddenly finding out you're out of flour in the middle of a busy day. Not a pleasant scenario, right? Inventory management prevents such situations. It involves diligently tracking what's in stock, what's running low, and what needs to be reordered. This way, you're always prepared and never caught off guard.

Optimizing Storage Costs

Did you know that holding excessive inventory can lead to high storage costs and potential wastage? Inventory management comes into play here by ensuring you maintain an optimal balance. It helps you avoid stocking too much or too little, thereby reducing costs and minimizing wastage.

Enhancing Customer Satisfaction

How many times have you walked away from a business because the product you wanted was out of stock? Inventory management helps avoid such customer dissatisfaction. By ensuring a steady supply of products, you can meet customer demand promptly, enhancing their overall experience and loyalty.

Companies that implement materials management practices see an average of 10% improvement in on-time delivery.

Informing Business Decisions

What sells more? What doesn't? When is the demand highest? These are just a few of the questions that inventory management can answer. By providing insights into sales patterns and customer behavior, it can guide strategic decisions such as what to stock, when to reorder, and how to price products.

Remember, effective inventory management is the backbone of successful materials management. It ensures you have the right materials at the right time and in the right quantities, thereby supporting seamless operations, cost efficiency, and customer satisfaction.

Benefits of materials management

Imagine the ripple effect that effective materials management processes could have on your business. Intriguing, isn't it? Well, that's just one of the many benefits you can anticipate when you dive into the world of materials management.

Unlocking Smoother Purchasing

Effective materials management involves obtaining the appropriate amount of materials to optimize purchasing procedures and reduce unnecessary expenses. By purchasing the right materials in the right quantities, companies can avoid waste and achieve substantial cost savings. Effective materials management can lead to a 20% reduction in procurement costs.

Mastering the art of inventory control

Imagine materials management as a balancing act. It’s all about keeping your inventory levels just right – not too much, not too little. This way, you dodge the pitfalls of overstocking and shortages, sidestepping unnecessary storage costs or panic buying. The result? A smooth-running, cost-effective operation.

Mastering Warehouse Efficiency

Imagine an organized, smooth-running warehouse where every inch of space is put to good use and costs are kept at bay. This isn't just a dream scenario - it's the reality with effective materials management. It's your secret weapon to unlock remarkable operational efficiency.

Companies that implement materials management practices see an average of 15% improvement in productivity.

Accurate production schedules

Picture this: Your business is a high-powered vehicle, cruising into the future with a finely tuned engine, where each component fits flawlessly, and the motor purrs with peak efficiency. This is the magic of skillful materials management. It's akin to having a crystal ball, offering you a sneak peek into the future and allowing you to predict the demand and supply of materials accurately. No bumps, no hitches - just smooth operations and clear skies ahead.

That's what effective materials management can do for you. It's like a crystal ball, letting you peek into the future to forecast the demand and availability of materials accurately. No hiccups, no interruptions - just smooth sailing.

But wait, there's more! Not only does this precision planning reduce downtime, but it also turbo-charges your operational efficiency. Think of it as the secret sauce that ensures your production processes run like clockwork. And the cherry on top? Your customers will be grinning from ear to ear as on-time deliveries become your new normal, not a pleasant surprise. Now, that's what we call a win-win!

A Penny Saved is a Penny Earned

Implementing materials management in your small business can lead to substantial cost savings. Efficiently managed materials lead to fewer wasted resources and lower procurement costs. This translates to more pennies in your pocket – and who doesn't love that?

Companies with effective materials management practices have a 15% reduction in inventory costs.

Quality Control

With materials management, the quality of your products can significantly improve. By having a clear understanding of your materials and their lifecycle, you're better equipped to monitor their quality and performance. A higher quality product? Yep, that's a big win for your customers and your reputation.

Kiss Unpredictability Goodbye

Unpredictability in business can lead to sleepless nights. Thankfully, materials management can help lower those stress levels. With a clear, well-organized system, you can better predict your material needs, quantities, and costs, reducing unforeseen complications. Less unpredictability equals more peace of mind!

Sustainability for the Future

Materials management isn't just about immediate benefits. It's also about looking to the future. By optimizing your use of materials, you contribute to more sustainable practices, reducing waste and environmental impact. A win for your business today, a win for the planet tomorrow.

And there you have it. Materials management isn't just a fancy term; it's a critical business practice with tangible benefits. So, why wait? Start implementing materials management in your small business today, and reap the rewards tomorrow!

Materials management best practices

To improve operational efficiency and sustainability, there are a number of best practices that can be implemented for effective materials management. Here are a few important ones to consider:

Establishing Benchmarks for Material Specifications and Quality

Imagine being the captain of a ship, navigating the vast ocean of quality control and raw material purchasing. That's the role of a materials manager! But even the most skilled captain can't steer the ship alone. They need a reliable crew that follows standard operating procedures to the letter.

These procedures are the map to treasure - they detail material specifications, quality standards, and sourcing requirements. By adhering to these, the crew can maximize product conformity (the treasure!) and minimize non-conformity (the pesky pirates!).

Keep up with Frequent Quality Assessments and Rate Your Suppliers

Quality control should start before production and be performed regularly. Quality failures can be costly, especially when detected by the customer. It's important to partner with reliable suppliers capable of providing appropriate materials in the correct quantities and on time. Suppliers should be evaluated on cost, quality, reliability, and sustainability practices. Good quality enforcement can be more affordable than rectifying quality failures.

Mastering Your Inventory: Tracking Your Direct/Raw Materials

For efficient factory operations, knowledge of material location and quantity is crucial. Proper markings and organized storage are important in managing physical stocks. Regular physical counts help identify issues, while technologies like inventory or MRP software assist in daily inventory tracking.

Stay on Top of Your Raw Materials Inventory Expenses

For an average manufacturer, a significant chunk of their expenditures stems from direct material costs. With this in mind, it's imperative to ensure that surplus inventory isn't sequestering funds that could be better utilized elsewhere.

Remember, having inventory tied up for too long can lead to the unfortunate circumstance of goods perishing or getting damaged. This is especially relevant for materials with a definitive expiration date.

Manufacturers should give thoughtful consideration to various inventory valuation methods - for instance, FIFO (First In, First Out), LIFO (Last In, First Out), or Weighted Average. The chosen method should align seamlessly with the specific nature of their business operations.

Devise a Strategy and Stick to It

Material planning is crucial in materials management. It begins with demand planning, which forecasts the product quantities to be sold in a certain timeframe. Using your product's bills of materials, you can evaluate the material requirements for this period. By assessing what materials are already in stock, you can determine what additional materials need to be ordered. This information helps create a delivery schedule to ensure a steady supply of raw materials and prevent work stoppages due to material shortages.

Inventory Control Techniques

By utilizing established inventory control techniques, you can gain valuable insight into the performance of your SKUs. This knowledge can assist you in reducing your inventory costs.

ABC analysis.

Ever heard of the 80/20 rule, also known as the Pareto principle? It's a game changer in inventory management. By leveraging this principle, ABC analysis helps you to classify your SKUs based on their consumption value. It's like sorting out your wardrobe, but for your inventory!

Category A is like your favorite jeans. These are the top 20% of SKUs that contribute to a whopping 80% of your total consumption value. They are your star performers and deserve the most attention – think higher service levels and frequent reviews.

Next, come your B-category items. These are your reliable t-shirts, making up about 30% of your SKUs and contributing to around 15% of the total consumption value. They may not be as glamorous as your A-category items, but they still need more attention than your C-category items.

And then we have category C – these are the items that only makeup 5% of your total consumption value, even though they account for about half of your SKUs. They're like the old socks in your wardrobe, not getting much attention, with the least amount of resources allocated.

But what if sorting your items into these three categories feels too simplistic? That's where XYZ analysis comes in. It allows you to account for the varying consumption patterns of your SKUs, adding another layer of insight to your inventory management.

Safety Stock and Reorder Point

Think of safety stock as your safety net - a stash of materials you keep on hand to dodge inventory shortages and keep production humming along. It's your plan B when the unpredictable happens in the supply chain due to changes in supply or demand.

The reorder point is like your alarm clock. It's the predetermined inventory level that triggers an order for a particular SKU, signaling it's time to top up your stock.

Now, setting just a reorder point could land you in a pickle. If delivery times overshoot the expected time to a stock-out, your materials will run dry, and production will hit a pause until new materials roll in. That's where your safety stock steps in to save the day. But remember, these aren't arbitrary numbers. They need to be calculated with precision to ensure they're providing maximum value to your business.

Just in Time

Imagine if you could streamline your manufacturing process so that your product barely has a chance to gather dust before it's whisked off to the end consumer. This is the magic of Just in Time (JIT) - not just an inventory control method, but an overall approach to manufacturing. It's all about minimizing the time your product spends in the supply chain, helping manufacturers dodge the pitfalls of overproduction, bottlenecks, and surplus inventory.

When we bring JIT into the world of materials management, it's like a breath of fresh air. The principle is simple - provide materials exactly when they're needed, matching demand as closely as possible. The result? A seamless flow of materials, drastically reduced inventory levels, and a significant cut in holding space and costs. It's efficiency at its finest.

Slash Your Search Time with the Power of Material Kitting

Imagine having all the ingredients of your favorite recipe pre-measured, bundled, and ready to go. That's what material kitting is all about! It's the art of neatly packing all the elements of a Bill of Materials (BOM) into an easy-to-use kit, even before it hits the production floor. This savvy technique not only simplifies your line-side inventory but also turbocharges your picking speed, reporting, and quality control processes.

So, when does kitting shine brightest? Well, it's like a secret weapon when you're juggling a large medley of tiny components, crafting customized products with a multitude of variables, or when you're playing Tetris with limited space on your shop floor that can't accommodate much line-side inventory.

Further Reading : The complete guide to product kitting

Utilize technology to make processes more efficient

Imagine a world where manufacturers and materials managers have a wealth of technological tools at their disposal. These include Barcoding, RFID and IoT devices, and warehouse management software, all designed to keep a tight rein on inventory. But the real game-changer, the tool that brings everything together not just in materials management but across all departments of a manufacturing company, is a manufacturing ERP system.

What's the magic of a top-notch manufacturing ERP? Well, it allows manufacturers to unite their entire business within one single application. This covers aspects of material management like material requirements planning, material deployment and replenishment, supplier management, quality control, inventory control and analysis, kitting, and so much more.

But that's not all. A manufacturing ERP system also simplifies other key manufacturing operations management processes. Think production planning and scheduling, order management, return merchandise authorization (RMA), and a ton more. The result? Greater efficiency and improved management practices across your entire company.

Contact us today to see how Brahmin Solutions can help automate your materials management.

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