What is Materials Management?
The core function of supply chain management is materials management. This involves the planning and execution of supply chains in order to meet the requirements of an organization or company. This includes controlling and regulating material flow while simultaneously assessing variables such as demand, price availability, quality, and delivery schedules.
Material managers plan the replenishment of stocks, determine inventory levels of each type of product (raw materials, work-in-progress, or finished goods), communicate information to the procurement operation and extended supply chain, and create the required amount of stock. Materials management involves assessing the quality of items to ensure they meet customer requirements, are in line with production schedules, and are cost-effective.
Material management systems encompass all activities related to items and are an essential business function that adds value to the finished product. Material management systems can include equipment and machinery needed in production, as well as spares.
Types of Material Management
Here are some examples of different types of materials management:
- Inventory management
Inventory Management is the management of a company’s inventory of Raw Materials, Semi-Finished Goods, and Finished Products. This includes determining the order points and ensuring the inventory is properly stored.
Inventory management is aimed at striking a balance between costs associated with holding too much stock and costs associated with running out of inventory.
- Purchasing Management
The purchasing management process involves the procurement of raw materials, supplies, and services needed for production. The process includes selecting suppliers, negotiating prices, preparing purchase orders, and managing supplier relationships.
The goal of purchasing management should be to purchase the items required at the lowest possible cost and highest quality, while also ensuring that they are delivered on time.
- Warehouse Management
The management of a warehouse involves managing the storage, handling, and movement of goods in a warehouse. Receiving, storing, and shipping materials are all part of warehouse execution. It also includes managing inventory levels, the location of the materials in the warehouse, and managing the physical movement of goods within a storage facility.
Warehouse management aims to maximize the use of available space while minimizing the costs of handling and storing materials.
- Materials Requirements Planning
Material requirements planning (MRP).is an inventory management software that is used to manage materials and plan production schedules.
MRP takes into account the lead time to order materials, production time, and inventory levels. MRP ensures that the materials needed for production are available in the right quantity and at the right time.
- Transportation Management
Transport management is the movement of material from one place to another. This includes selecting carriers, negotiating freight rates, preparing shipping documents, and managing delivery schedules. Transport management is concerned with ensuring that items are delivered at the lowest cost and on time.
Material Management Objectives
Here are five of the primary goals of material management.
- Material Right
Material management’s first goal is to make sure that the right materials are readily available for production. It involves identifying materials needed for production and making sure they meet the right specifications, quality, and quantity.
Companies can reduce the risk of production delays and increase customer satisfaction by ensuring the availability of the right materials.
- The Right Time
Material management’s second goal is to make sure that the correct items are available when needed. It involves controlling the flow of items in the warehouse and reducing lead time. It also improves the efficiency of the delivery process.
Material management’s third goal is to make sure that there are enough items available for production. It involves determining an optimal inventory level and implementing systems to manage item movement within the warehouse.
Companies can reduce the risk of stock shortages by ensuring the right amount of material is available. They can also lower the cost of handling and storage while increasing efficiency.
- Right Price
Material management’s fourth goal is to make sure that the items purchased are at the best price. Negotiating with suppliers for the best prices is part of the process. Cost-saving measures are also implemented, including reducing waste and lead times and improving delivery processes.
Material management’s fifth goal is to make sure that the items you use are from reliable sources. This involves identifying trustworthy suppliers, forming partnerships with them, and making sure that only approved suppliers are used to purchase materials.
Companies can minimize production delays and reduce defects by sourcing the right materials.