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What Are The Types of Material Management

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53 views3 pages

What Are The Types of Material Management

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SAP-ERP MM
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What are the Types of Material Management?

The work undertaken by materials management experts can be broken down into five different
types, as follows:

1. Material Requirements Planning

This important step in material management directly affects profits as the lower the amount of
material used, the lower the cost of production and the more profit is delivered. Reducing material
overspend has caused some industries to consider ‘Just in Time (JIT)’ strategies that require very
small levels of inventory. However, this still requires careful planning to maintain without impacting
production schedules.

2. Purchasing

Purchasing should be done economically and on time to maintain material supplies and increase
final profits by lowering expenses.

3. Inventory Control

An inventory can include a range of goods being held including partially finished items, goods
ready for sale and those used in production. Many industries try to time purchasing so that
materials enter stores just ahead of production, although there is also a need to gauge supplier
levels so items can be stocked before they become unavailable.

Inventories are required to control the flow of raw materials, purchased goods and finished parts
and components.

4. Material Supply Management

Supply chain management can require materials to be distributed to different sites or production
centres, each of which needs to be continuously supplied. Lack of stock can lead to financial
losses through having to source replacement production materials or having to halt production
schedules.

Poor storage can also lead to material supply disruptions through damaged or misplaced stock.
Material management teams should be able to mitigate against these situations by using
alternative supply systems.

5. Quality Control

Quality control of materials is also important, since good quality materials lead to good quality
products. Factors such as durability, dimensional accuracy, dependability, performance, reliability
and aesthetic value can all be important quality factors for materials management, depending
upon the applications.

All five of these types need to work together for the successful management of materials from
purchase and supply through to utilisation.

What do Material Managers do?


The overriding aim of material managers is to maintain a consistent flow of materials for
production. This seemingly straightforward task has a range of potential difficulties to overcome
including incorrect bills of materials, inaccurate stock-taking, shipping and receiving errors,
unreported scrap, and production reporting issues.

Planning, organising and controlling the flow of materials means it is possible to manage
purchasing and shipping to coincide with a manufacturing process and the final delivery of
products. While material managers oversee the inventory management needs of a company, the
actual procurement of materials may be undertaken by a separate purchasing team.

Material managers don’t just manage the flow of materials to ensure on-time delivery, but also
seek to manage costs and quality through the supply chain. Keeping track of the availability of raw
materials and products can also deliver cost savings and ensure a maximum return on working
capital.

Materials are usually classified as either direct or indirect materials. Direct materials are those that
are required for a finished product, while indirect materials are those that do not directly generate
the final product.

In either case, inventory management is a vital aspect of material management. This can be
broken down into three factors:

1. Maximum Stock

This is the maximum amount of material that is held in stock at any given time.

2. Minimum Security Stock

As stock levels fluctuate during production, there is also a need to ascertain a minimum stock
level, bearing in mind supplier delivery times, cost of the orders and production requirements.

3. Re-Order Point

This is the point at which orders should be made so as to keep warehouse supplies aligned with
supplier delivery times and production schedules.

Why is it Important?
Materials management is vital to ensure there is an unbroken chain of materials for production
purposes to meet customer demands. Not only does it make sure production schedules can be
met, but it can also save costs for a finished product while also maintaining quality through the
materials that are purchased and used.

Materials management crosses the line between purchasing, logistics and inventory management,
making it vital for processes reliant on raw materials, machinery, and maintenance, among others.

Conclusion
Materials management uses inventories and production requirements for planning and control to
ensure materials are available as required to meet production schedules.

This material planning includes managing logistics, stock levels, materials quality, cost and more.
This requires a step-by-step overview of processes and requirements.
Materials management has been an important part of industrial processes since the industrial
revolution (if not before!), and is still used by modern companies across a range of industries to
prevent any pauses in production.

With ties to other business areas, such as purchasing and warehousing, material managers need
to interact with a supply chain to make sure materials are delivered where they are needed at the
right time.

Types of Material Management


 Materials Requirements Planning. It is one of the most important steps in material
management as the inventory of materials costs around 60% of the total investment. ...
 Purchasing. ...
 Inventory Planning and Control. ...
 Flow and Supply of Materials. ...
 Quality Control of Materials.

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