What Is Material Management: Definition And Primary Objectives
Updated 14 September 2022
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Material management is the process of planning, organising, directing and controlling the flow of materials within an organisation. In the manufacturing field, material managers perform a vital role in purchasing, obtaining and maintaining raw materials to use in production processes. Having a basic understanding of this concept and the specific role of a material manager can help you prepare for a career in this field. In this article, we outline what material management is, how it works, what material managers do and its five core objectives.
What Is Material Management?
In the context of business, material management is the process of planning, organising and directing logistical activities involving materials and inventory. The core idea behind this process is to control the movement of materials and equipment by requesting them in advance, purchasing or renting them at a reasonable price and making sure they are available when needed. Material management is a key part of the supply chain process and ensures that professionals efficiently and correctly direct materials required for manufacturing procedures.
There are numerous roles in the domain of this process, like inventory control manager, material manager, inventory analyst, material planner and expediter, along with roles like buyer and logistics planner. This has become a popular organisation style, as effective teams can help maximise profits by optimising the flow of materials. This can be a challenging goal to accomplish, as there are many factors that can lead to production shortages, including:
Incorrect bills of materials
Inaccurate inventory counts
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What Are The Core Elements Of Material Management?
There are five core elements of this process. These align together to constitute the management of materials from purchase to utilisation. These are the five elements:
Materials requirements planning
This is one of the most important steps in this process, as it accounts for a major portion of the total investment of money. It directly influences the profits of an organisation as the number of materials a company procures is directly proportional to the amount of money it spends. The amount of materials utilised requires careful planning. Nowadays, companies are adopting the JIT (Just in Time) model, which significantly reduces the size of the inventory.
Related: What Is Resource Planning? (With Benefits And Techniques)
Inventory planning and control
Inventory refers to the different types and volumes of goods a company holds at a particular time. It may include finished products and raw materials, items that are ready for the market and materials used in the production process. The optimum practice of this prices aims to reduce the size of the inventory as far as possible. This significantly reduces the costs associated with maintaining an inventory. Professionals in the industry achieve this by purchasing materials right before production or before moving a product into stores.
There are three types of inventories:
Inventory for raw materials
Inventory for purchased goods
Inventory for finished parts and components
Related: Inventory Controller Skills (With Definitions And Tips)
Most companies derive their profits from the economical purchase of various materials. Sometimes, a company may invest a large portion of its total capital for purchasing materials. Hence, the primary aim of this process is effective purchasing. This helps in increasing profits by reducing the cost of purchasing.
Related: What Is A Purchasing Process? Importance, Steps And Tips
Flow and supply of materials
Material management plays a crucial role in supply chain management. Material managers try to maintain an uninterrupted supply of materials during the production process. They distribute these materials to various production centres. Poor management or lack of inventory disrupts the production process and the availability of material supplies. Lack of stock can cause financial losses, delays in sourcing replacement materials and disruption of production schedules.
Related: What Is Supply Chain Management? (Benefits And Examples)
Quality control of materials
Ensuring that the materials used in production are of high quality is very crucial. If the quality of initial raw materials is high, then it reflects in the quality of the finished products. Hence, it is necessary to source the best materials for any form of production. There are multiple factors for which professionals may employ quality control. This may include durability, thermal and weather performance, dimensions, reliability and visual appeal. All of these are important factors that can determine the value of the end product.
Related: What Is Quality Control? A Complete Guide
What Are The 5 Primary Objectives Of Material Management?
The five primary objectives are:
Right time: Obtaining materials at the right time to meet supplier and production demand is crucial for any organisation. Ensuring the availability of materials at the right time can reduce inventory-related risks.
Right material: This process also aims to procure the right materials at the necessary time. Having the right materials may result in a better quality of finished products and higher profits.
Right amount: Procuring goods in sufficient quantity can reduce unnecessary costs related to storage and organisation. The material can meet the demand and at the same time, reduce excessive stock holding.
Right price: Securing materials at a reasonable and affordable price is another key objective. Minimising procurement costs is an effective way to increase the profits of an organisation.
Right sources: It is important to procure materials from the right source for achieving consistent results. The right source can be a vendor or supplier who delivers the desired quality and quantity of materials at the right price.
Material Manager Job Description
A material manager is responsible for purchasing goods and other supplies, and managing inventory in an organisation. They collaborate with other managers to understand supply needs, purchase supplies depending on requirements, and coordinate receiving procedures. They undertake many responsibilities relating to quality assurance and operations control, which helps a company fulfil the major objectives of material management.
The job of a material manager involves all activities related to the procurement and distribution of materials and they help to add value to the finished products. They may also be responsible for obtaining machinery, spare parts and other equipment required for the production process. The primary goal of a material manager is to establish a continuous link of materials from production to manufacturing.
Related: Top 10 Careers In Management (With Duties And Salary)
What Does A Material Manager Do?
Material managers oversee procurement and distribution of materials. Some may also refer to them as logistics managers and supply chain managers, depending on the industry in which they work. Material managers are primarily responsible for planning and controlling the flow of materials, which includes activities such as sourcing, purchasing, inspecting and distributing materials. They analyse the company's needs, liaise with other managers and identify materials to procure.
Material managers oversee the distribution of supplies and ensure important materials are available during emergencies. They ensure that materials of the desired quality are available on time. In addition to this, they may coordinate consumer delivery processes that include managing budgets, monitoring freight, identifying inventory shrinkage and ensuring the accuracy of the inventory. Depending on the size of their organisation, material managers may also work with new product launches and recommend price points for selling.
Related: Procurement Skills: Definition, Importance And Examples
Duties Of A Material Manager
Material managers may perform the following duties:
Material managers design efficient ways to meet the demands of consumers. They can establish priorities for the flow of materials, including what materials a company needs for production, and when they require them. This process is forecasting. Once material managers establish priorities, they may manage multiple workflows to ensure that the correct capacity of materials is available to meet priorities.
Implementation and control
Material managers are responsible for implementing the plans they create for production. They may monitor production activity and control it to accomplish the priorities set in their plans. Additionally, material managers may also implement purchasing plans to meet production targets.
Inventory control is the responsibility of material managers. They may monitor the volume of inventory at any given point in time to ensure that an inventory is appropriate for meeting production demands. Material managers purchase new materials when inventory levels drop beneath a certain threshold. This guarantees a continuous and consistent flow of resources.
Material managers may monitor specific operations that relate to the procurement of materials. They typically possess an understanding of how procurement operations work and how to effectively schedule production processes. They use this understanding to meet delivery goals while maintaining overall cost efficiency.
Related: A Quick Guide To Operations Management Responsibilities
In larger companies, it is important for material managers to plan and control what facilities, plants, equipment and labour are available to process work and produce inventory items. Knowing how to process and manage the operations in a facility can help material managers keep the flow of materials on track. Material managers may also supervise and liaise with the managerial staff of specific production facilities.
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