What is materials management?
Materials management: The basis for optimum handling of material requirements
Ensuring smooth production is one of the elementary tasks of an industrial or manufacturing company. Only when a proper flow of materials is guaranteed can goods be produced and distributed without delay. The overarching term that encompasses all tasks related to the supply of materials is materials management.
To differentiate: What all counts as materials management?
Fundamentally, companies differ greatly in terms of how they organize and manage materials. For this reason, it makes sense to first describe materials management in the narrower sense.
Classical materials management: This includes all tasks with a focus on the supply of the company, here it is a matter of procuring all raw materials, auxiliary materials or operating materials as well as supplier parts. In essence, this is to ensure the ignition material for production.
Integrated materials management: In a broader sense, the term refers to all of a company's actions that are necessary to ensure the supply of the business. This starts with procurement, continues with the handling of the material flow and ends with production and final delivery.
These subtasks characterize materials management
Since many areas of a company are affected by materials management functions, it is difficult to establish a generally applicable organization. Depending on the type of company, the size of the company and its operating radius, different criteria come to the fore. In general, the main task of materials management is to ensure an optimal flow of goods - spatially, temporally, qualitatively as well as quantitatively.
To give a better overview of important subtasks, we have compiled the most important ones below:
- Management of flows of goods
- In-house logistics
- Supplier selection
- Production planning
- Needs assessment
What does integrated materials management mean?
Unlike the pure focus on material supply and procurement, which characterizes materials management in the narrower sense, integrated materials management is much more fundamental. This involves a holistic view of all functional areas that have a connection to materials. The basic idea is that this focus creates synergy effects that relate to the company's own material supply, customer needs as well as market mechanisms.
Within this area, a further distinction is made between different levels of integration, which are listed below:
"Integrated" materials management
In the basic scenario, the focus is on procurement and storage, transport and disposal. The process is thought through to the point where materials find their way into production or finished products are shipped. This form of materials management is the basic type and is used by many companies.
"Enhanced integrated" materials management
One integration level higher, the aim is to plan production holistically and make it controllable. All manufacturing tasks are explicitly integrated, which has the advantage of enabling better handling in procurement warehousing. In addition, just-in-time (JIT) production requires this integration step.
"Totally integrated" materials management
The maximum degree of integration is achieved when coordination is also possible with regard to distribution. Consumer trends, sales-specific issues and other details play a role here. By using powerful warehouse management software (WMS), it is possible to optimize capacity, reduce out-of-stocks and lower lead times accordingly.
The difficulty of materials management is to align the factual and formal objectives in the best possible way. On the one hand, it is a matter of covering material requirements so that production and delivery capability is ensured. On the other hand, shortages must be reduced, storage costs lowered and aspects of procurement optimized. The use of modern warehouse management software helps to view the flow of goods and draw conclusions about internal functional areas.