Material management is an important part of supply chain management. It involves setting up and running supply chains to meet a company’s or organization’s material needs. This includes controlling and regulating the flow of material while considering factors such as demand, price, availability, quality and delivery schedules.
Material managers are in charge of figuring out how much material is needed and stored, making plans for restocking, setting inventory levels for each item and sharing information and needs with procurement operations and the extended supply chain. Additionally, they assess material quality to ensure it meets customer requirements as per a production schedule and at a cost-effective price.
Material management systems encompass all activities related to materials and are a key business function that adds value to a final product.
What are the Types of Material Management?
The types of material management are:
1. Material Requirements Planning
Careful material management is essential for maximizing profits. Reducing costs spent on material can be achieved through Just in Time (JIT) strategies, which involve keeping very low levels of inventory. However, this requires careful planning to ensure production schedules are not impacted.
Purchasing should be done on time and economically to increase final profits by lowering expenses and maintaining material supplies.
3. Inventory Control
Inventory management is the process of keeping a collection of goods, including those that aren’t finished, those that are ready to sell and those that are used to make other things. Industries often strive to purchase materials right before production, though it is also critical to assess supplier availability so that items can be stocked before they run out.
The objective of inventory management is to regulate the flow of raw materials, purchased items and completed components.
4. Material Supply Management
Supply chain management necessitates materials being supplied to multiple sites or production centers to ensure a consistent supply. If stock levels are inadequate, it can result in financial losses from sourcing replacement materials or halting production.
Furthermore, inadequate storage can cause disruptions in material supply due to damage or misplacement. To counteract these issues, material maintenance management teams should be able to utilize alternative supply systems.
At this point, you should contact a supply management company or industrial maintenance consultants to help you keep track of your inventory and manage the materials in your supply chain. With the help of industrial maintenance consultants, you should understand the importance of material management in the supply chain.
5. Quality Control
Material quality management is crucial because high-quality raw materials result in high-quality products. Depending on the applications, qualities including durability, dimensional precision, dependability, performance, reliability and aesthetic value can all be crucial for materials management.
For the proper management of resources, from procurement and supply through utilization, all five of these categories must cooperate.
What is a Supply Chain?
A supply chain is the network of all the people, groups, companies, resources, activities and technological advancements involved in the production and delivery of a good.
The whole supply chain is made up of the process of getting raw materials from the supplier to the manufacturer and then to the customer. The section of the supply chain that moves the finished product from the manufacturer to the consumer is referred to as the distribution channel.
Steps in the Supply Chain
The steps involved in the supply chain are:
- Sourcing raw materials.
- Refining those materials into basic components.
- Putting together the basic parts to create a product.
- Order fulfillment/sales.
- Product delivery.
- Customer support and return services.
Lead time is the length of time it takes for any one of these processes to complete from beginning to end. Supply chain managers supervise lead times and coordinate procedures at each stage of the supply chain to maximize customer satisfaction.
Why Material Management is Important in Supply Chain
Material Management is an important element in the supply chain since it ensures the high quality of the raw materials used in production as well as the economical use of those resources.
JIT Inventory Management
Just-in-Time is an inventory management method that involves delivering goods as soon as they are needed.
JIT allows companies and organizations to minimize the number of goods they have with them before they are needed, reducing risk. Generally, it is an excellent way for companies to save money, improve efficiency and reduce risk if done correctly.
To effectively manage materials, businesses must have a clear understanding of their supply chain and the materials that are used in it. They must have a plan for the procurement, storage and distribution of materials and be able to track and monitor the materials at all times.
One of the biggest risks of JIT is that it makes the difference between what was planned and what happened even bigger. Designating the job of material management can reduce the possibility of some of these risks.
Reduction of Material Waste
By managing the timing of material delivery and overseeing inventory, material managers can reduce receiving errors and waste.
By controlling the materials used, it’s possible to reduce the cost of materials and the time it takes to produce goods and services. It reduces the cost of manufacturing. This also helps to increase the efficiency and productivity of the entire supply chain.
Increased Inventory Accuracy
The knowledge of accurate direct material inventory levels can help reduce inventory loss and increase production efficiency. Preventing the loss of materials is an important step in reducing the cost of raw materials.
Optimization of Material Transport
By focusing on better management techniques and creating specialized materials management departments, production companies can fully utilize the transportation of materials and the supply chain.
By controlling the materials used, it’s possible to ensure that customers receive the products and services they expect as efficiently and cost-effectively as possible.
This optimization is done by choosing the correct warehouses and using good transportation methods. Optimizing material transport can assist in providing a more consistent raw material flow for manufacturers.
Material management is the process of managing and controlling the materials used in the production of goods and services.
It’s a critical part of the supply chain because it ensures the quality of materials used in the production process as well as the efficient and cost-effective use of resources.