written by | September 29, 2022

What is Materials Management? Definition and Purpose

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Table of Content


Planning, organising, managing, and regulating the movement of materials inside an institution is the process of material management. Material managers play a crucial role in the manufacturing industry when it comes to buying, procuring, and managing the raw materials that are used in manufacturing. It might be easier to be ready for a profession in this industry if you have a fundamental comprehension of this idea and the precise responsibilities of a material manager. We describe material management in this article, along with how it functions, what material managers perform, and its five primary goals. 

Did you know?

Managing materials is crucial to ensuring a steady flow of goods for production purposes. Additionally, it ensures that production schedules are met. As a result, production costs can be reduced while product quality is maintained.

What is Material Management?

One of the primary purposes of SCM, or supply chain management, is materials management. It is associated with all operations involving the movement of materials. Budgeting, sourcing, purchasing, scheduling, holding, supplying, and regulating suitable materials are all covered. Here, the terms "materials" and "indirect material" are used interchangeably. This is due to the possibility of losses in such sectors from any kind of resource scarcity or delivery of subpar materials. Additionally, earnings and consumer happiness will be lost due to this. 

Furthermore,, the substance must be of the proper kind, amount, and location at the appropriate moment. This will guarantee thorough synchronisation and planning of the industrial activities. It seeks to- 

  • Utilise the firm's resources to their fullest potential. 
  • Provide the degree of customer care that is desired. 

Resources are just one of the inputs needed for production, which is important. The last three are labour (people), equipment (tools, machinery), and money (capital). 

Using materials management, one may get an advantage over competitors. this is made feasible by promptly providing clients with high-quality goods or services at a fair price. 

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What Does a Material Manager Do?

Managers of materials are in charge of ordering and distributing supplies. Depending on the sector they operate in, some might even identify them as supply chain managers and logistics managers. Planning and regulating the flow of raw materials, which covers tasks like sourcing, buying, inspecting, and distributing commodities, is the primary responsibility of material managers. They evaluate the demands of the business, communicate with other management, and decide which supplies to buy. 

Material managers control the flow of goods and guarantee that crucial supplies are accessible in case of crisis. They make sure the supplies are on time and of a good standard. Along with controlling budgets, tracking freight, detecting inventory loss, and guaranteeing inventory correctness, they may also manage customer delivery operations. Material managers may also assist with launching new products and suggest selling prices in accordance with the size of the company. 

Objectives of Material Management 

There are two groups that makeup materials management goals

Primary Objectives 

Low Prices: Naturally, the primary goal of material management is to acquire resources at the lowest possible cost and convey them. The total cost of operations will decrease as a result of this.

High Inventory Turnover: Inventory levels that are low compared to sales represent less capital tied up in stocks. The efficiency improves as a result of this. It implies that goods are sold faster. Whereas, with low turnover it indicates weak sales with excess inventory that might be an issue for business.

Therefore, businesses should make good use of its capital investment, and consequently, their investment from stakeholders will be higher. Additionally, inventory holding and carrying costs are minimal when turnover is high. 

Low cost of procurement and possessing: The company's true cost is decreased when supplies are handled and stored properly. Consequently, minimal material acquisition and possession costs result from effective receiving and storage operations. 

Continuous supply of materials: The cost of manufacturing will increase when there is a resource scarcity when the product is being manufactured, and this expense will also be inevitable. Therefore, consistency in the material supply is crucial, particularly for largely automated operations. This is so that production doesn't cease because of a shortage of materials because expenses in such operations are fixed and still accrue. 

Consistency of quality: When the company maintains uniformity in the production's raw materials quality. In the long term, this can lead to the consumers being retained. 

Favourable Supplier Relations: The company's standing in the market is determined by how it interacts with its suppliers. A business that cultivates strong ties with its suppliers receives affordable, on-time deliveries of its products. As a result, the production costs will go down, and the business will be able to draw in more clients as a consequence. 

Also Read: Education Business in India - Guide to Start an Education Business 2022

Secondary Objectives 

Favourable Reciprocal Relations: Reciprocity is the method through which a business wilfully purchases the highest amount of goods from its own clients. Striking a balance between the benefits and drawbacks of utilising purchasing power as a technique to increase sales is essential for healthy reciprocal relationships. 

New Materials and Products: The company's materials division aids in the creation of innovative goods and materials. Regular interactions between its personnel and the suppliers occur, and they can inform other stakeholders when they learn something of interest. 

Economic make or buy decision: Considering that the material unit frequently interacts with the supplier. They must take into account a number of things while selecting the provider, and they must also decide whether to create, buy, or outsource. 

Standardisation: The material management process will be effective if there are fewer things to handle and suppliers to interact with. They encourage uniformity and simplicity of the specifications for this reason. Standards and specifications are the responsibility of the designing departments. The material division, however, also makes a contribution. The department of materials can: 

  • Timely review of the inventory 
  • To cut costs, do away with non-standard components and encourage their incorporation into the product's design. 

Product Improvement: It is a significant goal for the design unit; however, the material department also offers them support here. In other words, it uses both the technical and financial expertise of the design staff and the material staff. This is being done to increase revenues through product modification. The material staff can help the design staff more economically accomplish the design goals. This is made feasible by offering comparable materials and parts that are equally effective but less expensive. 

Interdepartmental harmony: As you are aware, the company's material department interacts with all the other departments. The performance of the materials division depends on how much support it gets from the other divisions, even though the material department may help other departments succeed. 

Forecasts: Making projections for future expenses, pricing, and company operations, in general, is crucial. It facilitates effective material management. Experienced economists are working in large businesses. They predict how the buying and sales plans will turn out. These broad projections are transformed into particular ones for procurements by the materials staff. 

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Outcome from Objectives of Material Management

The question now is: How will the businesses be able to accomplish their goals? The business can accomplish these goals by: 

  • Keeping prices low 
  • Ensuring trustworthiness 
  • Controlling inventory 
  • Lowering operational expenses 

Conclusion:

The management of raw materials is the focus of the unique management discipline known as materials management. Its goal is to lower costs and manage materials effectively at various phases, and that too across the board for the entire business. 

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FAQs

Q: What are material management tools?

Ans:

The company uses material management to help it finish production by the deadline and send the finished goods to its shipping location. In order to offer the necessary raw material, the material management solution employs a distinct schema number to handle the requirements of various production projects.

Q: What are the characteristics of material management?

Ans:

Planning, directing, and managing the type, quantity, location, movement, and scheduling of numerous flows of resources utilised in and generated by the process are all aspects of materials management.

Q: What is the importance of materials management in the manufacturing industry?

Ans:

Material management is essential to maintain a constant flow of items for use in manufacturing and to meet consumer demand. Additionally, it ensures that manufacturing deadlines are met and helps lower production costs while preserving the quality of the product. 

Q: What is the significance of material management?

Ans:

Quality Control Increases: Ensuring that the resources entering production are accurate and of good quality is a key component of materials management. This promotes seamless manufacturing and raises the standard of the final product as a whole.

Q: What is material management? Explain with an example.

Ans:

The phrase "materials management" is used a lot in the manufacturing industry. It's the procedure businesses employ to organise, plan, and oversee their actions to manage the physical elements of their business operations. For instance, a company that manufactures automobiles must buy windows, motors, and wheels.

Q: What is the purpose of material management?

Ans:

The objective of materials management is to supply a continuous chain of production-related components in order to produce things on schedule for consumers. The materials department is in charge of distributing materials to a supplier base and ensuring they are distributed on schedule and with the right carrier to the firm. 

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.