• Materials Management with TPM

What is Materials Management?

Materials Management is a method for planning, organizing and controlling the activities that are related to the flow of materials in a company. This can lead to the control of the location, movement and time of those materials from their introduction, production, manufacturing process and final delivery. Materials management makes sure the materials available are aligned with the products to be manufactured and customer demands, thus giving a schedule of costs and resources that the company needs. Materials management controls the flow of materials with demand, prices, quality and delivery schedules.

The supply chain is linked to materials management as this method is used to plan and supply the organization. Inventory goes hand in hand with this in order to keep track of raw materials and specific products. This helps minimize costs to the organization and ensures maximum return on working capital.

Materials are primarily classified as direct materials or indirect materials. Direct materials are those that process and give a finished product, indirect materials are those that do not generate a final product.

  • Direct materials

    Typically, an “arm’s length”-style relationship, that’s a straightforward, commonly-found buyer/seller transactional arrangement for named goods or services. Usually, it involves contractual fulfilment only, with little or no interaction beyond communicating the requirement and fulfilment.

  • Indirect materials

    These are those materials that are part of the manufacturing of the product but do not make a difference to the final product. These cannot be calculated or measured, so their presence is not of high relevance in the delivery of the final product.

Objectives of Materials Management

One of the objectives is to provide an uninterrupted supply of components for production in time for supply chain. The materials department takes care of the supplies by ensuring the on-time delivery of these. Materials Management also takes care of the procurement of materials by connecting with suppliers. The main objective of this method is the provision and monitoring of appropriate processes of the materials at the highest quality but at lowest cost.

Importance of Materials Management

Materials Management is vital for the process that is received from raw materials, machinery, production processes, maintenance, among others, because with this management you can order and classify the inventories in the most accurate way. With the Management of Materials, the planning, movement, storage and control of materials to enhance and provide excellent customer service with a predetermined cost that is minimal. Materials Management allows you to:

  • Maintain continuity of supply of materials to ensure uninterrupted production.
  • Determine and ensuring optimum inventory levels at each stocking location in the supply chain.
  • Establish restocking plans for production materials.
  • Determine inventory levels to hold for raw materials, work-in-progress, and finished goods.
  • Maintain consistent quality to ensure uninterrupted production and customer satisfaction.
  • Improve efficiency of operations and procedures to minimize materials management costs.
  • Avoid overstocking to reduce unnecessary wastage, excess storage, carrying costs, and deterioration or obsolescence of products.
  • Avoid overstocking to reduce unnecessary wastage, excess storage, carrying costs, and deterioration or obsolescence of products.
  • Control the cost and ensuring the supply of indirect materials or non-production stores which may lead to work stopping if they are unavailable.
  • Release materials to the supply base on time and ensuring quality is maintained during transport.

Planning and Control

Planning and control of Materials Management is important in order to achieve the desired results. The planning and control is done with the areas that need to find the processes of the operations. This means that it is necessary to have the necessary parts, budget the materials, inventories, schedule the orders and monitor their process in relation to production and sales because the costs will be of investment for the delivery of the final product. Because of the economic control and the investment in the raw materials, it is necessary to have the inventories of the purchase and management of the materials that are needed for the processes of creating of the final product.

Inventory control

It is vital that you identify three factors for the control of your company’s inventories:

  • Maximum Stock

    This is the maximum amount of materials you wish to keep in storage or in the warehouse. Taking into account certain factors such as: the product demand, the cost of storage and transport, the time of the assortment by the supplier among others.

  • Minimum Security Stock

    This is the minimum amount of materials or products you want to keep in the warehouse or store. Taking into account: the supplier’s delivery time, cost of the orders, prices etc.

  • Re-order point

    This is the level of stock of the orders to be able to supply warehouse where the time with the suppliers is essential not to have problems of supply.

The benefits of inventory control are helpful to the operational areas that are in the organization giving priority to investment and cost of materials that are necessary for the productivity of the company, giving a follow-up flow to give positive results in the end of production and delivery to the customer.

Conclusion

Materials Management is an integral function supporting the complete cycle of material flow; from the purchase and internal control of production materials to the planning and control of work in process to the warehousing, shipping, and distribution of the finished product.

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