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Material groups: Definition & important aspects for buyers
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Material groups in a nutshell:
Material groups are systematic summaries of similar materials or services according to defined criteria such as technical properties, intended use or procurement market. They enable purchasing to efficiently bundle requirements, strategically select suppliers and optimize procurement processes.
Example: An automotive supplier structures its 12,000 individual parts into 8 main material groups (e.g. electronics, plastics, metals) and 45 sub-groups, allowing responsibilities to be clearly assigned and purchasing volumes averaging EUR 2.5 million per main group to be bundled.
Contents
Introduction to material group controlling
What are material groups?
Material groups are classifications of materials and services that are grouped together on the basis of similar properties, functions or areas of application. This systematic classification enables companies to structure and organize their procurement activities. Grouping simplifies processes, creates transparency and improves control over purchasing volumes.
Core elements of material group formation
Importance of material groups in purchasing
In purchasing, material groups play a decisive role in strategic procurement and supplier management. They enable the targeted bundling of requirements, which leads to better negotiation results with suppliers. Material groups also make it easier to identify potential savings and implement framework agreements. The structured approach can minimize risks and increase efficiency in the procurement process.
Implementation of material groups in purchasing
By strategically dividing materials into material groups, procurement processes can be made more efficient. This enables the bundling of requirements, standardization of articles and better negotiating positions with suppliers.
Practical example: Optimizing the procurement of electronic components
Initial situation: An electronics company buys resistors, capacitors and transistors from various suppliers without a clear structure or standardization.
Step 1 - Classification:
All electronic components are summarized under the material group "electronic components".
Step 2 - Standardization:
Definition of uniform specifications for frequently used components, e.g. standard values for resistors.
Step 3 - Needs analysis:
Determination of the total annual requirement for each component within the material group.
Step 4 - Supplier selection:
Identification of suppliers who cover the entire product range and meet high quality standards.
Step 5 - Negotiation and conclusion of contract:
Bundling of overall requirements enables better prices and conditions. Conclusion of a framework agreement with defined delivery conditions.
Result:
By introducing the material group and bundling requirements, the company was able to reduce procurement costs by 12%, shorten delivery times and reduce the number of suppliers from eight to two. This led to more efficient processes and higher product quality.
Evaluation and strategic findings
✓ Critical success factors
→ Systematic classification: Precise definition and logical structuring of material groups as the basis for effective procurement strategies
→ Standardization potential: Identification and use of synergies through uniform specifications within the material groups
→ Supplier management: strategic consolidation of the supplier base per material group for optimal negotiating positions
⚠ Challenges and limitations
→ Complexity management: balancing act between detailed classification and practical manageability
→ Dynamic adjustment: Continuous updating of material groups as market conditions change
→ Process integration: Integration of the material group strategy into existing ERP systems and procurement processes
Future trends and strategic implications:
"The evolution of material groups is being driven by digitalization and AI-supported analyses."
→ Automated material classification through AI
→ Predictive analytics for demand forecasts
→ Digital marketplaces with intelligent material group assignment
→ Sustainability-oriented material group definition
◆ Strategic recommendations for action
→ Development of a digital material group strategy with clear KPIs
→ Investment in training and further education for purchasing staff
→ Establishment of a systematic monitoring and adaptation process
Conclusion on the material group evaluation
Material groups are an indispensable tool for efficient and strategic purchasing. The systematic classification and standardization of materials not only enables significant cost savings by bundling requirements, but also creates transparency and optimizes supplier relationships. Despite challenges such as complexity management and the need for continuous adjustments, modern technologies such as AI and predictive analytics offer new opportunities for an even more effective material group strategy. Success lies in the balance between structured organization and flexible adaptation to changing market conditions.
