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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
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 strategies. 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 supply agreements. The structured approach can minimize risks and increase efficiency in the procurement process.
Material groups: From manual classification to automated category management
Material groups are essential for companies to structure and efficiently design procurement processes. Building on the theoretical foundation, we recognize the need to move from traditional methods to innovative solutions in practice. As the volume and complexity of materials increases, the transformation to automated systems becomes essential to increase competitiveness and efficiency.
Old: Manual material grouping
Traditional approach:
The traditional approach to material grouping was based on manual classification. Purchasing departments categorized materials based on physical characteristics or intended use, often using spreadsheets or simple database systems. This process was time-consuming and prone to errors and inconsistencies. The lack of standardization led to problems with data analysis and made strategic purchasing decisions more difficult. In addition, maintaining and updating the material groups was a continuous effort that tied up resources and limited the flexibility of procurement.
New: Automated category management
Category Management:
The modern approach to material group management relies on automated systems and intelligent software solutions. By implementing ERP systems and specialized category management tools, materials are automatically classified according to standardized criteria. AI in purchasing and machine learning make it possible to process large volumes of data efficiently and recognize patterns. This leads to consistent and up-to-date material grouping. The innovative power of these technologies offers practical benefits such as reduced process costs, increased transparency and an improved basis for decision-making. Companies can thus optimize their procurement strategies and react more flexibly to market changes.
Practical example: Automated material groups at a mechanical engineering company
An internationally active mechanical engineering company was faced with the challenge of efficiently managing its more than 50,000 material masters. By introducing an automated category management system, the company was able to increase classification accuracy by 90%. Manual maintenance became almost obsolete, saving over 1,000 working hours per year. In addition, the precise material groups enabled better bundling of procurement volumes, resulting in cost savings of 8%. The improved data quality also helped other business areas such as production and logistics to optimize their processes.
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.
