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Materials management: definition & important aspects for buyers
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Materials management in a nutshell:
Materials management encompasses all activities and processes for planning, managing and controlling the flow of materials and goods from the supplier to production. It is essential for purchasing, as it forms the basis for needs-based procurement, optimal stock levels and efficient use of resources.
Example: By introducing an integrated materials management system, an automotive supplier reduces its average stock levels from 2.5 to 1.8 million euros and shortens the lead time from order to goods receipt from 12 to 7 days.
Contents
Introduction to materials management
What is materials management?
Materials management encompasses all of a company's activities relating to the procurement, storage and provision of materials and goods. It ensures that the required materials are available in the right quantity, at the right time, in the right place and at optimum cost. The aim of materials management is to ensure a continuous supply of materials for production or sales while at the same time efficiently managing stock levels and costs.
Core components of materials management
Significance for purchasing
Materials management plays a central role in purchasing, as it forms the interface between suppliers and internal users. Effective materials management makes it possible to reduce procurement costs, shorten delivery times and ensure the quality of purchased materials. For purchasing, this means working strategically with suppliers, planning requirements precisely and continuously improving internal processes.
Optimization of inventory management
Efficient inventory management enables companies to reduce their stock levels and still ensure a high level of material availability. This is achieved through demand-oriented planning, regular stock analyses and the use of modern IT systems to monitor and control stock levels.
Practical example
A manufacturing company notices rising inventory costs and occasional material shortages. The purchasing manager decides to optimize inventory management:
1. analysis of consumption data: Review of sales figures for item A over the last 12 months.
2nd ABC analysis: Article A is classified as an A article (high value, high turnover).
3. determination of the minimum stock level: based on delivery time and average consumption, a safety stock of 500 units is defined.
4. implementation of a reorder point procedure: as soon as the stock drops to 700 units, the system automatically triggers a purchase requisition.
Result: The stock of item A is reduced by 25%, storage costs are reduced and material bottlenecks are avoided.
Evaluation and strategic findings
✓ Critical success factors
→ Integrated systems: linking ERP, inventory management and procurement for end-to-end process chains
→ Precise demand planning: use of historical data and forecasting models for optimal inventory levels
→ Supplier integration: close coordination with key suppliers for shorter lead times
⚠ Challenges and limits
→ Inventory optimization: balance between capital commitment and security of supply
→ System complexity: coordination of various materials management processes and interfaces
→ Market fluctuations: Adaptability to volatile delivery times and prices
◆ Strategic implications
→ Cost efficiency: reduction of overall costs through optimized inventory management
→ Competitive advantage: faster response to market changes
→ Risk minimization: Improved security of supply through intelligent inventory management
Future trends:
"Materials management is developing into a predictive system through digitalization and AI"
→ Real-time monitoring of stocks using IoT sensors
→ AI-supported demand forecasts
→ Automated reordering processes
→ Blockchain for transparent supply chains
Conclusion on the importance of materials management for corporate success
Effective inventory management is a key success factor in modern materials management. By integrating digital technologies, precise demand planning and close supplier relationships, companies can optimize their inventories while ensuring security of supply. The key lies in striking a balance between cost savings and availability as well as continuously adapting to changing market conditions. Pioneering technologies such as AI and IoT will continue to revolutionize materials management and open up new potential for optimization.
