Effective Material Management in Production

Understanding the steps in effective raw material management in production reduces waste, cuts costs, boosts labor productivity, ensures material supply continuity, and enhances business efficiency.
June 27, 2024 by
Uyen Duong

Materials management involves planning, organizing and controlling the movement of materials, from raw material procurement to final delivery. Materials management in production plays an important role in managing production operations and supply chains. It ensures reasonable use of raw materials, avoids excessive inventory or shortages, helps optimize costs and increase product quality. Effective management helps maintain a continuous source of raw materials, avoid production interruptions, and increase productivity and product volume, meeting market demand, thereby improving revenue and profitability. Avoiding material loss is necessary to ensure a smooth production process, so businesses need to understand and fix the causes of loss such as weight errors, manual operations, and management errors. warehouse. By adopting best practices, businesses can streamline processes, reduce costs and improve productivity.

Let's explore futher about materials management in the manufacturing industry with Sota Solutions.

I. What is materials management in production?

Materials management is a central component of supply chain management, encompassing everything from planning the procurement and importation of raw materials to managing warehousing, inventory, and distribution to customers. It involves ensuring the availability of parts required for production to satisfy a company's or organization's material needs. This process includes overseeing and regulating material flows while considering factors such as demand, cost, availability, quality, and delivery timelines.

Materials management also involves assessing material quality to make sure it meets customer demands in line with a production schedule and at the lowest cost. 

Material management systems embrace all of the activities related to materials and are a basic business function that adds value to a finished product. It can also include the procurement of machinery and other equipment needed for production processes as well as spare parts.

Typical roles in Materials Management include inventory analysts, inventory control managers, materials managers, material planners, and expediters as well as hybrid roles like buyer/planners.

Regardless of role, the main objective of Materials Management is assuring a supply of material with optimised inventory levels and minimum deviation between planned and actual results.

II. What are the Types of Material Management? 

  1. Material Requirements Planning: This crucial aspect of material management directly influences profits. Lower material usage reduces production costs, thereby increasing profits. To minimize material overspend, some industries adopt 'Just in Time (JIT)' strategies, which maintain minimal inventory levels. However, this requires meticulous planning to avoid disrupting production schedules.
  2. Purchasing: Economical and timely purchasing is essential to maintain material supplies and enhance final profits by reducing expenses.
  3. Inventory Control: Inventory can include a variety of goods, such as partially finished items, ready-for-sale products, and materials used in production. Many industries aim to time their purchases so materials arrive just before they are needed in production, while also considering supplier availability to ensure stock is available before it runs out. Inventories are crucial for managing the flow of raw materials, purchased goods, and finished components.
  4. Material Supply Management: Supply chain management involves distributing materials to various sites or production centers, each requiring a constant supply. Stock shortages can lead to financial losses due to the need to find alternative materials or halt production. Poor storage can also disrupt material supply through damaged or misplaced stock. Material management teams should have contingency plans to address these issues.
  5. Quality Control: Ensuring the quality of materials is vital since high-quality materials result in high-quality products. Important quality factors for materials management include durability, dimensional accuracy, dependability, performance, reliability, and aesthetic value, depending on the application.

All five elements must work together seamlessly for effective materials management, from procurement and supply to utilization.

III. Optimizing Raw Material Management

The raw materials management process includes five stages:

Phase 1: Organize Receipt of Raw Materials This stage involves receiving and transferring raw materials from the supplier to the company's warehouse. The goal is to ensure accurate accounting of the quantity, quality, and type of materials. Key tasks include:

  • Receiving materials per the contract
  • Transporting them to the warehouse
  • Ensuring all materials have the required documentation
  • Completing all reception procedures with proper checks and signatures

Phase 2: Organize Warehouse Management Warehouse management involves storing and controlling raw materials to maintain their quantity and quality. Important tasks are:

  • Minimizing damage and loss
  • Monitoring and updating material status
  • Ensuring easy import and export

Phase 3: Organize Raw Material Allocation This involves transporting materials from the warehouse to the production department. Methods include:

  • Allocating based on production department requests
  • Allocating according to a planned schedule

Phase 4: Payment and Settlement of Raw Materials This stage transfers responsibility between departments, comparing received materials with produced products to ensure accurate accounting and economical use. The settlement can be quarterly or monthly.

Phase 5: Reasonable Use and Saving of Raw Materials Businesses should develop plans to avoid wasteful use of materials, which can lead to losses and affect production. Efficient use of materials helps optimize costs and increase revenue.

Effective raw material management is challenging but following these steps can simplify and improve the process.

IV. Conclusion

Materials management plays a vital role in supply chain operations, serving as the foundation of production processes that enhance customer satisfaction and pave the way for sustainable business success. For expert guidance on leveraging technology for efficient materials management, please reach out to our hotline:  024 6295 4643.

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