Perhaps you have heard the term materials management yourself or read it in one of your school books and are wondering what the term materials management actually means?
Definition of materials management
Materials management includes the entire flow of goods of a company, from procurement to internal storage to the sale of the goods.
This means that all flows of goods must be adjusted in such a way that a company has the desired goods in the right quality and quantity, at the right time, in the right place and for the right customer. The materials management describes the Coordination of material movement of a company between its customers and suppliers. The materials management of a company is carried out by several departments of a company.
Materials management tasks
Materials management tasks include: control, coordination and planning of all goods flows within the company.
In addition, materials management includes the task of selecting the right suppliers for the company. By choosing the right suppliers, the aim should be to keep the procurement and disposition costs as low as possible.
In addition, one of the tasks of materials management is to organize and control the processes within the company correctly.
The tasks of materials management are summarized again in a table below.
Materials management tasks
- The control, coordination and planning of all flows of goods within the company.
- The selection of the right suppliers and thus the lowest possible disposition and procurement costs.’
- The planning and control of processes within the company.
Materials management departments
The tasks of materials management are carried out by different departments of a company. This includes purchasing, logistics and scheduling of a company.
procurement
As part of the procurement process, all Raw, auxiliary and operating materials purchasedthat a company needs for its goods. The procurement process includes this Analyze of the procurement market negotiationn with the suppliers as well as the an order the required goods.
In addition, there is also the task of determining needs, i.e. what needs exist in the company.
The task of procurement is usually taken over by the purchasing department of a company.
The following graphic should help you as a mnemonic while learning.
Materials Management Procurement
Figure 1: Materials management procurement
Source: blconcept.de
storage
Storage is the process that follows procurement. This process is mostly through the logistics of the company carried out.
As part of storage, the previously procured (i.e. purchased) goods are now stored. The storage process therefore also includes accepting the previously procured goods, including checking whether there are any signs of damage to the goods, or whether the goods are e.g. B. was delivered in the wrong quantity or type.
In addition, storage also includes the stockpiling as well as the inventory control. So checking and updating the goods that are in stock. If the stored goods are, for example, foodstuffs that perish easily, storage also includes storage and retrieval.
The following graphic should help you to better memorize the term storage
Materials management storage
Figure 2: Materials management storage
Source: 123rf.com
disposition
The disposition in the context of materials management includes the transport of goods and goods. This also includes preparing for shipment. Before the goods are prepared for transport, they must first be packed properly and securely for transport. This task is also taken on by logistics or, in some companies, by the scheduling department.
The following graphic should also help you as a mnemonic when learning the term «disposition».
Materials management disposition
Figure 3: Materials management disposition
Source: clipartix.com
Communication between the individual departments, which are integrated into materials management, is necessary for the success of the company. Because the company also determines and influences its performance and delivery capability through materials management.
Materials management goals
Now you already know the tasks of materials management. But what goals do companies pursue in the context of materials management?
The targets of materials management can be sorted into three different target types. These include the material goals, the formal goals and the social goals. You can find out more about what each of the goals entails below.
objectives
Objectives within the framework of materials management include securing the required goods. The objective goals represent the technical goals of the company, so to speak.
Basically, the objectives include all points that need to be considered when preparing the material. This includes the provision of the respective material…
- in the right amount
- in the right quality and type of goods
- in the right time
- in the right place
- at the appropriate price
In addition, one of the material goals in the context of materials management is that attention is paid to the quality of the goods when the order is placed, that our own delivery times and those of the suppliers are as short as possible and that the agreed delivery dates for the customers are met.
formal goals
Formal goals in the context of materials management are more likely long term consider. They include the economic goals of a business.
The formal goals of materials management include three sub-areas. These sub-areas refer to the procurement costs, the storage costs and the shortage costs.
What is hidden behind these costs is explained below:
1. Purchase costs
Within the framework of the formal goals, companies pursue the goal of keeping procurement costs and order prices as low as possible. This largely relates to the ordering process.
2. Storage costs
As part of the formal objectives, the aim is to manage storage costs in such a way that they are not too high, so that the storage risk can be reduced.
With regard to storage costs, goods that are not sold and instead remain in the warehouse and thus cause unnecessary costs should be avoided.
3. Shortage Costs
The missing quantity costs are also part of the formal goals of materials management. The missing quantity costs refer to the reduction of errors and the resulting costs.
Shortage costs arise, for example, from incorrect agreements when ordering.
social goals
Social goals in the context of materials management can also be viewed as environmental goals describe. The social goals within the framework of the Matindustrial economyhaft include all aspects of the environmentally conscious behavior of a company.
This includes the use of environmentally friendly packaging materials, the recycling of materials used or environmental protection.
The following graphic should serve as a mnemonic for you when learning the term «social goals». So you know that the social goals of materials management always relate to the environment.
social goals of the market economy
Figure 4: Social goals of the market economy
Source: az-online.de
Conflicting goals in materials management
Unfortunately, the materials management of a company is also associated with conflicts between the various target areas. Not Everyone Goals materials management can always 100% fulfilled will. So-called conflicts of interest often arise between the three target areas. But conflicts can also arise between the individual departments of the company that are integrated into the materials management process.
What this means exactly, you will find out in the following with a few examples.
For example, if a company wants to pay more attention to the use of environmentally friendly products, it is pursuing the company’s «social goal» of paying more attention to the environment.
In order to achieve this goal, however, the production costs must be increased. The formal goal of keeping production costs and ordering costs as low as possible can therefore not be met. The realization of the social goal and the formal goal at the same time is therefore not possible.
Accordingly, a so-called conflict of goals arises between the target areas, because only one goal can ultimately be achieved.
Avoidance of conflicting goals
It is not really possible to avoid conflicting goals. In the context of materials management, it will always happen that meeting one goal means that another goal cannot be met.
It is therefore all the more important for companies to check which goal is ultimately more important for the long-term success of the company. Within the framework of materials management, the company must therefore determine which goal is a higher one priority Has.
In addition, here is one permanent communication between the different departments involved in the materials management process. This is the only way to avoid or reduce conflicts between the target areas and the departments that are integrated into the materials management process.
Materials management – the most important thing
- Materials management includes the entire flow of goods in a company, from procurement and internal storage to the sale of the goods.
- Materials management describes the coordination of a company’s material movement between its customers and suppliers.
- The tasks related to materials management include the control, coordination and planning of all flows of goods within the company.
- The tasks of materials management are carried out by different departments of a company. (purchasing, logistics, disposition).
- Materials management targets can be sorted into three different target types.
- 1. Objectives include securing the required goods. The right goods, in the right quantity and quality, at the right time and in the right place.
- 2. Formal goals are geared towards the long term and relate to procurement costs, storage costs and shortage costs.
- 3. Social goals are also called environmental goals and refer to the environmentally conscious behavior of the company.
- When realizing the goals of materials management, there can always be conflicting goals, because not all goals of materials management can always be met 100%.
- In order to reduce or avoid these conflicts, communication between the individual departments and prioritization of goals is necessary.