Materials management is part of business logistics and refers to overseeing the location and movement of physical items or products. There are three main elements associated with such management: spare parts, quality control, and inventory management. Materials management is important in large manufacturing and distribution environments, such as warehouses, where there are multiple parts, locations, and significant money invested in these items.
Basic Purpose and Function
For many companies, materials management ensures the proper tracking of different goods within an organization. This can include items manufactured by a business, as well as those supplies and materials that are bought from another producer by that company. Each of these items represents a direct financial value for a business, and many companies employ individuals specifically to oversee such materials.
Importance of Spare Parts
The first element in materials management involves spare parts at a business. A detailed business process is required to determine the order point for spare parts, identify the ideal quantity to order, and process receipt of the parts to make sure they are in the correct place. Spare parts are integral to the continuing operation of production lines and related equipment. Poor management of this process can cause downtime and loss of production as machines break down without the parts available to repair them.
Quality Control in Business
Quality control, ensuring products are of high and consistent value, is a major part of materials management. The creation of material standards, inspections, and a returns process is a primary responsibility of employees at a company. All parts and materials must be tested to ensure that a specific level of quality is met. This is typically completed before a payment is issued to a supplier, ensuring that the supplier has met the conditions of their contract.
Inventory Management Procedures
Inventory management is the accurate tracking of all materials in a company’s inventory. A company has typically purchased these items from another supplier. There are three possible areas of loss that are reduced through effective inventory management: shrinkage, misplacement, and short shipments.
Shrinkage is a general materials management term used to describe the loss of materials once they have reached a company. This type of loss can be due to theft or damage. Loss through misplacement is most commonly found in very large organizations or warehouses. Material is received by the shipper and then frequently moved to another location by the distribution staff. However, if it is moved to the wrong location, it can become lost and counted as never having been received.
Short shipments occur when the quantity received is less that the number on the packing slip. This must be identified and corrected as soon as possible, preferably before the shipper receives the package. The more time that passes before it is realized, the greater the risk of a supplier insisting that the product was shipped correctly, and the loss occurred within the customer's warehouse.
Specific Industries
Certain fields, such as healthcare, rely on materials management to ensure different goods are stored properly. Medicines and powerful pharmaceutical drugs are often kept at hospitals and similar healthcare facilities. These products are stored, tracked, and monitored daily to ensure they are not stolen or abused by patients or staff at a hospital. Similar procedures may be used in research labs that house chemicals or biological components that may be potentially dangerous or used to create weapons.