Materials management best practices for manufacturers
Blog //28-09-2021

Materials management best practices for manufacturers

by Grace Child, Senior Product Marketing Executive

Materials are an essential ingredient of any manufacturer’s operation. Without raw materials, there’s no way production processes can begin, and no finished products will ever be sold to customers. This may seem obvious, however, the methods used for managing these materials can sometimes be overlooked or underutilised.   

So, what exactly is materials management, and what role does it play in the manufacturing industry? In this article, we take a closer look at the different types of materials management, and provide some best practices that can improve the way you complete this crucial task…

What is materials management?

Materials management is largely centred around controlling the flow of materials, so that manufacturers have the exact resources they need, and exactly when they need them. Any action that is involved with assisting the material journey falls within this field.

The activity helps to ensure the quality of materials is high, and that they are being sourced from reputable suppliers. It also assists with attaining these items at a reasonable price, and providing visibility around the number of items you have on hand.  

It’s no surprise to learn that it’s usually a materials manager who takes the lead with this task. Or at least someone with a similar level of authority within the buying, producing, and selling aspects of your operations.

It’s worth noting that materials can usually be broken up into two categories. Direct materials are items that will be used in production, and will form part of the core recipe of your products.

Indirect materials aren’t a visible element of the sellable good, but will have been used at some point in the process (such as glue or cleaning equipment). These items are still incorporated into a manufacturer’s costs, even if they’re not listed as a key component.   

What is the role of materials management in manufacturing?

Materials management is a fundamental cog in the wider manufacturing mechanism. It can have a big impact on enhancing the smoothness of supply chain management and production processes.

Without the appropriate measures in place, it would be more difficult to meet consumer demand, which could lead to late deliveries, broken promises, lost relationships, and ultimately fewer sales.

For this reason, it’s essential to ensure those involved with product creation have the resources they need to complete their job. It’s also crucial to have a competent strategy for sourcing materials, otherwise the quality of your output will suffer (along with your reputation).

Effective materials management inevitably leads to increased efficiency for your overall business. By taking this endeavour seriously you’ll reduce waste, work quicker, spend less, and have a better product to sell. These aspects lead to happier employees and customers. The time and money saved can be reinvested into your company’s infrastructure too. 

What are the 5 R’s of materials management?

  • Right supplier
  • Right quantity
  • Right price
  • Right quality
  • Right time 

What are the main parts of materials management?

Purchase management

Raw materials must be sourced from somewhere, so they’ll usually bought from a supplier. The person in charge of purchasing should always be on the lookout for the best price, because finding a good deal is one of the simplest ways to reduce costs, and to increase profitability.

MRP

Material Requirements Planning allows manufacturers to stick to an optimum level of materials during their production process. The best way to do this is to determine exactly what (and how many) materials are needed to build each product in their catalogue.

One method for doing this is building a comprehensive bill of materials. This way you essentially have a recipe book of ingredients. When you combine this with insights around demand, you can reduce the amount of materials you source, saving money as a result.  

Supply chain management

An effective supply chain is essential for materials management as it allows materials to seamlessly flow through all the phases of your manufacturing operation. This aspect is all about ensuring materials are in the right place at the right time.

If you have multiple storage facilities, it may be sensible to have items in certain locations depending on where their production journey is due to begin. It’s important for the whole supply chain to be durable, so that unforeseen disruptions don’t cause materials to be stuck in bottlenecks.   

Stock control

Stock control allows manufacturers to govern where materials are kept, and how many products are kept in storage (in preparation for being shipped to customers). In a similar vein to MRP, you should strive to keep your inventory as small as possible, whilst still being able to meet demand in a timely fashion. It’s important to always look for ways to improve your inventory control strategy, as this will lead to greater efficiency.  

Quality control

It’s impossible to create great products without similarly great materials. This area of materials management is connected to purchasing, as it is the suppliers chosen that will ultimately determine how good the materials are. In terms of the quality control itself, you should be assessing the characteristics of the materials in relation to the necessity you have. So, for example, its strength could be the most important trait you’re looking for.

What are some materials management best practices?

  1. Use clear guidelines for material quality

It’s useful to stay in control of material quality, by ensuring that the purchasing employee is meticulous with their selection process. But a sure-fire way to stay on top of this, is to have a set list of guidelines that must be reached before an item is bought or used. Having these company-wide requirements, not only removes any ambiguity (if a material appears to fall within the grey area), but it also means that standards can continue to be met even when certain employees are absent.      

  1. Pick suppliers strategically

As we’ve already mentioned, you’ll want to choose suppliers that have a reputation for providing high-quality materials. But there are other characteristics that can be searched for too, that may help from a strategic perspective. The geographic location of any provider may influence how quickly you can get hold of items when a last-minute order comes in.

A potential partner’s flexibility, transparency and communication skills are also traits that may be determining factors in the selection process. You’ll want a supplier that understands your needs and is a good fit for your company’s ethos in the long run.     

  1. Have a dedicated materials manager

It’s important to have an individual of authority that oversees all the elements discussed so far. Having a designated employee for this work creates accountability, which means responsibilities are more likely to be fulfilled. Having a focal point also means that other employees have someone to contact if they’re facing any material challenges. This central figure will be able to put plans in place and put actions into motion. Their plans will also serve as guidance for others to follow.          

  1. Use the ‘Just-In-Time’ stock control method

As discussed earlier, there are stock control strategies that can be used to improve efficiency around materials. One such example is the Just-In-Time manufacturing philosophy. This approach follows the logic that you should only source materials (and begin production runs) when an order has already been placed by a customer. It can be a risky method, but if done properly, it will reduce the amount of material within the supply chain at any given time.

It also lowers storage costs and reduces the amount of waste you generate. You’ll certainly need a reliable and understanding supplier to implement this effectively. There are other strategies you can implement (such as Lean Manufacturing or Six Sigma), but it’s all about choosing one that works best for your business.           

  1. Have an ordered warehouse

It’s important that the space in which your materials reside has some sort of structure to its layout. Not only will this make it easier to find items when they’re needed, but it also decreases the chances of damage occurring, as there is less chaos.

Any warehouses or factories you use (along with the machinery and workstations within them) should be organised tactically so that materials can travel from one stage of the supply chain to the next as easily as possible.       

  1. Complete frequent reviews

Treating materials management as a top priority for your business is a good start, along with using the best practices mentioned above. But simply putting these procedures in place is not enough. You should regularly review any processes related to materials, to ensure they’re still performing as expected. Any decline or deviation from the original purpose could mean it’s time to tweak or replace them.   

  1. Use MRP Software

Arguably the most important thing you can do to manage materials effectively is to have some form of system for monitoring the quantity, cost, and location of any materials in your possession. Having this information in an easily accessible place provides you with a great deal of clarity.

It is possible to capture this data with traditional techniques, but life becomes far easier with the help of technology. Dedicated MRP software helps to eradicate errors when completing this task, and saves your employees bundles of time. 

Which MRP software is best for manufacturers?

When searching for the right MRP software, there are particular specifications manufacturers should be on the hunt for. Does it have functionality for production planning, and does it make it easy to build a complex bill of materials? Does it provide end-to-end traceability, can it assist with quality management, and are stock requirements determined by a calculation of future demand?

Advanced’s Manufacturing Software has all these traits, but its biggest advantage is that it acts as a solution for your wider business too. Rather than being a standalone MRP solution, it integrates this facet with your accounting, payroll, e-commerce, and contact management functions.

Having this level of integration enables an environment of transparency, cohesion, and consistency. The system provides a clear view of online sales, which then informs the scale of production that is needed and ultimately dictates the number of materials that are purchased.   

The cloud functionality and reporting capabilities are further perks, that allow employees to access material information remotely, and to determine financial insights that will ultimately drive transformational change.

 

If you want to increase your business’s efficiency, and enhance your materials management processes, take a more detailed look at our Manufacturing Software (which is tailored for small to medium-sized manufacturers).   

Blog Manufacturing Business Cloud Essentials
Grace Child

Grace Child

PUBLISHED BY

Senior Product Marketing Executive

Grace joined Advanced in July 2016 and leads product marketing for our Cloud back office solutions across finance and ERP. Grace is responsible for go-to-market activity, sales enablement, product launches, and understanding and articulating customer insights.

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