Supply chain management encompasses the entire flow of producing goods or services, from sourcing the raw materials through every phase, resulting in a final product. Managing this process means minimizing cost, waste and time throughout the production process. IBM explains that “the industry standard has become a just-in-time supply chain where retail sales automatically signal replenishment orders to manufacturers,” or a process where the demand regulates the supply.
Technology grows increasingly essential to supply chain management. Intelligent applications are a new way to handle maintenance, repair and operations (MRO) inventory. MRO is not part of finished goods, but effective management is critical for running production smoothly. Purpose-built intelligent apps also shape indirect materials management. AI integration into supply chain management enables data-driven reports and dashboards, assisting all teams in the process, from procurement to operations, management and front-line workers.
Professionals interested in broad managerial responsibilities in various service and manufacturing settings can gain the knowledge and skills necessary through the fully online Master of Business Administration (MBA) with a Concentration in Supply Chain Management program from Bowling Green State University (BGSU).
What Is Materials Management?
Materials managers are responsible for purchasing or obtaining the raw materials required to produce a specific product. Indeed describes this role as including many responsibilities, “such as quality assurance and operations control, which help accomplish the major objectives of materials management, which is a process that can lead a manufacturing enterprise to find success.”
Materials management is the part of the supply chain that ensures the materials needed for manufacturing have been obtained in a cost-effective and timely way. It can be challenging to get the quality and quantity of the various materials needed on time to avoid shortages or delays in production.
Materials managers monitor and adjust inventory, ensure that inventory counts are accurate, ensure bills of materials are correct, and track and manage supplier relationships and shipping schedules. A materials manager must balance providing the necessary materials on time and avoiding waste and overstocking to control costs. Indeed describes the “Five Rs of Materials Management” as ensuring the right material, the right amount, at the right time, with the right resources, at the right price.
Direct and Indirect Materials
Materials required for production may be either direct or indirect. Inbound Logistics states that “direct materials are the components that cost the most and are the most essential to the production line.” These would be raw materials, natural resources or any other supplies that are part of the finished product.
Indirect materials, on the other hand, “are less cost intensive than direct materials and involve less measurement.” Examples include gloves, personal protective equipment and maintenance supplies. While these are critical to the production process, they are not part of the actual product.
The Process of Materials Management
All of the steps, from purchasing to receiving, are the materials manager’s responsibility. Purchasing the right goods in the right amount is the first step. Guaranteeing adequate storage is available in convenient locations helps avoid shortages and ensures there is enough of everything to keep the supply chain working. Transporting materials to manufacturers promptly is a large part of materials management and is sometimes separated into its own department. Receiving involves both checking and distributing components to the correct parties.
Just-in-time inventory management (JIT) is a style that emphasizes delivering components as needed to minimize the amount of stocked inventory. Anticipating requirements accurately and managing delivery timing helps to reduce waste and save costs.
Purchasing comes next and includes finding ways to lower expenses and receive supplies on time. Managing inventory involves not only keeping the right amount of goods on hand but also being able to assess supplier availability. The next step is to supply the materials to the sites or production centers as needed. Quality control involves ensuring the quality of the source materials so the finished product is of the highest quality.
Materials management is the first step in the supply chain. Once the right materials are sourced, purchased, quality checked, stored and delivered on time, the rest of the supply chain can move smoothly. These steps include refining the raw materials into basic components and then putting the components together to create the final product. Sales and order fulfillment are next, followed by product delivery, customer support and return services.
Become a Supply Chain Professional With an Online MBA From BGSU
The nationally acclaimed, AACSB-accredited online MBA – Supply Chain Management program from BGSU is suited for anyone who meets the admission requirements on the program page. However, it is a particularly convenient option for working professionals, including those with military experience. Students gain the tools, processes, knowledge and skills to pursue and thrive in leadership roles in supply chain management.
Learn more about the BGSU online MBA with a Concentration in Supply Chain Management program.