Guide to Material Management (With Types and Objectives)

By Indeed Editorial Team

Published June 4, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Many businesses work with raw materials, which they source and then process into new products. If a business can source materials effectively and ensure a steady supply, it can function more efficiently and increase profits. Learning about materials management can help you understand the importance of this concept for many businesses and decide whether this is a career you wish to pursue.

In this article, we define material management, detail different types of materials, explain the key responsibilities of a material manager, and provide a list of objectives for managing materials.

What is material management?

Material management determines how a business sources, transports, and utilizes all the raw materials, goods, and products it requires for production and operations. The materials management department of a business concerns itself with every aspect of planning and controlling how materials move throughout the company, such as establishing a supply and negotiating rates, arranging transportation, and storing goods. This can be critical to the success of businesses that operate in industries such as manufacturing or construction.

Material managers strive to ensure a steady flow of goods throughout an organization. If a material manager can source high-quality raw materials, ensure timely delivery, and order the correct quantity of products, they can help the core business run efficiently. Materials management requires careful attention to both the general logistical operations of a business and the small details in material acquisition and transport. Businesses that dedicate time to optimizing their material managing processes can eliminate excess expenses and generate more profit.

Related: What Is Management? The Definition, Functions, and Levels

Types of materials

Material managing generally concerns two distinct types of materials, both of which are important for a business to function effectively. Here are brief descriptions of the two types of materials:

Direct materials

Direct materials are those that go into the final product that a business produces. For example, the direct materials of a construction company might be lumber, nails, glass, and concrete. If there are delays in the acquisition or transport of these materials, it can cause significant harm to business operations, and the quality of the direct materials a business uses can have a significant impact on the final product.

Indirect materials

Indirect materials don't go into the products that a business produces. Instead, they support the production process or business operations. For example, the indirect materials for a construction company may be tools and spare parts for machinery. Nearly every business requires indirect materials, even those that don't produce any physical products.

For some businesses, indirect materials take the form of office supplies or company equipment. Issues with the supply of indirect materials can cause delays in production and other challenges within a business, and effective sourcing of these materials can lead to lower overhead costs.

Responsibilities of material managers

Material managers take responsibility for the materials management within a business. Here are some of the key duties of material managers:

Production planning

Material managers coordinate with other members of the management team to consider the overall operations and objectives of a business and determine what materials are necessary for success. Material managers help determine if using less expensive raw materials can help a business lower costs while still producing high-quality products. They might provide input on the ability of a business to take on new contracts and meet customer demand.

Forecasting

Forecasting involves predicting what quantity of materials a business might require in the future. Material managers examine current production levels and determine the correct quantity of products to order from suppliers. They monitor the materials a business has in storage and decide when it is necessary to acquire more.

Forecasting requires material managers to consider the economic climate, the current operations of a business, and organizational objectives to ensure that they order an appropriate quantity of materials and that the business can deploy those materials efficiently.

Related: 9 Supply Chain Management Degree Jobs (With Salaries)

Logistics

Material managers help plan, implement, and monitor all aspects of the logistics concerning the transport of materials. They try to determine the most cost-effective methods for transporting materials and might negotiate favourable rates with suppliers. Managers might consult with other businesses or logistics experts to determine methods for saving time and money in transport.

They might also take responsibility for the security of materials in transit and devise new methods for reducing losses. Managers have knowledge of the logistical operations of a business and monitor supply lines to ensure a regular supply of essential materials.

Related:10 Careers in Logistics (With Salaries and Primary Duties)

Inventory management

Inventory management refers to how a business stores and accounts for materials in its possession. Material managers monitor inventory levels and order new supplies as necessary. They devise methods for storing materials to ensure they are safe and do not degrade due to damage from improper storage.

Managers might find new locations or facilities for storing materials before processing or might seek to cut costs at existing facilities by using new storage methods. If material managers ensure that a business has a sufficient stock of supplies, they can avoid shortages and maximize productivity.

Negotiation

Material managers might take responsibility for negotiating rates for materials with suppliers and transportation companies. Managers learn about different supply options and consider the cost, quality, and reliability of supply when they determine which supplier suits the needs of a business. They might negotiate rates for bulk shipments to save the business money and establish a long-term relationship with a supplier. If any challenges arise, material managers work with the supplier to find a solution.

Evaluation

Material managers constantly monitor all aspects of the supply chain of a business and evaluate the efficiency of each component. They collect data concerning suppliers, inventory, and transportation costs to search for potential inefficiencies. Managers consult with upper management and production staff to evaluate the quality of sourced material and determine if any changes might be necessary. If material shortages occur, managers determine the cause of the issue and devise protocols to increase the reliability of the supply.

Material management objectives

Material managers typically have a set of objectives that they attempt to achieve in their work. Here are the main objectives of material managing:

High quality

Material managers strive to acquire high-quality materials for businesses to use in their products. High-quality materials can make a product more appealing to consumers and can lead to higher sales. If a business uses low-quality materials in their products, they might initially save money in production, but it can eventually lead to a loss of trust with their customers. Managers evaluate potential suppliers to determine which one can consistently supply excellent materials.

Sufficient quantity

Materials management involves attempting to source a sufficient quantity of materials for a business to use in production. Material managers consult with production managers to determine the quantity of materials a business requires over a specific period. They attempt to forecast changes in the production schedule and anticipate future requirements. Managers search for suppliers who can guarantee a specific amount of product at regular intervals.

Steady timing

If an organization can acquire materials at specific and reliable times, they can make more accurate production forecasts and meet targets. One of the objectives of material management is to put processes in place that ensure a steady supply of materials for production. Material managers select reliable suppliers and organize transportation logistics to ensure timely delivery of all necessary supplies. They monitor the flow of materials from suppliers to production facilities to anticipate and mitigate any delays.

Consistent source

Acquiring materials from a consistent source can help ensure uniformity of products and can help a material manager negotiate a favourable rate for purchase. Material managers strive to find a consistent source for required goods so that they can make accurate forecasts and establish continuity. Maintaining consistency in materials across many shipments can improve the production process, reduce the likelihood of unexpected delays, and help ensure that finished products are consistent, which can increase customer satisfaction.

Best price

Material managers seek to find the lowest rates for purchasing and transporting materials while ensuring a steady supply. By lowering the cost of materials, they can help a company increase revenue. Managers make careful decisions as they balance the quality and the cost of materials. They select transportation methods that ensure the safety of materials while reducing unnecessary expenses.

Ethical source

Material managers might consider the source of materials and attempt to select a supplier that works to reduce the environmental impact of its product. Suppliers that operate ethically might produce higher quality materials and benefit their community. If a material manager can source ethical materials for production, a business can advertise to consumers that they use these materials in their products, which might help increase sales.

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