Impacts of Effective Material Management

Introduction
Labour, material, tools, equipment and cash are the main parts of any industry or
project. Materials management, which includes procurement, shop fabrication, logistics,
supply chain management, production on site, and field servicing, requires special
attention to achieve cost reduction. The supply chain is a convenient term used to
describe a complex web of activities. (Treseler, 2012)
Material management is the system for planning and controlling to ensure that the right
quality and quantity of materials and equipment are specified in a timely manner.
Materials should be obtained at a reasonable cost, and be available for use when
needed. The cost of materials represents a large proportion of the cost. Usually cost for
any project or industry production is mainly on the materials and plant component that
can make large portion of the project cost dependent upon the type of project and the
extent of mechanisation and plant used. (Burt, 2011)
The efficient management and handling of material represent a key role in the
successful completion of the work. It is important for the contractor to consider that
there may be significant difference in the date that the material was requested or date
when the purchase order was made and the time at which the material will be delivered.
These delays can occur if the contractor needs a large quantity of material that the
supplier is not able to produce at that time or by any other factors beyond his control.
The contractor should always consider procurement of materials is a potential cause for
delay (Willis, 2008).
This research study is to examine impacts of the implementation of effective material
planning

Literature Review
Materials management is concerned with planning, organizing and controlling the flow
of materials from their initial purchase through internal operations to the service point
through distribution.

Dobler (2010) defines that Materials management is part of business operations which
is concerned with the scheduling for procuring, obtaining, managing, recording , keeping
and issuing of supplies and things for the use in operation with proper control channels
and processes. Here supplies are material used in an industry that will either be part of
another product or assist in getting a work done.
Kirby (2010) states that material management involves the control of the flow of goods
in a firm. It is the combination of purchasing with production, distribution, marketing and
finance. material management as the activities involved to plan, control, purchase,
expedite, transport, storage, and issue in order to achieve an efficient flow of materials
and that the required materials are bought in the required quantities, at the required
time, with the required quality and at an acceptable price.
The term supply chain describes the supply system from raw materials through to goods
fixed in place. Achieving efficient material management is important and a site layout
design that reduces material travel time is very important in construction productivity.

Patrick (2010) defined that material management is set of techniques that uses bill of
material data, inventory data, and the master production schedule to calculate
requirements for materials. It makes recommendations to release replenishment orders
for material. Further,it makes recommendations to reschedule open orders when due
dates and need dates are not in phase.
Kirby (2011) cited that Materials planning is an approach or tool that can be exercised
efficiently in maximization of productivity and profit in a factory or company. The main
focus of the objective of materials management planning is to increase the use of the
companys available resources by ensuring proper supply of materials for production
process and also minimizing cost of holding excessive inventories. This objective when
achieved, leads to cost reduction and improve profitability. This involves preparation of
materials budget that includes what is needed, how much, where and when to fulfill the
objective of the organization.

Salin (2010) mentioned that the most important thing to bear in mind while planning for
materials is to procure the right quality at the right price. Procurement in highly technical
areas required skill and experience on the part of the buying manager. Cost
improvement is simply the result of learning effect among workers, reflecting the
development of skill and dexterity that occurs when a task is performed repeatedly.
An effective materials management system enables users to seamlessly integrate
interchanges with commodity suppliers, subcontractors, manufacturers, fabricators, and
freight forwarders. The ability to manage the supply chain has several benefits include
Complete supplier management allows access to historical information on supplier
performance on previous projects and Knowledge of material shipments well in advance
of release from the suppliers allows for better planning and allocation of resources for
labor and equipments

Juacera (2009) explained that At the core of every material management is the
calculation designed to tell companies what they have, what they need to make and
buy, and when they need to make and buy it. If this were the only definition for MRP,
then the answer to this question would be obvious. MRP may not be perceived as
leading edge at this time, but accurate answers to the simple questions of what a
company has, what it needs to make and buy, and when it needs to make and buy it
can spell the difference between success and failure for any company.
Rough (2011) said that When taking into account the increased complexities in the
twenty-first century, the failure deal with material management accurately will cause a
company to fail more quickly. Material Planning is critical and more relevant than ever.
However, in several cases the core Material Planning concepts and rules around them
have been neglected and left to idle for a long time.
Jerome (2011) mentioned that the impact of poor material management will to lead to
three main effects:

First, improper indication of stock which is identified as having too much of the wrong
material, too little of the right material, high obsolescence, and/or low inventory turns.
Companies frequently can identify many of these problems at the same time.
Second, incorrect service-level performance where customers continue to put pressure
on the company, which quickly exposes poor on-time delivery, low fill rates, and poor
customer satisfaction. In addition, customers consistently attempt to drive prices down.
Finally, high expenses due to spread of materials and waste. In an attempt to fix the
preceding two unacceptable business results, managers will commit to payment
premiums and additional freight charges or increase overtime to fulfill promises.
Typically, this effect is under measured and underappreciated in most companies.

A materials management system is typically controlled through an information system,

thus, can help in taking decisions related to material in the organization. Vassili (2012)
explain that effective material management offer a number of potential benefits to
service, supply and manufacturing firms. Some of the main benefits include helping
supply and production managers to minimize inventory levels and the associated
carrying costs, track material requirements, determine the most economical lot sizes for
orders, compute quantities needed as safety stock, allocate production time among
various products, and plan for future capacity needs.
As materials management is handled by single authority, it can result in better
coordination, as it becomes the central point for any material related problems.
Stevenson et al (2011) discussed that the information given by material management is
useful in other areas as well. A range of people in a typical manufacturing company are
important users of the information provided by an MRP system. Managers, across
departments make decisions about scheduling work, and plant foremen, who are
responsible for issuing work orders and maintaining production schedules, also rely
heavily on material management. Other users include customer service representatives,
who must be able to supply customers with projected delivery dates, purchasing
managers, and inventory managers.

As per Levi et al (2011), Supply chain management can impact the important customer
value of price by significantly reducing costs. Thinking in terms of customer value
promotes a broader look at a companys offerings and its customers. Customer value
drives changes and improvements in the supply chain; some forced by customers and
competitors and others undertaken to achieve competitiveness.
Navon (2012) stated that The problems encountered by the materials management
concept were; lack of flexibility; entrusting sensitive activities with one office; lack of well
integrated database system to support information flow and bureaucratic in nature.
Subsequently, most manufacturing firms have yet to recognize professionalism in
materials management as most sensitive positions like purchasing and supplies are
undertaken by non-professionals. This is a great undoing in this globally competitive
market.
Randolph (2012) states that the impact of a material management system include
lowest final cost, optimum quality, assurance of supply, and lowest administrative costs.
The materials manager obtains the materials needed at the lowest cost possible. By
buying products at the lowest possible costs, operating costs can be reduced and profits
can be increased. Proper handling and storage of materials can reduce the total cost of
materials; therefore the materials manager should ensure that materials are handled
properly and stored in the most adequate places.
Lansford et al. (2013) mentioned that Companies that have good material management
could be more successful in attracting customers than companies that have ineffective
material management . When a company has good material management it could
benefit from cost reductions, cooperative environment from the employees of the
supplier, and willingness to help with materials ordered and orders pending. When a
company has bad material management it might be possible that it experiences late
deliveries or wrong materials delivered. This will have an impact in the total cost of the

product, possibly increasing the total costs, and delaying the completion of the final
product.
Bernold (2011) cited that an effective material management system can bring many
benefits for a company. Reducing the overall costs of materials, Better handling of
materials, Materials will be on site when needed and in the quantities required,
Reduction in duplicated orders, Better field material control, Improvements in project
schedule, Reduce of materials surplus or shortage and Better cash flow management.
Dobler (2009) state that material management is designed to improve the activities
related to the flow of materials. They add that material management should coordinate
purchasing, inventory control, receiving, warehousing, materials handling, planning, and
transportation.
Munson & Hu (2010) mention their study that in an effective materials management
model the planning for and the purchasing of raw materials and components for all
factories supplying the organization with finished goods is done in one place, supported
by an integrated computer systems. The organization gains complete control over the
management of materials as information and decision making becomes centralized.
Rafiel (2010) suggested that for an effective material management is better to have a
centralized material management. In a centralized materials management model the
planning for and the purchasing of raw materials and components for all factories
supplying the organization with finished goods is done in one place, supported by an
integrated computer systems. The organization gains complete control over the
management of materials as information and decision making becomes centralized.
Lansford (2011) further cited that Moving towards a centralized materials management
structure is worth considering as organizations are becoming more sophisticated in their
management of their operations and supply chains. Technological advancements such
as the internet and complex information systems are making it possible to coordinate

materials, information and financial flows across the organization and supply chain, and
to help organizations become more efficient and competitive in the long run.
Karijalan (2010) mentioned in the study of effective material management that effective
materials management and its associated benefits will support current projects running
in the organization. One such project is Right Sourcing, a project that aims to through
structured performance measurement and evaluation aid the Purchasing department
with future supplier selection. effective materials management will ensure that
knowledge of supplier reliability, flexibility and responsiveness are closer to the decision
making source, i.e. Purchasing, and not dispersed across numerous sites.
Jerome (2009), said that The effective materials management plan builds from and
enhances an institutional master plan by filling in the gaps and producing an
environmentally responsible and efficient outcome. A Business Operations, office, or
housing complex can expect a myriad of benefits from an effective materials
management plan. For starters, there are long-term cost savings, as consolidating,
reconfiguring, and better managing a campus core infrastructure reduces annual
operating costs.
Chandler (2011) stated that the major challenge that materials managers face is
maintaining a consistent flow of materials for production. There are many factors that
inhibit the accuracy of inventory which results in production shortages, premium freight,
and often inventory adjustments. The major issues that all materials managers face are
incorrect bills of materials, inaccurate cycle counts, un-reported scrap, shipping errors,
receiving errors, and production reporting errors.
Conclusion
Burth(2009) said that materials management is the branch of logistics that deals with
the tangible components of a supply chain. Specifically, this covers the acquisition of
spare parts and replacements, quality control of purchasing and ordering such parts,
and the standards involved in ordering, shipping, and warehousing the required parts.

Cavinato (1994) states that the objectives of a material management system should
include lowest final cost, optimum quality, assurance of supply, and lowest
administrative costs.
Material management is an important management tool which will be very useful in
getting the right quality & right quantity of supplies at right time, having good inventory
control & adopting sound methods of condemnation & disposal will improve the
efficiency of the organization & also make the working atmosphere healthy any type of
organization, whether it is Private, Government ,Small organization, Big organization
and Household.
Even a common man must know the basics of material management so that he can get
the best of the available resources and make it a habit to adopt the principles of material
management in all our daily activities
While most of the writing and discussion about materials management is on acquisition
and standards, much of the day to day work conducted in materials management deals
with QA issues. Parts and material are tested, both before purchase orders are placed
and during use, to ensure there are no short or long term issues that would disrupt the
supply chain.
An effective materials management plan also means a more holistic approach to
managing vehicle use and emissions, solid waste, hazardous waste, recycling, and
utility services. As a result, this means a greener, more sustainable environment and a
manifestation of the many demands today for institutions to become more
environmentally friendly.
And finally, an effective materials management plan can improve aesthetics. Removing
unsafe and unsightly conditions, placing core services out of sight, and creating a more
pedestrian-friendly environment will improve the visual and physical sense of place for
those who live and work there.