The materials management or inventory management is concerned with the administration as well as the temporal, quantitative, qualitative, and possibly also spatial planning and control of material movements within a company and between the company and its environment. It coordinates the flow of goods between suppliers, customers, carriers need (for example, production) and the bearings. In manufacturing companies, it ensures the supply of manufacturing areas with direct goods such as raw materials and supplies, supply parts and semi-finished products and in general the provision of indirect goods such as office supplies, spare parts, or services.
The theory of materials management is an area of responsibility in business administration and industrial engineering.
- Subject Objective: To ensure that the required goods are provided when they are needed ( material liquidity ): as to the correct amount
- The right products
- In the required (correct) quality
- In the right place
- At the right price
- ( the so-called six "R" logistics )
- Trade-off between the cost of providing the goods ( service level or service level ) and the cost of a possibly non-existent, but required amount ( shortage costs / shortfall ). These costs must be optimized.
- Reduction of the bound in stocks capital ( capital commitment costs / capital employed ) by the reduction of inventory levels and the prevention of stored goods.
- Protecting the environment is important in more than one sense. Compliance with legal guidelines and regulations relating to emissions, use and disposal of a variety of materials and hazardous substances
- Realization of cost saving potentials in materials procurement through recycling
- Creating competitive advantages through image building
In terms of the flow of materials materials management has versatile functions true. Because the implementation and research in the field of integrated materials management is still relatively new, it will be in a range of literature and practice, depending on the degree of integration, attributed to functions in the field of procurement, logistics and production.
The materials management performs its functions for the following objects:
- Materials and components that enter directly into the product; Raw materials, such as metals, wool, staple etc.
- Adjuvants, for example, solder, twisting, etc.
- Semi-finished products, that is, pre-produced, prefabricated components, for example, injection pump, car doors, etc.
- Supplies, for example, machine oil
- For example, blending with metal sheets
- These can be valuable or expensive to dispose of waste
- Finished products
- Work in process; in production located goods ( work in progress).
- As bearings for print and office supplies in an insurance
Functional differentiation and integration
The Materials Management has worked with many companies large numbers of overlapping areas and interfaces to other functional areas.
The main intersection of the materials management (as part of enterprise logistics ) is the one with the logistics. While the logistics primarily concerned with the carriage of goods and information flows of a company in its external relations, the material economy has its focus on material and internal data streams. Depending on the decision-making materials management it includes different tasks. Thus, the procurement of needed goods and their storage belong to their duties. This includes on-site transport and interim storage of the goods during the production process. Equally, however, can also be the final storage of finished goods from the producer as well as recycling and waste management are among their tasks, which is gaining more and more importance due to the current debate on sustainability. In contrast to the material economy of Shopping deals rather with the strategic selection of suppliers and negotiating and check the conditions.
The valuation of material stocks connects the materials management and procurement with financial accounting and controlling. Stocks and work in progress are valued at material cost. The materials are valued at the acquisition price, the moving average price or in -house manufactured products with the calculated unit price. The valued inventory flow directly into the corresponding balance sheet items. In addition to the correct prices therefore the quantity held in stock are the balance sheet and therefore must be correct. Are the documented stock quantities for some reason questionable, the correct quantity of stock must be redetermined by means of consuming and costly process of an inventory.
In Controlling the weighted material consumption is necessary to determine on production orders, the price and quantity variances and to evaluate any findings of the Committee. In Production controlling the actual costs of in-house production of semi-finished and final products are determined.