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What is Materials Management?

By Carol Francois
Updated Mar 02, 2024
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Materials management is part of business logistics and refers to overseeing the location and movement of physical items or products. There are three main elements associated with such management: spare parts, quality control, and inventory management. Materials management is important in large manufacturing and distribution environments, such as warehouses, where there are multiple parts, locations, and significant money invested in these items.

Basic Purpose and Function

For many companies, materials management ensures the proper tracking of different goods within an organization. This can include items manufactured by a business, as well as those supplies and materials that are bought from another producer by that company. Each of these items represents a direct financial value for a business, and many companies employ individuals specifically to oversee such materials.

Importance of Spare Parts

The first element in materials management involves spare parts at a business. A detailed business process is required to determine the order point for spare parts, identify the ideal quantity to order, and process receipt of the parts to make sure they are in the correct place. Spare parts are integral to the continuing operation of production lines and related equipment. Poor management of this process can cause downtime and loss of production as machines break down without the parts available to repair them.

Quality Control in Business

Quality control, ensuring products are of high and consistent value, is a major part of materials management. The creation of material standards, inspections, and a returns process is a primary responsibility of employees at a company. All parts and materials must be tested to ensure that a specific level of quality is met. This is typically completed before a payment is issued to a supplier, ensuring that the supplier has met the conditions of their contract.

Inventory Management Procedures

Inventory management is the accurate tracking of all materials in a company’s inventory. A company has typically purchased these items from another supplier. There are three possible areas of loss that are reduced through effective inventory management: shrinkage, misplacement, and short shipments.

Shrinkage is a general materials management term used to describe the loss of materials once they have reached a company. This type of loss can be due to theft or damage. Loss through misplacement is most commonly found in very large organizations or warehouses. Material is received by the shipper and then frequently moved to another location by the distribution staff. However, if it is moved to the wrong location, it can become lost and counted as never having been received.

Short shipments occur when the quantity received is less that the number on the packing slip. This must be identified and corrected as soon as possible, preferably before the shipper receives the package. The more time that passes before it is realized, the greater the risk of a supplier insisting that the product was shipped correctly, and the loss occurred within the customer's warehouse.

Specific Industries

Certain fields, such as healthcare, rely on materials management to ensure different goods are stored properly. Medicines and powerful pharmaceutical drugs are often kept at hospitals and similar healthcare facilities. These products are stored, tracked, and monitored daily to ensure they are not stolen or abused by patients or staff at a hospital. Similar procedures may be used in research labs that house chemicals or biological components that may be potentially dangerous or used to create weapons.

Practical Adult Insights is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By anon263041 — On Apr 23, 2012

Material management it is a tool of controlling decisions for certain transactions and it deals with the production process. Proper handling of materials within the company plays a vital role in productivity and efficient functions.

Managing materials is not only for those who are in that position, but it is for all, because even a common individual can adhere to this.

By anon160786 — On Mar 17, 2011

i think materials management is an important department in the company, because its deal not only with internal departments in the firm, but also deals with the external environment so this department plays a very important role in the company. --Ahmed E.

By KittenTucker — On Jan 25, 2011

Materials management is even more important for companies that deal with really expensive materials, since they get hit harder when materials are misused or go missing. I unfortunately experienced this firsthand in my old job when several high-priced pieces of equipment were "lost" (i.e., probably stolen) -- our business took a really hard hit, and it was especially frustrating since I felt that if we had had a better materials management system in place we might not have had that problem.

By sunshine31 — On Jan 15, 2011

A comprehensive manual on the subject was written by J.R. Tony and Chapman Arnold. It is called the “Introduction to Material Management” and it discusses scheduling, warehouse management, purchasing, ordering, and inventory control.

Material management distribution can also be analyzed with companies that have been successful in this venture.

UPS famous for its small package division also has a strong market presence with regard to warehousing and logistics management. Many companies expand their market operations in order to serve more customers and this is why UPS ventured into logistics management.

They have cameras in the receiving area in order to limit shrinkage from warehouse employees.

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