How Materials Management Transformation Can Spruce Up Your Supply Chain

Materials Management Transformation

Your company’s supply chain plays a crucial role in the pursuit of its goals. In turn, a disjointed or inefficient supply chain may make it more difficult for your business to make progress towards fulfilling its potential. 

By optimizing your supply chain you may be able to significantly reduce your operating costs by speeding up the production process and reducing waste.

If you think your supply chain could be better, then a great place to start is by investigating your problems involved in materials management, as this aspect alone could have a significant effect on the efficiency of your supply chain.

What is materials management?

The role of materials management in supply chain refers to the process of overseeing the purchase, delivery, and flow of the raw materials that a company needs to produce its products.

It’s a segment of a company’s broader supply chain that is usually overseen by a materials manager, and is important because it directly impacts your company’s bottom line.

With strong materials management practices, you may be able to reduce overstocking costs, enable a more consistent materials management production process, and save your business from having to overspend on materials needed at the last minute.

To provide more context for what matters in materials management, we’ll turn to ThomasNet and its “Six Rs of Materials Management”:

  • The right material
  • At the right time
  • In the right quantity
  • Of the right quality
  • At the right price
  • From the right source

In order to nail the process of materials management aspect of your supply chain, it may help your company to be doing well in not just a few, but in all six of these areas.  

How to know if you’ve got a bad supply chain

While the status of your supply chain may not always be immediately apparent, there are checks that can help you to determine this. 

In the case that your business is strong enough to reach its goals even with a subpar supply chain, it may not be immediately obvious where you need to improve. Even if this is the case for your business, fixing your supply chain may still help you to become even more efficient, boosting profit and taking your business to the next level. 

Considering these three topics will help you figure out whether your supply chain is as good as it could be or whether it could use some improvements.

Bad data

Bad quality data can be a killer to your supply chain’s efficiency. Research shows that companies lose 30% or more of their revenue if they rely on bad data.

You might have bad quality data if you’re dealing with one of the following issues:

  • Spreadsheets that exist only in siloed departments
  • Software that doesn’t speak to other systems
  • Important records that are maintained and controlled by singular departments

Lost data

Your supply chain may also need work if key data points (or materials) are difficult to locate. For example, if you don’t know where certain key pieces of supply chain information lie within your company, it’s likely that you need to make improvements.

Too much redundant info

In some situations, having too much information about your supply chain may be as limiting as having too little. Having access to quality data and using it to inform your decisions is likely going to be beneficial in terms of your supply chain. 

If you have too much redundant info in your systems, it can be very difficult to find the quality data that you need to optimize your processes.

How to use AI and machine learning to optimize your supply chain

The rise of artificial intelligence and machine learning has brought with it new opportunities for optimization along the supply chain. 

As these technologies become increasingly powerful, digital materials management transformation is becoming the new frontier of supply chain optimization.

Experts indicate that many large enterprises only have about 20% visibility into their supply chains instead of the 70-90% that’s needed to optimize revenue and reduce volatility.

The digitization of material management is likely to be key in helping businesses to bridge the gap between their current and possible visibility. Most supply chain digitization products are created to provide additional insight into key processes that may be difficult to see without such software. 

A recent IBM survey found that 84% of chief supply chain officers said that the lack of visibility across their supply chain was the biggest challenge they faced. Embracing the digitization of your broader supply chain and your materials management processes may be one efficient way to resolve this problem.

6 tactics for a successful materials management strategy

It’s all about good data management

Your supply chain materials management transformation is likely to begin with quality data. 

Without good data – and by that we mean data that is both accurate and relevant – you simply may not have the insight needed to accurately track how your materials management process is impacting your broader supply chain over time.

And in order to consistently have access to good, quality data, your company is likely to need to have strong data management practices in place. Consistently tracking and accurately recording important supply chain metrics may be useful here, including:

  • On-time deliveries
  • Production speed
  • Inventory carrying rate
  • Supplier on-time delivery
  • Months on hand
  • Any other metrics that are valuable to your specific company 

It may prove useful to have a solid baseline figure for each of the metrics that you plan on tracking before adjusting your materials management process. Having those baseline numbers means that after you make a change you can more easily compare the efficacy of the change, and adjust accordingly. 

Keep your materials process transparent

It may also prove useful for you to have insight into multiple stages of your materials flow process.

Without being able to view each individual step in the process, it may be more challenging for you to identify which stages are working and which aren’t.

The best way to do this may be by creating a blueprint, or framework, that clearly demonstrates the path that each material that you procure takes from purchase to end product.

With such a plan in place, your materials flow process is likely to become more predictable. Everyone who comes in contact with the materials is more likely to be able to understand exactly what they’re supposed to do, and so will be able to respond to unexpected changes more efficiently. 

This can have the net effect of reducing variance and improving flow, ultimately improving efficiency along your supply chain. 

Make use of analytics

Analytics are likely to be crucial when it comes to creating a materials management process that your company can be proud of. Specifically, tracking the financial analytics of your materials management flow can prove invaluable. 

For starters, an accounting inventory analytics system might track metrics such as:

  • Purchase price of materials
  • Sales figures
  • Adjustments
  • Costs of holding excess inventory in your warehouse

Keeping track of this financial data will likely give your company useful insight into what it needs to focus on improving in order to optimize its materials management process. 

Get the best suppliers

The ceiling for your materials management process can be lowered or raised depending on the suppliers that you work with. If your suppliers are inconsistent with their delivery schedules or prices, it becomes very difficult to create a predictable, smooth-flowing path for the materials you procure — regardless of how much time or money you invest in doing so.

If you think that suppliers are holding your company back from reaching its potential, it may be worth looking for alternative options. Alternatively, you may feel able to be honest and upfront about your needs with your current suppliers. Explaining the need for greater consistency may be enough to solve this problem for you. 

Think outside the box

The digitization of materials management is an ongoing process. New technologies and processes are constantly being innovated, which enable cutting-edge companies to be constantly improving. 

This fast-paced innovation means that your business may have an advantage if they continually think outside of the box when it comes to managing the flow of necessary materials. 

Keeping an eye on the developments in this space may well be worth your while, as it will allow you to quickly discover and make the most of technology that suits your business needs. 

Keep everything running on time

Timing is often one of the most important parts of materials management. The most successful materials management plans are likely to work because each step in the plan flows naturally from the previous one with minimal delays.

In order to get your company to this point, it may help you to time each stage of the process. Figure out how long it takes you to get materials in your warehouse, to use them, and to send the completed products out to your customers. Doing so may help you to optimize your ordering and forecast your future needs more effectively.

Get the help of AI and machine learning 

If you’re interested in harnessing the power of an AI and machine learning platform in your own supply chain, you may be pleased to hear that you don’t have to transform your materials management flow on your own.

Here at Verusen, we’re powering the next generation of materials management software. Take advantage of the tools available to take your supply chain efficiency to the next level. 

Our AI, machine-learning-based materials management intelligence solutions help customers streamline resilient supply networks and create materials management flows that enable a much more efficient supply chain.

Contact us to request a free 30-minute demo today.


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