Materials Management
Overseeing materials use and procurement.
Workflow
- 01Requisition Creation
- 02Purchase Order Management
- 03Inventory Receipt
- 04Inventory Replenishment
If you change this
It implies 3 topics across 2 modules, including Supply Chain Management which you might not expect.
See the path ahead →Why it matters
A production schedule is a plan about materials. If the materials are not there, the schedule is a forecast of disappointment; if there are too many, the working capital is sitting in a warehouse.
- It gates production: A missing component stops a line regardless of what else is ready.
- It ties up cash: Raw materials and work in progress are working capital with a holding cost.
- It depends on bill of materials accuracy: Everything planned is planned from it.
The workflow
- 01
Requisition creation
Demand generated from the production plan and the bill of materials, not from observation of empty shelves.
- 02
Purchase order management
Requirements converted to orders against contracted suppliers and lead times.
- 03
Inventory receipt
Materials received, inspected where required, and made available to production.
- 04
Inventory replenishment
Stock levels maintained against consumption, lead time and variability.
Bill of materials accuracy is the input to everything. A BOM that is two revisions behind the shop floor produces shortages that look like supplier failures and are not.
What you need in place
- Accurate bills of materials: Version-controlled and matching what is actually built.
- Real lead times: Measured from supplier performance, not quoted at contract signing.
- Safety stock set on variability: Calculated from demand and supply variation, not intuition.
- Consumption recording: Backflush or issue, but recorded, or stock diverges immediately.
- Scrap and yield factors: In the plan, or every run short-picks.
- Shortage visibility: Before the run, not at the line.
Questions to ask
01BOM accuracy
When was each bill of materials last verified against the build?
Drift here causes shortages nobody can explain.
02Lead times
Are they measured or quoted?
Quoted lead times are a negotiating position.
03Safety stock
How was it calculated?
If nobody can say, it is either too much or too little.
04Consumption
How is material issue recorded?
Unrecorded consumption makes stock data useless within weeks.
05Shortages
How far ahead do we see a shortage?
The answer determines whether it is a decision or a crisis.
06Yield
Are scrap and yield in the plan?
Planning at one hundred percent yield guarantees short runs.
Metrics and KPIs to track
Material availability
Production orders started with all materials available.
Shortage frequency
Lines stopped for material, and hours lost.
BOM accuracy
Verified bills against total.
Inventory turns
Raw material and work in progress.
Supplier lead time variance
Actual against planned.
Scrap rate
Against yield assumption.
Alongside this