Costs and Benefits of Materials Management Systems

Properly designed and implemented materials management systems will produce tangible benefits in the areas of improved labor productivity, reduced bulk materials surplus, reduced materials management manpower, and cash flow savings. The most significant benefits occur in the area of improved labor productivity. A basic materials management system can be expected to produce a 6% improvement in craft labor productivity. When sophisticated computer controls are implemented and the crafts use the system to plan their work around bulk material availability, an additional 4-6% in craft labor savings can be expected. (RS7-1, p. v) A well-designed computer system assists with the generation of materials requirements and then tracks materials requisitions and purchase orders through the purchasing, expediting, and warehousing functions to final issue and installation. (RS7-2, p. 5)

Using integrated materials management systems, projects were able to improve the overall labor productivity. Two of these factors are believed to be: (1) materials are more likely to be available when needed, and (2) craft supervision can plan the work around material availability. On projects that did not implement a materials management system, craft foremen spent 20 percent of their time hunting down materials and 10 percent tracking and expediting orders. These foremen admit to leaving their crews unsupervised for long periods of time which has a detrimental effect on labor productivity. Other benefits of implementing a materials management system include: reduced bulk materials surplus, reduced management manpower, improved vendor performance, and the ability to meet the construction schedule. (RS7-1,  p. 11)