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Materials Management (Archived)

RT-007 Topic Summary
RT 007

Overview

This topic has been superseded by RT-257

Materials Management is best defined as the planning and controlling of all material and equipment so that they are requested in advance, obtained at a reasonable cost, and are available when needed. The project materials management process begins with a materials plan which is incorporated into the project plan. Decisions made in the early stages of a project are very critical to the project success and there is considerable opportunity for cost savings if materials are properly planned and controlled. It is continuous and extends from the initiation of requirements in the home office to the day to day operation in the field.

Materials planning must be proactive to be successful and must be integrated throughout the organization so that all members understand the importance of materials and responsibilities of all personnel in their relation to material. Scheduling, quality assurance, and proper field receipt and handling are also important steps in the materials management process. The use of a Materials Management System (MMS) is growing and has shown to be a vital part of materials management. Its proper implementation can result in significant financial savings as well as keeping projects ahead of schedule.

Key Findings and Implementation Tools

1 : Goals of Materials Management

Materials Management encompasses more than just acquiring goods and services. Materials Management deals more importantly with the planning and controlling of all steps necessary to insure that the objectives of price, quality, and quantity are met when and where required. The recommended goals of Materials Management are:

  1. Obtaining the best value for purchased materials
  2. Assuring supplies are on hand when and where required
  3. Reducing inventory to the lowest amount required
  4. Assuring quality requirements are met
  5. Providing efficient low cost movement of supplies to the site and within site storage (SD-1, p. 3)
Reference: (SD-1)

2 : Benefits

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)
Reference: (RS7-1)

3 : Materials Management Planning

Materials managers are necessary to oversee the life-cycle of materials, to coordinate all the functions, to make improvements, and to be sure that materials planning and training functions are well ahead of time. (SD-1, p. 5) In the manufacturing industry, materials management is already highly recognized as a major contributor to improving productivity. Techniques have been developed where demonstrable efficiencies are possible, but these are lacking in the construction industry. As the construction industry moves toward computer-based data systems, the use of these products needs to be determined cost efficient based on the size of the project. The cost of materials represents more than half of the total cost of today's typical capital project. Lack of materials when needed at the job site is typically the single most frequent cause of construction delays. (SD-27, p. 1)
Reference: (SD-1)

4 : Materials Management Organization

Figure 2, Materials Management Organization – Larger Project (SP-4, Ch.3, p. 8)
Reference: (SP4)

5 : Planning and Communications

Planning and communications are probably the two most important elements of any effective materials management system. (SD-17, p. 4) The responsibilities of all areas of the project need to be clearly defined early in the project. Further discussion is needed by the owner to relay specific project characteristics or constraints that may alter the scope or cost of the project’s materials management effort. These may include restricted lay down areas, schedule compression and changes, cash flow requirements, design changes, etc. The contractor then needs to communicate the exact materials procedures he has chosen to implement on the project.
Reference: (SD-17)

6 : Surplus Materials

Surplus materials are a result of design changes, errors in estimates and takeoffs, improper site warehousing, duplicate buying efforts, inventory errors, and poor field control of issued materials. (IR7-3, Sec.2, p. 55) Material surplus can generally be held to 1% or less when an effective system is in place and the takeoff is being executed from the final design drawings. If the takeoff is performed before the final drawings are complete, the bulk materials surplus can exceed 10%. An effective materials management system will reduce surplus from a range of 5% to 10% of bulk materials to about 1% to 3% of bulk materials purchased.
Reference: (IR7-3)

7 : The “Quality Process” of Construction Materials

The materials quality cycle involves establishing organizational responsibilities, supplier relations, level of surveillance and inspection, and receiving quality control. Quality control includes the actual inspection, testing, and other essential activities. Conformance is achieved when the supplier meets the established requirements specified by the engineer. An important concept in quality management is that the actual conformance to requirements is the responsibility of the supplier. Having a positive supplier relationship is crucial. Quality assurance is the planned or systematic actions necessary to ensure product conformance.
Reference: (IR7-3)

8 : Labor Productivity

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)
Reference: (RS7-1)

9 : Implementation Tool #1

IR7-3, Procurement and Materials Management: A Guide to Effective Project Execution

Appendix B
  • Materials Plan Outline – An outline that spans the entire life cycle of material planning and is intended to be used as the basis for development of the actual written materials plan for any given project.
Appendix D
  • Post-Project Evaluation of a Materials Management System – A questionnaire to be filled out by project materials manager (and other group managers) to rate and evaluate the effectiveness of a materials management system and offer concrete statistics and percentages of a project (e.g., number of PO’s, freight cost, percent of on time delivery, etc.)
Appendix E
  • Basic File Structure of a Relational Database Materials Management Computer System – A conceptual visualization of a Materials Management Computer System, described and demonstrated as a collection of related data files or tables with program modules.
Reference: (IR7-3)

10 : Implementation Tool #2

SP-4, Project Materials Management Handbook

Covers all aspects of materials management, including international, commercial, and small projects.

This publication has been archived because it was superseded by IR7-3, Procurement and Materials Management: A Guide to Effective Project Execution.
Reference: (SP4)
RT-007

Key Performance Indicators

Improved materials management, Improved on-time delivery, Improved productivity

Research Publications

Procurement and Materials Management: A Guide to Effective Project Execution - IR7-3

Publication Date: 01/1999 Type: Implementation Resource Pages: 518 Status: Archived Tool

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Project Materials Management Primer - RS7-2

Publication Date: 11/1988 Type: Research Summary Pages: 18 Status: Archived Supporting Product

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Bar Code Applications in Construction - SD-33

Publication Date: 02/1988 Type: Source Document Pages: 73 Status: Archived Reference

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Project Materials Management Handbook - SP-4

Publication Date: 09/1987 Type: Special Publication Pages: 348 Status: Archived Tool

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Project Materials Management Planning Guide - SD-27

Publication Date: 06/1987 Type: Source Document Pages: 57 Status: Archived Reference

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Costs and Benefits of Materials Management Systems - RS7-1

Publication Date: 11/1986 Type: Research Summary Pages: 30 Status: Archived Supporting Product

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Costs and Benefits of Materials Management Systems - SD-17

Publication Date: 05/1986 Type: Source Document Pages: 92 Status: Archived Reference

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Attributes of Materials Management Systems - SD-1

Publication Date: 04/1985 Type: Source Document Pages: 25 Status: Archived Reference

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Tags

Knowledge Areas:
Materials Management
Project Phase:
Commissioning & Startup, Construction, Detailed Design (Engineering), Detailed Scope, Handover & Closeout, Procurement
Project Function/Role:
Architects & Engineering, Commissioning & Startup, Construction, Operations & Maintenance, Procurement & Contracts, Project Management, Quality Management, Risk Management
Industry Group:
Buildings, Heavy Industrial, Infrastructure, Light Industrial
Regions:
Africa – South Africa, Asia – China, India, Southeast Asia, Australia, Europe – Scandinavia, Russia, Middle East, North America – USA, Canada, Mexico, South America – Central America, Brazil
10-10 input Metrics:
Controlling, Organizing, Planning, Quality, Supply Chain

Keywords

Materials Management System (MMS), Quality Assurance, Purchasing, Expediting, Surplus, Materials Control, Warehousing, rt7

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