Is there really a difference between the two concepts? The short answer is yes, there is. Although the two are closely related and often intersect, material management is more concerned with sourcing, purchasing, storing, and controlling the flow of materials used in a company’s manufacturing or service delivery processes.
On the other hand, inventory management mainly focuses on controlling and monitoring the inventory levels, locations, and movement of all finished goods, work-in-progress materials, raw materials, machinery, and equipment used by an organization in its operations.
Whereas material management concerns itself with the larger scope of materials used by a construction firm, inventory management tends to be more specific and is targeted at achieving optimal stock levels and a smooth flow of goods within the organization.
Both practices are critical in ensuring that a business remains efficient and cost-effective and can often benefit from construction material management software or inventory management software.
What is inventory management?
Inventory management is concerned with a company’s inventory—particularly ordering, storing, utilizing, and selling it. Inventory management also intersects with material management in that it covers managing raw materials, production components, and finished goods.
Among the main functions of inventory management are:
- Defining optimal inventory levels
- Setting reorder points
- Monitoring stock quantities
- Doing regular inventory audits
- Minimizing excess inventory
- Avoiding stockouts
- Optimizing inventory distribution and storage
Inventory management is put in place to ensure adequate inventory levels are available so that a business can effectively meet its customers’ needs while reducing holding costs and avoiding stock obsolescence.
What is material management?
Material management in construction is mainly concerned with optimizing materials throughout their lifecycle, from sourcing to utilization and even through disposal. It is an essential function within a company, and it is put in place to ensure that materials flow smoothly from suppliers to production and consumers.
Among the core principles of material management are the 5 Rs, which are:
- Right material
- Right time
- Right quantity
- Right cost
- Right sources
Material management also aims to reduce costs by ascertaining that materials are neither under- or over-stocked. It also impacts customer satisfaction by ensuring that the correct items are delivered on time.
Among the key activities in material management are:
- Assessing material requirements
- Demand forecasting and planning
- Finding suppliers
- Ensuring materials are bought at optimal cost and quality
- Receiving, inspecting, and storing materials
- Coordinating material flow throughout production and operations
- Distribution of materials from the company to its consumers
What is inventory control in material management?
Not to be confused with inventory management, inventory control is specifically concerned with the daily monitoring of stock and material levels within the warehouse to ensure that the needed components and goods are delivered to their intended destinations. In short, it’s a more specific type of inventory monitoring, as opposed to inventory management, which covers a much broader scope.
Inventory and material management are closely related yet different components of a construction company’s business processes. Inventory and materials are valuable assets and thus require careful monitoring and management through construction material management software to ensure that everything is used in an optimal manner.
If you are interested in learning how Fishbowl’s flexible inventory management solution can help your business now, you can book a demo.