Material Management: Strategies, Challenges, & Trends

Material management is always the backbone for any business involved in physical goods, especially for an eCommerce seller, who has to deal with many processes to keep everything running smoothly. As more and more sellers depend on digital methods, it becomes even more crucial that the material flow for procurement, storage, and distribution goes flawlessly. Smart strategies in modern, complex eCommerce would help optimise the management of materials, reduce costs, and increase customer satisfaction.

Material Management: An Overview and the Role of a Material Manager

Material management is defined as the well-coordinated process of planning, procuring, storing, moving, and controlling materials efficiently throughout a business. More often, regarding eCommerce, it refers to the management of raw materials, finished goods, packaging, and logistics.

Role of a Material Manager:

The role of a material manager is very important because he or she has to ensure that the core inventories of a business and its supply chain run smoothly. The following are the key roles :

• Forecasting the inventory requirement based on the sales projection.
• Relationships with the vendors must be maintained and ensured that goods are delivered on time.
• Storage, warehousing and distribution management.
• Stock levels must be monitored to avoid overstocking or stockouts.
• Ensure the movement of materials is done efficiently to reduce any delays.

Material management, therefore, is a very significant function for the success of sellers, especially eCommerce ones. Without appropriate handling and timely delivery of goods, businesses would eventually lose customers and increase operational costs. Therefore, a material manager must ensure that every stage of the supply chain functions optimally.

Why Material Management is Key to Business Success?

The ultimate aim for any eCommerce seller is the satisfaction of his customers. Attainment of this becomes a far-reaching dream if material management is compromised. Below are reasons why material management is a core factor in business success:

Optimisation of Inventory Costs:

Proper material management entails that the stock on hand is adequate to satisfy demand without necessarily overstocking, or tying capital in unwanted stocks. Efficient management helps in balancing inventory levels and reducing warehousing costs.

Enhancing Order Fulfillment:

If there is proper material management, the seller can fulfill the orders of the customers promptly. Effective management of inventory enables fast picking, packing, and shipment, thus making customers very satisfied and coming for more.

Reducing Operational Delays:

Poor management of materials can cause disturbances in the supply chain; again, this can delay the filling of orders. In line with this, smoothening the process of material handling will enable the seller to minimise operational hiccups, hence improving the efficiency of the business.

Minimising Waste:

Materials must be handled with care to reduce incidences of damage and spoilage, among other aspects of waste. Proper storage and handling techniques will assure product quality and reduce losses for better profit margins.

Improving Supplier Relationships:

Efficient material management strengthens relationships with suppliers by procuring on time and following up on supply agreements. Stronger supplier partnerships translate into better terms, speedier delivery, and reduced lead times.

5 R’s: The Pillar of Material Management

The 5 R’s of materials management are those key principles that call for effective and efficient handling of the materials from the source to utilisation. Materials Resource, Right Quantity, Right Time, Right Place, and Right Price are the five R’s on which any material management exists. These optimise resource utilisation to minimise waste for minimising cost. Elaboration goes as follows:

Right Material:

Sourcing and utilising the right material is an important first step in material management. It helps in selecting materials through specification required for a particular product or process, guaranteeing its quality and conformation to regulations. Using the right material eliminates costly errors, defects, and waste that are most probably generated by inappropriate materials inefficiently or completely failing the product.

Right Quantity:

Correct amount will ensure that the demand is met with the supply. Overstocking results in a loaded inventory increasing the cost of storage and waste occurring due to obsolescence and under-stocking results in delay in production and lost opportunity. The exact quantity of materials maintained through the correct forecasting and planning of demands only.

Right Time:

Timing is everything in material management. Materials need to be available at the right time, lest production bottlenecks or delayed project timelines can be expected. This requires liaison with suppliers, maintaining appropriate lead times, and scheduling deliveries to match up with the requirements of production. Good time management avoids rush orders and idle time due to unavailability of materials.

Right Place:

The material should reach the appropriate destination so that there is a smooth flow of operations. Logistic and appropriate warehousing methods must be adopted for storing and transporting materials effectively. Delays in operations or at times higher costs can be caused due to misplaced materials or wrong delivery.

Right Price:

Given the importance of material acquisition at the right price to maintain profitability and competitiveness, this calls not only for price negotiations with suppliers but also for full knowledge of market trends and the ability to cost control without sacrificing quality. The best cost-quality ratio is highly critical to optimise material cost with product integrity assured.

Material Handling Methods: A Breakdown

Material handling involves moving, storing, protecting, and controlling materials in various states within the supply chain network. All eCommerce merchants depend on multiple material handling methods since each technique can help in smoothing out a particular process.

Manual Handling:

Materials are handled manually in smaller operations. This will include picking up the items from the shelves, packing merchandise, and transportation of goods within a warehouse. Manual handling is time-consuming and prone to errors.

Automated Systems:

Automation is becoming increasingly prevalent in today’s eCommerce warehouses. Automatic systems involve conveyor belts, robotic picking systems, and AGVs that assist products in moving around much faster and more accurately.

Inventory Management Systems (IMS):

A good IMS provides updates on stock levels in real time, which makes inventory tracking relatively easier for the seller. These systems help to bring down human error and extend visibility across the supply chain.

Cross-Docking:

Cross-docking is a material handling technique whereby products are directly transferred from the inbound trucks onto the outbound trucks without being taken through the warehouse; hence, reducing storage needs and increasing the order fulfillment speed.

Third-Party Logistics Solutions:

Material handling can be outsourced to third-party logistics service providers like Shiprocket to smoothen your operations as a seller. Inventing, packaging, and shipment-related involvements by 3PLs while you pay more attention to core business operations.

Essential Elements of a Comprehensive Material Management System

A properly devised material management system should facilitate the movement of materials and reduce costs on all fronts to ensure complete efficiency. In this regard, an eCommerce seller would need the following components:

Demand Forecasting:

Accurate demand estimation aids the seller in estimating customer orders well in advance, whereby he can adjust his inventory levels accordingly. With data-driven tools, there is never a situation when under- or overstocking could occur.

Supplier Management:

Building solid relationships with suppliers ensures that the supplies will be in on time. Flippers must nurture their relationship with the suppliers through the processes of negotiation, lead-time management, and quality control.

Inventory Storage:

Warehouse management allows space optimisation, which enables fast picking and packing times. Other systems, such as barcode scanning, shelving optimisation, and automation, enhance speed and accuracy.

Order Management:

A robust OMS tracks an order from placement to delivery, ensuring that the orders are filled correctly. It ensures that all operations regarding order processing are carried out in minimum time and the customers are serviced in due course.

Inventory Control:

The seller has to keep a constant check on the stock levels to avoid stocking out of a product or holding obsolete stock. The application of effective inventory control techniques like JIT inventory and EOQ makes this function efficient.

Logistics and Distribution:

It also encompasses efficient material management for the timely distribution of products to customers. This would include the selection of appropriate and reliable shipping partners, route optimisation for delivery, and solutions for central shipments like Shiprocket.

Common Obstacles in Material Management

However, despite its importance, managing materials often presents a serious challenge to many sellers. Below are listed some of the most common challenges and how they affect the eCommerce business.

• Inefficient Warehouse Operations:

Badly organized warehouses are going to ensure that the picking packing and shipping go at snail speed. This, of course, delays the process and results in very dissatisfied customers.

• Supply Chain Disruption:

The material supply chain can be disrupted due to factors beyond one’s control, such as supplier delays, transport issues, and natural disasters. In this regard, it’s considered good business practice for any seller to have contingency plans handy to help mitigate such occurrences.

• Manual Errors:

Manual material handling is also susceptible to picking, packing, or shipping of orders incorrectly, which may lead to costly returns and a bruised seller reputation.

• High Logistics Costs:

The cost of transportation and warehousing logistics can be quite high. Unless there is an effective material management system in place, unnecessary costs might arise that could eat into the profit of the business.

• Demand Fluctuations:

eCommerce is characterized by unpredictability in demand patterns, particularly during peak seasons or promotions. The seller needs to plan this fluctuation to avoid a stockout or excess inventory.

Effective Strategies and Best Practices for Material Management

The following ways will help the seller overcome all the challenges of material management and work efficiently:

Centralised Inventory Management System:

Through the use of a centralised inventory management system, it would be easier for sellers to track the exact amount of stock in real-time through different selling channels. This reduces the risk of a stockout situation, thus letting the customer purchase an available product.

Automation of Repetitive Tasks:

Automation of repetitive tasks, such as the picking, packing, and shipping of orders, greatly cuts down errors and enhances processing time. Automated systems also allow sellers to scale their operations without extra labour costs.

Leverage Data Analytics for Forecasting:

Data analytics tools let sellers forecast demand based on history, trends, and seasonality. Accurate demand forecasting reduces overstocking or stockout probabilities and helps in making better-versed purchasing decisions.

Just-in-Time Inventory Management:

JIT inventory management allows the sellers to keep the minimum stock on hand and also to get the material exactly at the time of requirement. This will reduce the cost of warehousing and ensure that the capital does not get locked up in stock.

Diversification of Supplier Networks:

One must not remain dependent on a single supplier because a disturbance to this source of supply can have disastrous effects. Sellers have to diversify supplier networks so that supply disruptions do not take place, and material is available when required.

Outsourcing Logistics and Warehousing to 3PLs:

This would facilitate the process for sellers in managing material handling with much ease, integrated with third-party logistics services provided by a company like Shiprocket. Shiprocket thus offers end-to-end solutions right from warehousing and packaging to shipping to help sellers grow their businesses.

Looking Ahead: The Future of Material Management

New trends and technologies keep re-inventing material management. The seller must move with the trends if they want to exist in eCommerce.

Artificial Intelligence and Machine Learning:

AI/ML has come to make new changes in material management, advanced forecasting, predictive analysis, and real-time inventory-level insight. AI-based systems will automatically adjust the inventory by demand patterns, reducing the need for manual interference.

Supply Chain Transparency with Blockchain Technology:

Blockchain, which is gaining much popularity these days, is very significant in the field of material management as it provides complete transparency and traceability across the supply chain. With blockchain technology, it would be possible for the seller to trace the origin and movement of materials to ensure ethical sourcing and reduce fraud.

Internet of Things for Real-time Tracking:

RFID tags and IoT sensors let the seller trace the movement of the materials at any particular moment. Conversely, sellers can make sure there is more visibility across the supply chain, helping them avoid any kind of loss or delays.

Shiprocket: Seamlessly Centralise eCommerce Processes Across All Channels

Shiprocket is an e-logistics platform that serves to cater to the needs of eCommerce sellers for seamless material management. It offers a comprehensive solution for shipment, inventory management, and order fulfillment to help every seller centralise his operations on each sale channel.

• Centralised Inventory Management: The integration of Shiprocket with multiple marketplaces of eCommerce enables the seller to manage inventory through one integrated dashboard. This can be done by updating the actual stock level at any moment in time to avoid issues such as overselling or stockouts.
• Automated shipping solutions: Shiprocket reduces the pain of choosing a courier, printing shipping labels, and tracking order status. The sellers can thus choose from various courier partners to avail of the fastest and most cost-effective option.
• Multi-Channel Integration: It helps the seller manage orders from different channels, including marketplaces like Amazon, Flipkart, and their websites all within Shiprocket. The idea is to offer the same stock across these channels while making the selling process a little easier on Shiprocket.

Conclusion

The management of materials is one of the most important elements of any successful eCommerce business. From the perspective of inventory control and supplier management to logistics and distribution, all elements of material handling contribute toward the overall efficiency of a seller’s operations.