Materials management software cuts waste in the supply chain
Many software programs focus on a single function. Not materials management—its focus encompasses many tasks.
By Maria Varmazis -- Purchasing, 1/15/2009 2:00:00 AM
Part of the trouble with finding good materials management software is as basic as defining what materials management really does. The very concept of materials management is so broad and encompassing that it might have functionality that covers warehousing, logistics and inventory management. It's not just basic cost savings that buyers want, but also reduced turnaround, cycle time and waste that are also primary concerns. And it seems more buyers are catching on to the advantages that can come with a materials management tool—players in the materials management software market like Foster City, Calif.-based Arena Solutions reported a 38% revenue increase in just the second quarter 2008, and they specifically cite the economic downturn as a reason many buyers look to cut down on costs from waste or inefficiency.
But what exactly is materials management, and how does it work in the context of software? According to Greg Miller, corporate vice president of materials management at Cleveland, Ohio-based Eaton Corp. “Materials management is alignment of the customer marketplace and manufacturing plans to create the ability to deliver the end product to the customer when they want it and how they want it. It is extremely broad—it includes everything from demand planning and forecasting through capital planning to manufacturing execution and logistics.”
And getting an effective materials management tool to work for you is not as simple as tallying data about available materials for the end product and hoping for the best. From the plant floor to the engineering and finance departments all the way down the supply chain, a good materials management program needs to be able to draw on detailed business intelligence while feeding new information back into many different departments and functions concurrently so they can use it to manage their processes.
“The reason materials management uses so many tools has to do with all the touchpoints that you end up having to deal with, which are not just internal but external as well,” says Miller. Any useful software program needs to be able to check in with what's going on at the plant floor, with customers, and with the supply base. Easier said than done when you have functions and factories spread out across the globe. “I go back to before there were computers, and materials management was easier then because factories were self-enclosed, and everyone sat in the same area—the software was called 'talking to each other.'”
In Eaton's case, Miller says the solid foundation for their materials management program was the company's set of ERP systems, which includes a combination of SAP, Oracle and some homegrown software. With ERP as the central repository of all the business data going in and out of the company, a materials management suite can feed into that on the periphery. The advantage to this approach is that companies can make whatever tweaks they need to the materials management program without having to subsequently adjust their core ERP system. Miller cites an example of managing materials in an aerospace order. “For such a hugely complex order, I have to schedule things two years out,” Miller says. “In that case, I don't need a system built to respond to rapid change, I need a project management system.”
So how should you choose materials management software? He advises buyers to choose a system that is flexible enough to meet all the specific needs of their supply chain, which might mean taking the time to customize what's out there and tailor it to your company's model.
Central to most materials management software is the bill of materials (BOM) component, but beyond that core capability software companies vary greatly in what additional modules they can offer. Since materials management spans so many fields, most programs run the gamut from reducing parts waste through warehousing control and product lifecycle management all the way to engineering design collaboration and, more generally, project management, especially for products with fast turnaround.
Not every company needs all those capabilities though, or they might need something more tailor-made for their industry—market-specific compliance modules are an important consideration. That's why just sitting down to map out the details of that model can be one of the hardest steps in the software selection process. With an area as broad as materials management, the temptation can be to bring in every possible tool and widget, even when it's not completely clear how they might help. That's why Miller goes by the age-old advice that wise managers have been following for years: Keep it simple.
“Everybody in materials management believes that their business is special and complex, but when it comes right down to it, you should look at what you need to accomplish and not what the software can accomplish, and never spend a penny more,” he advises. The last thing any materials manager or buyers needs is to be bogged down in training and work brought on by a cumbersome and overly-complicated system—one that's supposed to make their jobs easier, no less. If overall materials management goals are too lofty and not well-defined, the software you end up buying might not even come close to doing what you need. But if you keep the software too restricted, when it's time to expand or add on to existing processes, you might find your software doesn't have the features or functionality for doing what you need and you have to start from square one.
Miller says the easiest way to avoid that dilemma and to save time, money and effort is to be realistic, weigh your long-term goals, but don't get overwhelmed by the software options. “If you put a capability in front of a group of people, they almost feel obligated to use all of it,” he says. “You have to gauge what you really need and what you're capable of doing, but don't put in anything more than that. Give yourself the capability of moving up in sophistication without having to start over.”
| Company | Product name | Website |
| Bellwether Software | ePMX | bellwethercorp.com |
| Kornyk Computer Solutions International | SIMMS | kcsi.ca |
| Arena | Arena PLM | arenasolutions.com |
| MasterControl | MasterControl BOM | mastercontrol.com |
| QA Software | QMS | qa-software.com |
| Compiere | Compiere 3.1 | compiere.com |
| Khameleon Software | Khameleon Materials Management | khameleonsoftware.com |
| ePLUS | Procure+ | eplus.com |
| Oracle | Oracle Inventory Management | oracle.com |
| SAP | SAP MM Module | sap.com |
| Bowen & Groves | M1 Materials Management | bowen-groves.com |
| Made2Manage | M2M Materials Management | made2manage.com |
Senior Manager, Materials Management #11193
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