CHAPTER-2
INTRODUCTION TO MATERIALS MANAGEMENT
Materials constitute a major cost component for any Industry. The total cost
of installed materials (or Value of Materials) may be 60% or more of the
total cost (Stukhart 2007, Bernold and Treseler 1991), even though the
factory cost may be a minor part of the total, probably less than 20-30%.
This is because the manufactured item must be stored, transported, and
restored before it is put in place or "consumed" at the site. The total cost of
materials will include, in addition to the manufacturer selling cost, the cost
of procurement (cost of placing processing and paying the material, physical
distribution, the distributor's cost, and the transportation of materials), and
the site-handling costs (cost of receiving, storage, issuing, and disposal).
The efficient procurement and handling of material represent a key role in
the successful completion of the work. It is important for the contractor to
consider that there may be significant difference in the date that the material
was requested or date when the purchase order was made and the time at
which the material will be delivered. These delays can occur if the
contractor needs a large quantity of material that the supplier is not able to
produce at that time or by any other factors beyond his control. The
contractor should always consider procurement of materials is a potential
cause for delay (Willis, 2008).
30
,Poor planning and control of materials, lack of materials when needed, poor
identification of materials, re-handling and inadequate storage cause losses
in labor productivity and overall delays that can indirectly increase total
project costs. Effective management of materials can reduce these costs and
contribute significantly to the success of the project.
2.1 BACKGROUND
The Webster's dictionary defines materials as "the elements, constituents, or
substances of which something is composed or can be made." Ballot (2006)
defines materials as the physical materials that are purchased and used to
produce the final product and does not suggest that materials are the final
product. In other words, materials are the parts used to produce the final
product. Bailey et al. (2009) define materials as the goods purchased from
sources out of the organization that are used to produce finished products.
Stukhart (2007) defines materials as the items that are used to produce a
product and which include raw materials, parts, supplies and equipment
items.
Dobler and Burt (2009) classify manufacturing materials into five
categories. These categories are:
• Raw materials- materials that the company converts into processed
parts. This might include parts specifically produced for the company
and parts bought directly off the shelf (i.e. bolts, nuts).
• Purchased parts- parts that the company buys from outside sources
(i.e. rubber parts, plastic parts).
• Manufactured parts- parts built by the company (i.e. tower case for a
computer).
31
, • Work in process- these are semi-finished products found at various
stages in the production process (i.e. assembled motherboard).
• MRO supplies- maintenance, repairing, and operating supplies used
in the manufacturing process but are not part of the final products (i.e.
soap, lubricating oil). Chandler (2001) states that construction
materials can be classified into different categories depending on their
fabrication and in the way that they can be handled on site. He
classifies the materials into five categories. These categories are
• Bulk materials- these are materials that are delivered in mass and are
deposited in a container.
• Bagged materials- these are materials delivered in bags for ease of
handling and controlled use.
• Palleted materials- these are bagged materials that are placed in
pallets for delivery.
• Packaged materials- these are materials that are packaged together to
prevent damage during transportation and deterioration when they are
stored.
• Loose materials- these are materials that are partially fabricated and
that should be handled individually.
Table 2.1 presents some examples of commonly used materials in
construction and their classification.
32
INTRODUCTION TO MATERIALS MANAGEMENT
Materials constitute a major cost component for any Industry. The total cost
of installed materials (or Value of Materials) may be 60% or more of the
total cost (Stukhart 2007, Bernold and Treseler 1991), even though the
factory cost may be a minor part of the total, probably less than 20-30%.
This is because the manufactured item must be stored, transported, and
restored before it is put in place or "consumed" at the site. The total cost of
materials will include, in addition to the manufacturer selling cost, the cost
of procurement (cost of placing processing and paying the material, physical
distribution, the distributor's cost, and the transportation of materials), and
the site-handling costs (cost of receiving, storage, issuing, and disposal).
The efficient procurement and handling of material represent a key role in
the successful completion of the work. It is important for the contractor to
consider that there may be significant difference in the date that the material
was requested or date when the purchase order was made and the time at
which the material will be delivered. These delays can occur if the
contractor needs a large quantity of material that the supplier is not able to
produce at that time or by any other factors beyond his control. The
contractor should always consider procurement of materials is a potential
cause for delay (Willis, 2008).
30
,Poor planning and control of materials, lack of materials when needed, poor
identification of materials, re-handling and inadequate storage cause losses
in labor productivity and overall delays that can indirectly increase total
project costs. Effective management of materials can reduce these costs and
contribute significantly to the success of the project.
2.1 BACKGROUND
The Webster's dictionary defines materials as "the elements, constituents, or
substances of which something is composed or can be made." Ballot (2006)
defines materials as the physical materials that are purchased and used to
produce the final product and does not suggest that materials are the final
product. In other words, materials are the parts used to produce the final
product. Bailey et al. (2009) define materials as the goods purchased from
sources out of the organization that are used to produce finished products.
Stukhart (2007) defines materials as the items that are used to produce a
product and which include raw materials, parts, supplies and equipment
items.
Dobler and Burt (2009) classify manufacturing materials into five
categories. These categories are:
• Raw materials- materials that the company converts into processed
parts. This might include parts specifically produced for the company
and parts bought directly off the shelf (i.e. bolts, nuts).
• Purchased parts- parts that the company buys from outside sources
(i.e. rubber parts, plastic parts).
• Manufactured parts- parts built by the company (i.e. tower case for a
computer).
31
, • Work in process- these are semi-finished products found at various
stages in the production process (i.e. assembled motherboard).
• MRO supplies- maintenance, repairing, and operating supplies used
in the manufacturing process but are not part of the final products (i.e.
soap, lubricating oil). Chandler (2001) states that construction
materials can be classified into different categories depending on their
fabrication and in the way that they can be handled on site. He
classifies the materials into five categories. These categories are
• Bulk materials- these are materials that are delivered in mass and are
deposited in a container.
• Bagged materials- these are materials delivered in bags for ease of
handling and controlled use.
• Palleted materials- these are bagged materials that are placed in
pallets for delivery.
• Packaged materials- these are materials that are packaged together to
prevent damage during transportation and deterioration when they are
stored.
• Loose materials- these are materials that are partially fabricated and
that should be handled individually.
Table 2.1 presents some examples of commonly used materials in
construction and their classification.
32
