Material flow: definition & explanation

The material flow within an organisation is to be understood like the blood circulation in a body. It is not the observation of individual vessels that provides an overview of the system, but only a holistic view of the interconnected and correlated pathways enables an evaluation of the overall condition and the definition of improvement measures. 

The entire material flow in an organisation must therefore be viewed and controlled holistically. The necessary operating resources, raw materials and materials must be available at the right time in sufficient quantities and in an appropriate condition at the right place in an efficient manner without leading to overstocking in the process. 

How an efficient material flow reduces your costs 

Optimising the flow of materials in production can help to reduce costs and increase efficiency. Companies can take various measures to improve material flow. One way is to reduce inventory by implementing just-in-time methods. In this way, companies can minimise material requirements and inventory, which in turn leads to a reduction in storage costs. 

Another approach to optimising material flow is the implementation of lean methods. This involves identifying and eliminating waste in the material flow. By implementing lean methods such as Kaizen and 5S, companies can improve material flow by optimising efficiency in work systems and material flow between work systems, and minimising material and time waste. This effectively reduces costs, increases efficiency and productivity, and ultimately improves profitability and competitiveness. 

How to identify weak points in your material flow

As a rule, it is the case in most companies that both procurement and production ensure an inflow of materials, raw materials, semi-finished products and finished products into the warehouse, while distribution and production simultaneously cause an outflow of input materials, components, semi-finished products and finished products from the warehouse. 

By analysing these flows and their interdependencies, you will get an overview of the entire material flow in your company and its scope. Look at the inflow and outflow of goods from the processes, analyse the quantities and the retention time of the individual items, identify high-frequency changes in quantities as well as static stock levels. Also look at the material transports. The benefit you can derive from the resulting gain in knowledge for cost reduction outweighs the effort in any case. 

Regular coordination optimises your material flow 

Within the organisation, there is often no one directly responsible for managing minimum and maximum stock levels and communicating them. Regularly agree on these values in the management team and optimise the stocks together on an ongoing basis. The decision for stocks cannot be made by individual persons or individual operational functions, because depending on the preference and character of the person or operational function, either unnecessarily high stocks would otherwise be kept, or individual positions would have to be replenished again and again at great expense in a short time. 

By defining intervention limits such as a minimum and maximum stock quantity, i.e. a quantity of goods which or maximum quantity of goods that must or may be available, calm and balance can be achieved, since, for example, urgent procurements of consumables that are no longer available can be dispensed with. 


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