Material flow: definition & explanation

The material flow within an organization is like the blood circulation in a body. It is not possible to get an overview of the system by looking at a single blood vessel, but only a holistic view of the interconnected and correlated pathways makes it possible to evaluate the overall condition and define improvement measures.

The entire material flow in an organization 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. 

As a rule, in most companies, procurement and production ensure an inflow of materials, raw materials, semi-finished products and finished products to the warehouse, while sales and production generate an outflow of products or materials, raw materials and semi-finished products away from the warehouse.

By analyzing these flows and their dependencies on each other, 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, analyze the quantities and the storage time of the individual items, identify high-frequency changes in quantities as well as static stock levels. Also take a look at material transports. The resulting gain in knowledge outweighs the effort in any case.

Within the organization, there is often no one directly responsible for controlling minimum and maximum stock levels and communicating them. Regularly coordinate these values in the management team and optimize the inventories together on an ongoing basis. The decision for inventories should not be made by individual persons or individual operational functions, because depending on the preferences and character of the person or the operational function, either unnecessarily high inventories are kept or individual positions 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 minimum 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 are no longer necessary.


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