Material Procurement —The Ultimate Guide of 2022
We already have a hint when we see the word material procurement. But if we look into it, there is a much deeper understanding of material procurement. But what is it and how is it done?
For this article, we will explore the world of material procurement. How it is important and its advantages.
Once you finish reading this article, you will have a full understanding of material procurement. This will allow you to use it in your future projects as a procurement manager. Let’s now begin exploring the world of material procurement.
What is Material Procurement?
Procurement is a term that has already registered its meaning in our minds. It is about purchasing or acquiring the goods or services that the business needs to operate.
Material procurement comes in when we talk about building a project. It is the process of acquiring the required materials for the construction of a project. Material procurement is similar to construction procurement.
A procurement team is responsible for procurement activities for products, materials, and subcontractors. Procuring material is the most important part of material procurement as contractors may be overwhelmed by all the requests. Especially from suppliers who will provide the goods and services for the project.
Its Connection with Material Management
Materials management is a key to good material procurement. It boosts productivity and efficiency in constructing a project. Material management refers to the combined process of sourcing, purchasing, moving, handling, and controlling the materials.
Disruption to material procurement may result in a loss in profit and also customer trust. That is why effective material procurement needs good material management.
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What is a Material Manager?
The material manager is the one tasked to maintain the material procurement and all the other processes involved. It also oversees material management.
The material manager does not just manage the flow of delivery but seeks to manage cost and quality throughout the supply chain.
The material manager supervises inventory management. It checks if all the materials are available and sufficient for the span the project will be constructed.
Two Types of Materials
1. Direct materials
Direct materials are those that go directly into the product or project. This represents the cost and benefit of the product itself. An example of these items are pipes, hollow blocks, cement, wood, and glass.
The availability of direct materials is crucial for the success of a project. If these materials are not available at the time you need them, the company may incur great losses.
2. Indirect Materials
These materials are part of the project but do not become part of it. In simple terms, it is the things that made the product. An example of these materials includes equipment and spare parts such as hammers, drills, screwdrivers, and nails.
Its value may not be seen but the absence of these materials will have a great impact on the project. It will greatly affect the process and result of the project if these materials are not available.
Importance of Material Procurement
Material procurement is focused on acquiring materials for the project. If there is no material procurement, then the project will ultimately fail. Many consequences may arise if material procurement is not taken seriously. This includes delay, overspending, and scarcity of supplies.
Material procurement is not just about acquiring materials but also procuring things that are good in quality and cost-efficient.
If material procurement is done right, then then the project will surely succeed. Because it lays out all the things that will be needed for the project. This allows for a smooth and cost-efficient construction of the project.
Benefits of Material Procurement
1. Competitive Bidding and Quality of Materials
Material Procurement seeks to acquire goods that have a competitive price. This is where bidding comes in. A list of suppliers will be prepared and then it will be narrowed down as the process goes on.
When selecting a supplier, the business may prefer those who match their budget and requirements. This benefits the company as they will not go beyond their allotted budget while still being true to the quality.
Although the offer does not just become accepted just because it has a lower price. Some businesses also consider the quantity they can supply for the span of the project. This allows businesses to be at an advantage as negotiation is in their hands.
Material Procurement helps the project to be sustainable until it has been constructed. It assists the project by checking if the needed supplies are available in the inventory.
Sustainable material procurement also assessed value for money and the environment. Some businesses may source materials that are environmentally friendly combined with value for money.
3. No Delays
Material procurement lessens or even eliminates the risks of delays. This is due to the availability of the needed materials in the inventory. Material procurement ensures that all deliveries will be made in time. It also checks the accuracy of the materials that arrive. This allows the construction of the project to be free from delays which results in finishing on time.
Tips in Procuring Materials as a Procurement Manager
1. Know your Suppliers
Throughout the years, there has been a growing dependence on suppliers paired with a complex supply chain that makes it hard to manage. In addition, social media has a great impact on the reputation of the supplier as it can amplify scandals with just one wrong move. Due to this, you must know your suppliers are compliant from the start.
Procurement managers must make sure that they have a solid understanding of their suppliers. This is to make sure that suppliers can comply with their requirements to aid their procurement process.
2. Use Procurement Tools and Platforms
With the advancement in technology, there is no shortage of tech solutions on the market that will surely make your procurement tasks easier. Using procurement tools and platforms streamlines the process of procurement. It also makes communication and collaboration with your team easier.
Implementing new platforms in your system will optimize your department. You will also generate more data that you can use to develop better purchasing management. Furthermore, this can improve your decision-making and your negotiations with your suppliers.
3. Accept that you Cannot do it all Alone
In order to procure your materials properly, you should know that you cannot do it all alone. Having a team with whom you can delegate your task can make you focus on improving other aspects of the procurement process.
Being in a team saves you more time by getting rid of jobs such as invoicing and spending analytics. This will allow you to streamline the process of procurement which will bring efficiencies and growth to the company.
Frequently asked questions
What is material procurement?
Material procurement is the process of acquiring materials needed to construct a project.
What does a material manager do?
A material manager manages the entirety of material procurement and material management.
Is material procurement important?
Material procurement is important to successfully build a project. It is what determines the project’s materials, costs, and the time it takes to be constructed.
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