May 7, 2019

Purchasing and Materials Management - Review Notes

Construction Industry Institute™
3925 W Braker Ln, Austin, Texas 78759

CII, based at The University of Texas at Austin, is the research and development center for the capital projects industry.

Materials Management

An integrated process for planning and controlling all necessary efforts to make certain that the quality and quantity of materials and equipment are appropriately specified in a timely manner, are obtained at a reasonable cost, and are available when needed.

There is considerable opportunity for cost savings if materials are properly planned and controlled. Implementation of a materials management program contributes to predictable project outcomes, reduced costs, improved productivity, and quality.

Global Procurement & Materials Management (Best Practices Survey) - 2008

Materials management is a complex and comprehensive process involving people, organizations, technologies, and processes that manage the definition, sourcing, planning, quantification, supplier qualification, purchasing, supplier QA/QC, expediting, transportation, logistics, and control of materials and associated information across the life cycle of a capital project.

Global Procurement & Materials Management (Best Practices Survey)

Most construction-related organizations have a structured procurement, or materials management department. (Report RS257-1, p. 5) CII surveys indicate a growing trend in the use of materials management systems by owners and contractors. 

The majority of organizations reported regularly outsourcing Transportation and Logistics, Supplier Quality Management, Purchasing, Expediting, and Site Material Management.

Half of the respondents include the materials management IT system in their corporate strategy. However, the lack of interoperability of different systems and lack of access for external parties were reported to be issues to be tackled.  About half of the survey respondents are seriously concerned with strategic supplier relationships, agreements through which strategic partners engage in long-term commitments and may share confidential information. 

Globalization is a well-established but complex trend. The globalization of owner materials standards, standard processes, and preferred suppliers is increasing and  the trend becomes more pervasive. But,  quality concerns are triggering analyses to determine when local sourcing is preferable to global sourcing. 

Sourcing from emerging markets:  35% of respondents report having significant involvement in this type of sourcing—with more contractors than owners saying that they do. 

Seventy four percent of the survey responses said that materials management was a part of their corporate strategic plan.

The majority of organizations surveyed appeared to have a sophisticated supplier quality management system that includes: inspection plans, supplier quality evaluation before selection, supplier databases, design quality reviews, and materials management process audits.

Seventy-one percent of the organizations surveyed acknowledged that they have an integrated materials management computer system, usually using a combination of commercial software, custom-made software, and/or an enterprise resource planning (ERP) system. 

2018 Research -  Lack of Visibility of Materials Status in the Supply Chain

Timely and accurate materials flow is a critical component of capital project success. Many projects face disruptions to materials flow. A fundamental problem is lack of visibility of materials status in the supply chain. Even though there is decision making to reduce procurement transactional costs but materials are delivered in a way that is costly to construction due to ill prepared planning. These costs arise due to late delivery, lack of responsiveness to site need dates, extra materials handling on site, expediting costs, etc. Improved visibility provides the chance to change associated behaviors that are sub-optimal.

Visibility of information is a prerequisite to more opportune decisions, improved processes and hence the ability to manage risk. Being able to see where materials are and subsequent ability to accurately forecast delivery dates enables effective work in the field and supports timely corrective action. Moreover, improving materials visibility can be tied to other productivity and quality enhancement efforts such as Advanced Work Packaging. Indeed, almost all project improvement efforts can benefit from heightened supply chain visibility.

The research carried out by CII provides concrete starting points from which firms and projects can take action. It provides detailed definitions of desired visibility across common decisions during execution. A complement of enablers is also provided to enhance the benefit of increased visibility.

Very good notes prepared by Beverley Goodale, University of Maryland University College

Notes by Beverley Goodale - Does not exist presently 2019


Lesson 2 - Purchasing management - SCM 101 - Learn quickly and get a job in corporate purchasing

Updated on 8 May 2019, 12 Jan 2013

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