Materials management can be described as the planning and control of the flow of materials that are a part of the inbound logistics system. Materials management usually includes the following activities: procurement, warehousing, production planning, inbound transportation, receiving, materials quality control, inventory management and control, etc.
Effective procurement of goods and services contributes to the competitive advantage of an organization. The procurement process links members in the supply chain and assures the quality of suppliers in that chain. The quality of the materials and services, that are input, affects finished product quality and hence customer satisfaction and revenue. Input costs are a large part of total costs in many industries. With the importance of procurement as a determinant of revenues, costs, and supply chain relationships.
Procurement can be a complex process that is difficult at times to define, understand and manage. Depending on the circumstances, procurement can be defined, in a narrow sense, as the act of buying goods and services for a firm or, in a broader perspective, as the process of obtaining goods and services for the firm. The procurement process is, however, more than just an activity. It is the successful completion of a series of activities that often cut across organizational boundaries. To formalize the definition, then, procurement consists of all those activities necessary to acquire goods and services consistent with user requirements.