As defined in this book, logistics management is concerned with the efficient flow of raw materials, in-process inventory, and finished goods from point-of-origin to point-of- consumption. An in­tegral part of that flow, referred to as materials management, encompasses the administration of raw materials and in-process inventory. In a formal sense, materials management can be defined as follows; "Materials management is the single - manager organization concept embracing the planning, organization, motivating, and controlling of oil those activities and personnel principally concerned with the flow of materials into an organization."

The importance of materials management to the total logistics process cannot be overstated. Although materials management does not directly interface with the final customer, the degree to which raw materials, component parts, and subassemblies are made available to the production process ultimately determines the availability of products to the customer. The decisions, good or bad, made in the materials management portion of the logistics process will have a direct affect on the level of customer service offered, the ability of the firm to compete with other companies, and the level of sales and profits achieved in the marketplace.

Without efficient and effective management of inbound materials flow, the manufacturing process cannot produce at the desired price and at the time they are required for distribution to the firm’s customers. It is essential that the logistics manager understand the role of materials management and its impact on the company's cost/service mix.

Purchasing and Procurement

The acquisition of materials has long been an important aspect of materials management and will con­tinue to be in the future. The rapidly changing supply scene, with cycles of abundance and shortages, varying prices, lead times, and availability, provides a continuing challenge to those organizations wishing to obtain a maximum contribution from this area.

The term purchasing and procurement are often used interchangeably, although they do differ in scope. Purchasing generally refers to the actual buying of materials and those activities associated with the buying process. Procurement is broader in scope and includes purchasing, traffic, warehousing, and re­ceiving inbound materials.