INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
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Comparative Study of SAP Technique Based Material
Management Impact Compared to Conventional Manual Methods
in Construction Practices
S. Sribalaji
1
, Dr. P. Palson
2
1
PG Scholar, Annamalai University, Engineering and Technology, Annamalai Nagar, Tamilnadu.
2
Associate Professor, Department of Civil and Structural Engineering, Annamalai University,
Engineering and Technology, Annamalai Nagar, Tamilnadu.
DOI : https://doi.org/10.51583/IJLTEMAS.2025.140400055
Received: 16 April 2025; Accepted: 24 April 2025; Published: 10 May 2025
Abstract – Material management plays a vital role in construction, significantly impacting project costs, efficiency, and overall
success. In both commercial and residential projects, materials contribute over 60% of total expenditures, emphasizing the need for
an efficient management system. Traditional manual tracking methods often result in inefficiencies, delays, and cost overruns.
However, technological advancements, particularly System Application and Product (SAP) software, have revolutionized material
management by optimizing procurement, inventory control, and consumption tracking. Implementing SAP enhances productivity,
minimizes waste, and ensures timely project completion. An efficient material management system ensures the right quality and
quantity of materials are procured, delivered, and handled effectively at a reasonable cost. This study compares traditional methods
with SAP-based solutions, highlighting their advantages. A survey conducted across construction firms in Chennai provides insights
into current material management practices. The research focuses on SAP’s impact on cost control, inventory management,
procurement efficiency, and overall operational effectiveness in the construction industry.
Keywords – SAP (System Application & Product) Material management, Conventional Material Management, Inventory
Management, Procurement & Operational Cost Management.
I. Introduction
In the modern construction industry, material management plays a pivotal role, as materials contribute more than 60% of the total
project cost. Effective material management is essential not only for controlling project expenses but also for ensuring timely project
delivery and quality assurance. It involves the systematic planning, procurement, storage, distribution, and utilization of
construction materials. Poor
material management can lead to significant project delays, cost overruns, and increased wastage. Traditional manual methods of
material management often suffer from inaccuracies, data delays, and lack of real-time visibility, resulting in operational
inefficiencies. In contrast, digital solutions such as SAP Material Management (SAP MM) offer integrated, real-time data
management platforms that enhance procurement planning, inventory control, and logistics tracking. By providing centralized data
storage, real-time updates, and improved communication, SAP MM has the potential to significantly improve construction project
performance. Despite the growing adoption of digital tools, many construction firms still rely on conventional manual practices.
This study aims to critically evaluate the differences between SAP MM-based material management and conventional methods in
the construction sector. Specifically, it investigates their respective impacts on procurement efficiency, inventory control, labor cost
reduction, and financial management.
By using SAP, 100% of data related to material management is centrally stored on a secure server, ensuring seamless access and
real-time updates. An SAP system enhances communication within an organization by providing accurate and timely information
whenever required. Compared to Traditional manual tracking methods (conventional MM), The study explores key processes
involved in both SAP-based and traditional manual tracking methods in material management and their impact on construction
efficiency.
The core processes involved include i.e.
Planning,
Procurement,
Logistics,
and Inventory Management.
Functions of Material Management
To achieve the material management, its functions can be categorized into primary and secondary functions.
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Primary Functions
Materials Requirements Planning.
Purchasing.
Inventory Planning and Control.
Ascertaining and Maintaining the Flow and Supply of Materials.
Quality Control of Materials.
Departmental Efficiency
Secondary Functions.
Standardization and Simplification.
Make and Buy Decisions.
Coding and Classification of Materials.
Forecasting and Planning
Challenges in (conventional) Manual Material Management
Absence of Real-Time Inventory Tracking
Inaccurate Demand Forecasting
Limited Digitalization in Material Management
Cost Overruns and Sustainability Issues
Operational Disruptions in Material Flow
Procurement Inaccuracies and Overstocking
Challenges in Compliance with Industry Standards
To Achieve Efficient Material Management in Construction firm
Enhancing efficiency and cost-effectiveness in material handling.
Balancing stock levels to avoid shortages and overstocking.
Enhancing procurement efficiency through automation and standardization.
Implementing strategies to reduce waste, promoting sustainability and cost savings.
Reducing expenses related to material storage and logistics to improve profitability.
Ensuring materials meet required standards to enhance construction quality.
Collaborating with reliable suppliers for timely and quality material supply.
Maintaining a steady flow of materials to prevent project delays.
Literature Review
N. B. Kasim, Peniel Ang Soon Ern (2010) had discussed process of material management. They have taken interview and
questionnaire survey of A class contractors in Malaysia. The questionnaire survey was taken on implementation of ICT and interview
was taken on acceptance of ICT for material management. They found that, main barrier of implementation of ICT is high cost and
there was just average level of acceptance of ICT by the industries. In construction industries, for material management Microsoft
office and handheld devices are widely adopted but bar code and RFID tools are not adopted
A.R. Patil (2013) mention that the efficient procurement of material represents a key role in the successful completion of the work.
Poor planning and control of material, lack of material when needed, poor identification of material, re- handling and inadequate
storage cause losses in labor productivity and overall delays that can indirectly increase total project cost.
Nawaj Kalim Hannur SushmaShekharKulkarni (2014) they have surveyed & studied current material management practices
followed in the seven different construction companies in Pune, Maharashtra. They have suggested that there is need to change in
process of material management. They have recommended using ICT Techniques to manage the material. By using ICT Techniques
Purchase orders, Shipping
SAP Material Master for Beginners: The Essential Guide to Understanding and Using the Material Master in SAP ERP" by Matthew
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Johnson (2018) Johnson introduces readers to the fundamentals of the SAP Material Master, guiding beginners through its
functionalities and applications within the SAP ERP system.
Materials Management with SAP (2024) Business Processes and Configuration (3rd Edition) Jawad Akhtar, Martin Murray. This
updated edition explores the intricacies of materials management within the SAP environment, covering topics from procurement
to inventory processes
Research Gaps in Material Management and SAP Implementation
Studies highlight the low adoption of advanced ICT tools like barcodes and RFID in material management, indicating a gap in
exploring their potential benefits.
High costs associated with ICT-based material management tools deter construction companies, necessitating research on cost-
effective solutions and financial feasibility.
Many companies still often using on manual tracking methods, leading to inefficiencies, delays, and increased costs, suggesting the
need for better integration of automated systems like SAP
Research lacks insights into how modern material management techniques, including SAP, contribute to sustainable construction
practices by minimizing waste and optimizing resources.
These gaps can enhance material management efficiency, improve better project outcomes
Need for Comparative Analysis of SAP vs. Other Material Management Systems
Inadequate Focus on Sustainability in Material Management
Lack of Studies on Real-Time Material Tracking
Gap in SAP Material Management Adoption for Small and Medium Enterprises.
Limited Adoption of Advanced Technologies
High costs associated with ICT-based material management tools
Needs for Study
To Study how SAP MM can streamline procurement and logistics
To minimize delays and cost overruns in construction to savings the cost.
Identify ways to reduce implementation costs and enhance the affordability
To Analyze the Efficiency of SAP in Real-Time Material Management
To reducing waste and improving sustainability in construction projects.
Enables real-time material tracking and inventory control in comparison to traditional systems.
Identify best practices for effective material management that enhance productivity, cost efficiency, and project success.
Conduct a comparative analysis of SAP with other enterprise resource planning (ERP) tools Conventional methods.
Objectives of The Study
Conducting a comprehensive survey of various construction companies to assess and analysis their existing material management
practices.
Investigating the extent to which construction companies have implemented the SAP system for material management.
Evaluating the effects of SAP system implementation on material management efficiency, accuracy, and overall project performance
within the construction industry.
Perform a comparative analysis between conventional material management methods and those utilizing the SAP system.
To apply the value engineering concepts to achieve cost reduction in construction projects, ensuring that essential functions are
maintained or improved while reducing overall costs.
II. Methodology
This study systematically selected construction companies involved in medium to large-scale projects. Selection criteria included
project size, digital tool adoption, data availability, and geographic location.
Companies were categorized based on whether they used conventional manual methods or SAP-based material management
systems.
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Primary data collection methods involved structured questionnaires, site interviews, direct observations, and internal report reviews.
Focus areas included procurement efficiency, inventory control, labor cost management, and cash flow handling.
Quantitative analysis using statistical tools such as mean, median, and standard deviation enabled an objective comparison between
conventional and SAP-based methods.
Direct on-site observation ensured the accuracy of data and minimized biases. The comparative evaluation highlighted operational
advantages gained through SAP MM adoption.
The methodology involves site selection, analyzing current processes, comparing conventional and SAP systems, assessing SAP’s
impact performance within the construction industry. i.e. given below Diagram:1
Diagram :1
MM - Survey of Different Construction Companies Table No:1
Selection of site and Analyze the Current MM – Process Table No:
Material management module of sap
SAP - System Application & Products
SAP- originally known as System Anwendungen Produkte in German This a comprehensive enterprise resource planning (ERP)
software developed to centralize and streamline data management across various organizational departments. By integrating diverse
business processes into a unified system, SAP enhances operational efficiency and decision-making SAP's modules oversee the
procurement, storage, and transportation of materials, ensuring optimal inventory levels and timely availability. The software
handles financial accounting, controlling, and reporting, providing real-time financial insights and supporting compliance with
regulatory standards.
With integrated customer data and interaction histories, SAP enables better customer service and relationship management. Key
Applications Managed by SAP
Surveying the various construction
Selection of site & analysis the
current process System Adoption in
Material Management
Comparing conventional
methods with SAP system
Analyzing the Impact of SAP
on Material Management on site
Applying the value engineering
for cost reduction
Conclusion
SI. No
Name of The Company
MM Process
1
Casagrand Builder Private Limited
SAP, ERP
2
Appaswamy Real Estates
SAP, Primavera
3
Sobha Limited is a multinational real estate developer
SAP, ERP, Primavera
4
chettinad cement corporation limited
Conventional
5
shridhar construction Pvt. Ltd
Conventional
6
JRM Construction
Conventional
7
SPL Infrastructure Pvt Ltd
Conventional
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Logistics and Material Management
Financial Management
Human Resources (HR)
Reporting and Analytics
Features of SAP MM
SAP MM is one of the modules of SAP that deals with material management and inventory management.
SAP MM speeds up the procurement and material management activities, making the business run smoothly with complete time
and cost efficiency.
It deals with managing the materials (products and/or services) and resources of an organization with the aim of accelerating
productivity and reducing costs.
It deals with the Procurement Process, Master Data (Material & Vendor), Account Determination & Valuation of Material,
Inventory Management, Invoice Verification, Material Requirement Planning, etc.
Sap Structure in Materials Management
The Organizational Structure in MM is made up of following Organizational Levels:
Client.
Company Code.
Plant.
Storage Location.
Purchasing Organization0
SAP Material Management - Structure, Procurement Cycle, and Transaction Codes in site No :1 Table No: 3
Site
No
Site Selection
for Detail Study
Site
Location
Type of Project
Material Management
Process
1
Casagrand
Builder Private
Limited
Chennai
apartments, villas, and plots industrial &
warehousing, and engineering & contracting
SAP, ERP
2
shridhar
construction
Pvt.Ltd
Chennai
Residential, commercial, Bridge and Roads
Conventional Manual
SI.No
SAP Structure
Description
1
Client
The highest level in SAP, representing an independent environment.
2
Company Code
Represents a legal entity for financial reporting.
3
Plant
A physical or logical subdivision for production, procurement, or
inventory.
4
Storage Location
Defines where materials are stored within a plant.
5
Purchasing Organization
Responsible for procurement activities.
6
Purchasing Group
Represents a group of buyers responsible for procurement.
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Conventional Module Material Management Structure- Procurement Cycle, and Transaction Codes in Site No: 2
Table No: 4
SI. No
Procurement Cycle
Description
1
Requirement Determination
Identifying material needs.
2
Purchase Requisition (PR)
Requesting materials internally.
3
Source Determination
Selecting vendors from master data.
4
Purchase Order (PO) Creation
Issuing a formal order to the supplier.
5
Goods Receipt (GR)
Receiving and verifying materials.
6
Invoice Verification
Checking and approving supplier invoices.
7
Payment Processing
Processing payments via FI
module.
SI. No
Category
Transaction Code
1
Material Master
MM01 / MM02 / MM03
2
Purchasing
ME21N / ME22N / ME23N
3
Purchase Requisition
ME51N / ME52N / ME53N
4
Goods Receipt
MIGO (goods movement)
5
Invoice Verification
MIRO / MIR7
6
Inventory Management
MB1B / MB51 / MB52
7
Material Requirement Planning (MRP)
MD04 / MD02
8
Vendor Management
XK01 / XK02 / XK03
9
Reporting
MB5B / ME2L / ME80FN
SI. No
Module
Description
1
Procurement
Acquiring raw materials, equipment, and other resources needed for construction projects.
2
Inventory Control
Ensuring optimal stock levels to prevent shortages or excess materials.
3
Warehousing
Storing, handling, and allocating materials properly within designated locations
4
Logistics
Managing the transportation and delivery of materials to project sites.
5
Supplier Management
Maintaining vendor relationships, negotiating contracts, and ensuring material quality
compliance.
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i.e. Unlike SAP, conventional material management does not use predefined transaction codes. It follows a structured approach,
Manual entry of material data in registers or spreadsheets
Procurement records maintained in Excel or hard copies
Handwritten or digital forms shared via email
Manual invoice matching with POs and delivery receipts
Forecasting via spreadsheets or project schedules
Supplier lists maintained in documents or ERP systems in manual
Manual reporting using Word documents Excel, or printed logs.
Traditional Conventional) Structure in MM
The organizational structure typically encompasses the following key components:
Procurement
Inventory Control
Warehousing
Logistics
Supplier Management
Movement Types for MM
103 – Gate Entry
105 – Goods Receipt
106 – Goods Receipt Reverse
541 – Material Transferred to Contractors Stock
542 – Material Reverse from Contractors Stock
281 – Goods Withdrawal (Consumption)
282 – Consumption Reverse
301 – Stock Transfer from Plant.
Detail Working of SAP
SAP Login Screen
Log on to the SAP server. The SAP login screen will prompt you for the User ID and the Password. Provide a valid user ID and
SI. No
Procurement Cycle
Description
1
Material Requirement Planning (MRP)
Identifying material needs based on project schedules.
2
Purchase Requisition (PR)
Internal document requesting specific materials for procurement.
3
Vendor Selection
Choosing suppliers based on price, quality, and availability.
4
Purchase Order (PO) Issuance
Sending a formal purchase request to the selected vendor.
5
Goods Receipt & Inspection
Receiving and verifying materials against the purchase order
6
Invoice Processing & Payment
Approving and processing supplier invoices for payment.
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password and press enter. The user id and password are provided by the system administrator. The login screen appears as follows:
This image showcases the standard fields you'll encounter when logging into SAP, such as:
Client: Specifies the client number.
User: Your SAP username.
Password: Your SAP password.
Language: The language code for the session.
Purchase Requisition (PR)
A purchase requisition is an internal document used in SAP MM to request the procurement of materials or services. It serves
as the first step in the procurement process.
Gathering Requirements for Purchase Requisition (PR)
Before creating a PR, the following requirements must be gathered:
Material and Service Details
Description of the material or service required
Quantity and unit of measurement
Required delivery date and location
Source of Supply (Optional)
Preferred vendor details (if available)
Existing contract or purchase agreement references
Budget and Cost Allocation
Assigned cost Centre or project code
Budget approval (if required)
Procurement Type and Urgency
Routine or emergency purchase
One-time or recurring procurement
Procurement Types in SAP MM
There are several types of procurement processes in SAP MM, including:
Internal Procurement
Materials are procured from another department or plant within the company.
Example: Stock transfer between two company locations.
External Procurement
Materials or services are purchased from external vendors
Standard Procurement – Buying from an external supplier.
Subcontracting – Raw materials are provided to a vendor, and they return finished goods.
Consignment – Vendor stocks materials at your location, and you pay only when consumed.
Stock Transfer – Transfer of stock from one warehouse/plant to another.
Third-Party Procurement – Vendor delivers directly to the customer instead of the company.
PR Purchase Requisition
PR is raised in system by execution team as per the requirement of material. Following fields are required to be entered while raising
PR.
Material Code
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Required Quantity
Plant No for which material is required
Requisitioner Name.
Class of material
Creation Process in SAP
Transaction Code (T-Code): ME51N
Enter required material/service details.
Specify delivery date and purchasing group.
Assign cost Centre and plant details.
Save the PR and generate the document number.
Figure 1: Purchase Requisition
Purchase order (po)
The process begins when a Purchase Requisition (PR) is approved at all necessary levels. Once released, the PR becomes visible
to the Purchase Department, enabling them to proceed with procurement. The Purchase Department then prepares the PO for the
required materials, ensuring that specifications, quantities, and pricing align with the organization's needs. The PO undergoes a
multi-level approval process to validate its accuracy and compliance with budgetary constraints. Upon final approval, the PO is
officially released and forwarded to the respective supplier, who then arranges for the delivery of materials.
Figure 2: Purchase Order (PO)
Gate entry
Purchase Order (PO) is issued, the supplier arranges for the delivery of materials to the designated site. Upon arrival at the project
site, the security personnel at the gate plays a crucial role in documenting the initial receipt of materials. Upon the material’s arrival,
the security guard records the details in the Inward Register, assigning a Gate Entry Number on the Delivery Challan. In the SAP
system, the Goods Receipt Note (GRN) is posted using the MIGO transaction code.
The movement type associated with gate entry posting is 103, which signifies that the material has arrived but is yet to undergo a
quality inspection or final acceptance.
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Figure 3: Gate Entry
Goods receipt number
The Goods Receipt (GR) phase is critical, marking the point at which the ordering party receives and verifies the condition and
quality of delivered materials. This step ensures that the materials meet the specified requirements before they are added to inventory.
Upon delivery to the site, the materials are checked against the Delivery Challan and the Purchase Order (PO) to confirm accuracy.
The Goods Receipt Number (GRN) is then posted in the SAP system using the MIGO transaction code.
The choice of movement type during this posting determines how the stock is updated in the inventory. Movement type 103 is used
to record the receipt of goods into a blocked stock, indicating that the materials have arrived but are pending inspection or approval.
No accounting document is generated at this stage. Once the materials pass inspection, movement type 105 is employed to release
the goods from blocked stock to unrestricted stock. i.e. Movement type used for Posting GRN is 105.
Figure 4: Goods Receipt Number (GRN)
Material issued to and reversed from contractor
After posting the Goods Receipt Note (GRN) in the SAP system, materials are issued to contractors, transferring responsibility and
ownership to them. This transfer is executed using movement type 541, which moves the materials from the company's unrestricted
stock to the contractor's stock. Notably, this movement does not generate an accounting entry, as the materials are still owned by
the company but are physically located with the contractor. When materials are returned from the contractor's stock to the company's
inventory, movement type 542 is utilized.
The SAP transaction code MIGO is employed for both issuing materials to contractors and reversing such issuances. This transaction
code facilitates the execution of various goods movements, material including those involving movement types 541 and 542.
Figure 5: Material Issued to Contractor
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Material issue slip
Issue slip of consumed material against respective activity is prepared & submitted by Engineer In charge of respective building to
store in charge. Following details are mentioned on issue slip Figure:6
Issue slip No – 681
Project Code
Network No.
Plant No.
Vendor Code
Activity No.
Activity Description
Material No.
Material Description
Quantity of Required Material
Unit
Reservation No.
Figure 6: Material Issue Slip (sample)
Material withdrawal consumption
The consumption of materials is systematically recorded to maintain accurate inventory and financial records. Upon receiving a
material issue slip from the Engineer in Charge, the Store In-Charge proceeds to document the material consumption in the SAP
system. This is accomplished using the MIGO transaction code, a versatile tool for various goods movements. The specific
movement type employed for material withdrawal due to consumption is 281
Figure7: Material Withdrawal (Consumption)
Work procedure in conventional material management
Conventional method of MM (Material management) is a critical function within construction companies, ensuring that materials
are available when needed, in the correct quantities, and at optimal costs. Traditionally, many construction firms have relied on
conventional methods for material management.
Material Estimation:
At the project's outset, estimators manually calculate the types and quantities of materials required, often using historical data
and personal experience.
Procurement Planning:
Based on the estimates, procurement teams manually identify potential suppliers, solicit quotations, and negotiate terms without
the aid of digital databases.
Purchase Order Creation:
Purchase orders are manually drafted, approved, and dispatched to suppliers, typically through physical documents or basic electronic
communication.
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Material Delivery and Inspection:
Upon delivery, materials are inspected for quality and quantity. Records are maintained in physical logs or simple
spreadsheets.
Storage and Inventory Management:
Materials are stored on-site or in warehouses, with inventory levels tracked manually, increasing the risk of errors and
mismanagement.
Distribution to Worksites
Materials are allocated to specific tasks or sites based on manual scheduling and coordination.
Waste Management:
Excess materials or waste are manually recorded, and disposal or recycling is arranged without systematic tracking.
However, the adoption rate varies, with some firms still relying on traditional methods due to factors like cost, resistance to change,
and lack of technical expertise.
Increased Manpower Requirements
Extended Timeframes for Material Management
Increased Paperwork
Manual Execution of Numerous Activities
Higher Risk of Errors and Inaccuracies
Safety Risks Associated with Manual Handling
Challenges of Conventional Methods:
Inefficiencies:
Manual processes are time-consuming and prone to human error, leading to delays and increased costs.
Lack of Real-Time Data:
Without digital systems, real-time tracking of inventory and material usage is challenging, hindering timely decision-making.
Limited Collaboration:
Manual methods restrict seamless communication among project stakeholders, affecting coordination and project outcomes.
Manual material management in construction projects involves a series of Labor- intensive processes that are susceptible to various
inefficiencies and challenges. Many construction companies are transitioning to digital material management systems. These
platforms offer real-time tracking, automated procurement processes, and enhanced collaboration tools, leading to improved
efficiency and profitability.
Comparison between Conventional Material Management and SAP Material Management. Table No: 5
Aspect
Conventional Material Management
SAP-Based Material Management
Data Entry
and Processing
Manual data entry, increasing the likelihood
of human errors.
Automated data entry with validation checks, reducing errors.
Inventory
Tracking
Physical counts and manual logs, leading to
potential inaccuracies.
Real-time inventory tracking with automated updates
Procurement
Process
Lengthy procurement cycles due to manual
approvals and paperwork.
Streamlined procurement with electronic approvals and
reduced paperwork.
Reporting and
Analytics
Limited reporting capabilities with delayed
data compilation.
Advanced real-time reporting and analytics for informed
decision-making.
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Required Staff
Min staff required is 3No
1 No of staff Required
Error
Handling
Errors may go unnoticed longer, leading
compounded issues.
Immediate error detection and alerts for prompt resolution.
Compliance
and
Audit Trails
Challenging to maintain comprehensive
audit trails manually.
Automated audit trails ensuring compliance and easy
traceability.
Operational
Cost
Affordable for small construction companies
whose turnover is below 100 Cr.
Affordable for construction companies whose turnover is
above 250 Cr.
Vendor
Management
Manual vendor evaluations, which can be
inconsistent.
Systematic vendor performance tracking and management.
Material
Requirements
Planning
Reactive planning based on immediate needs
Proactive planning with predictive
algorithms to
forecast demand.
comparative analysis materials management
The comparative charts and tables with metrics like cost savings, time efficiency, error rates, or inventory accuracy and before and
after SAP comparison with conventional manual methods through questionnaires, site interviews, direct observations.
Results from Quantitative Analysis using SAP MM in Construction Projects Table No: 6
Procurement Efficiency
Question
Response Summary
Insights
How do you manage
procurement?
60% SAP, 30% ERP, 10% Manual
Majority prefer SAP for procurement.
Key procurement
challenges?
50% supplier delays, 30% high costs, 20%
payment issues
Supplier delays are the biggest challenge.
Does digital
procurement improve
efficiency?
80% Yes, 20% No
Strong agreement on efficiency improvements.
Inventory Control
Question
Response Summary
Insights
How do you track inventory?
70% SAP MM, 20% Excel, 10% Manual
SAP MM is the preferred tool.
Major causes of material waste?
40% Poor planning, 35% theft, 25% damage
Poor planning is the top cause of waste.
Does SAP MM help in reducing waste?
75% Yes, 25% No
Most respondents find SAP MM beneficial.
Labor Cost Savings
Question
Response Summary
Insights
What factors increase labor costs?
45% overtime, 30% inefficiency, 25%
labor shortage
Overtime is the biggest cost factor.
How often do you provide training?
50% quarterly, 30% yearly, 20% never
Regular training helps in labor cost reduction.
Does workforce planning help in cost
85% Yes, 15% No
Strong consensus on proper workforce
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Question
Response Summary
Insights
savings?
planning benefits.
Cash Flow Management
Question
Response Summary
Insights
Major cash flow challenges?
50% delayed payments, 30% high costs, 20%
poor planning
Payment delays are the top issue.
Do you use forecasting in cash
flow?
70% Yes, 30% No
Forecasting is widely used for financial
planning.
Does SAP MM improve financial
tracking?
80% Yes, 20% No
Most users find SAP MM beneficial for
financial monitoring.
Figure: 7 Comparison of SAP based vs Manual Method in construction Material
Material Management System Usage in
Construction Projects Table No :7
System Type
Estimated Usage
Percentage
Remarks
Conventional Manual
Methods
40% – 50%
Still widely used, especially by small to medium enterprises
(SMEs).
SAP-Based Systems
30% – 40%
Common among large firms and advanced project environments.
Other ERP Systems
10% – 20%
Includes tools like Oracle, Microsoft Dynamics, Tally ERP, etc.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
www.ijltemas.in Page 540
Figure: 8 software usage percentage
Sample Financial Report for Project Progress Documentation for before SAP Table No: 8
Item
Estimated Cost (₹)
Actual Cost (₹)
Variance (₹)
Remarks
Cement
12,00,000
11,50,000
-50,000
SAP minimized wastage
Steel
15,00,000
14,80,000
-20,000
Bulk order discount
Bricks
6,00,000
6,30,000
+30,000
Delay in procurement
Labor
8,00,000
7,90,000
-10,000
Real-time tracking
Equipment
10,00,000
10,20,000
+20,000
Extra transport
Total
₹51,00,000
₹50,70,000
₹30,000
Cost saved with SAP
This structured analysis provides a data-driven understanding of how SAP MM impacts procurement, inventory, labor cost, and
cash flow in construction projects. This study evaluates the impact of SAP Material Management implementation in construction
projects by comparing it to conventional manual methods. Key performance metrics such as cost savings, time efficiency, error
rates, and inventory accuracy were analyzed before and after SAP adoption. Quantitative data collected through structured
questionnaires and site observations were used to develop comparative charts and tables.
Results demonstrate significant improvements in procurement efficiency, material tracking, and reduction of manual errors with
SAP MM. These are the impact compared to conventional method over SAP in construction practices. The primary obstacles to
SAP adoption include its high initial investment, reaching up to 2 crores, and the lack of consensus among board members.
Implementing SAP is financially viable for construction firms with an annual turnover exceeding 250 crores.
Item
Planned Cost (INR)
Actual Cost (INR)
Variance (%)
Remarks
Cement (OPC 53 grade)
₹4,00,000
₹4,40,000
+10%
Overstocking due to mis-
planning
Reinforcement Steel
₹9,75,000
₹9,42,500
-3.3%
Efficient usage
Fine Aggregate
₹75,000
₹82,500
+10%
Wastage due to poor handling
Coarse Aggregate
₹72,000
₹69,600
-3.3%
Balanced
Admixtures
₹60,000
₹58,500
-2.5%
Efficient usage
Total
₹15,82,000
₹15,92,100
+0.63%
Minor overages
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
www.ijltemas.in Page 541
Advantages and disadvantages of material management by sap
Advantages of material management by SAP
Enhanced Inventory Management and Cost Reduction, Real-time tracking of Materials
Improved Procurement Efficiency, Time can be reduced while manage the materials.
SAP MM automates inventory processes, reducing manual errors and ensuring accurate stock levels.
By optimizing procurement processes and minimizing material wastage.
SAP MM contributes to lowering operational costs. lead to faster operations and reduced delays.
Disadvantages of material management by SAP
High Implementation Costs for SAP MM involves substantial investment in software, hardware, and skilled personnel.
Operating SAP MM effectively necessitates personnel with specialized technical expertise.
Need for Technically Skilled Workforce to Strong Estimation Department Required
Not Affordable for Small Construction Companies limiting their access to advanced material management solutions.
SAP MM demands considerable system memory and processing power for additional infrastructure investments.
Advantages and Disadvantages of Conventional Material Management
Advantages:
Low Initial Cost, No need for expensive software or system implementation.
Easy to understand and manage without requiring extensive training or technical expertise.
Companies can modify their processes as per their specific needs without system restrictions.
No Digital Infrastructure Required Physical records and manual tracking make it accessible even in areas with limited technology.
Hands-on tracking and management provide better physical oversight of material handling.
Disadvantages:
Manual data entry increases the chances of miscalculations, lost records, and incorrect stock tracking.
Procurement, inventory updates, and reporting take longer due to manual work.
Materials are not tracked in real-time, leading to shortages or excessive stock.
Generating reports requires manual effort, making decision-making slow and unreliable.
Managing large-scale projects with manual processes is difficult and inefficient.
III. Discussion
Material management is a critical function in construction companies, as construction materials often account for over 60% of total
project costs.
Traditionally, many construction firms have managed materials manually. However, to enhance profitability and efficiency, there's
a growing shift towards adopting advanced material management software. In a 2025 survey of seven construction companies in
Chennai, the following observations were made:
Casagrand Builder Private Limited Construction implemented SAP, PROJECT SYSTEM (PS) for their material management
processes
Appaswamy Real Estates utilized ERP and Primavera for material management.
Sobha Limited is a multinational real estate developer using SAP, ERP, Primavera for MM process
Chettinad cement corporation limited utilized Conventional and MRP for the material management.
The remaining five companies continued to rely on conventional manual methods. This distribution indicates that approximately
37.5% (3 out of 8) of the surveyed companies have adopted advanced software solutions like SAP and ERP and for material
management, while 62.4% (5 out of 8) still employ manual methods.
It's noteworthy that the adoption of such advanced software is often linked to the company's turnover. Firms with turnovers exceeding
minimum 100 crore to 250 cores find it more economical to implement these systems.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
www.ijltemas.in Page 542
Regarding satisfaction with their current material management processes:
Casagrand Builder Private Limited Construction reported satisfaction with their SAP- based system (system application product)
Companies like Shridhar Construction Pvt Ltd, JRM Construction, SPL Infrastructure Pvt, Ltd and Chendur Infrastructure Pvt Ltd
expressed dissatisfaction with their existing methods. (Manual method for MM process)
IV. Conclusion
A survey revealed that all construction companies engage in material management, with many relying on traditional methods.
Comparing these conventional approaches to SAP-based systems shows that SAP can lead to significant cost savings over the
duration of a project.
Implementing SAP in material management effectively reduces human errors, decreases administrative time, and enhances the
planning of material procurement. However, the initial setup costs for SAP are substantial, potentially making material management
expenses higher than those associated with traditional methods. Each company does not use advanced technique but at least they
carry out material management by conventional method.
The study highlights a growing shift in the construction industry toward advanced material management systems like SAP, which
offer superior efficiency, accuracy, and project performance compared to conventional manual methods. While many construction
firms in Chennai still rely on traditional approaches.
There is a clear trend toward adopting digital solutions to streamline procurement, optimize inventory control, and improve overall
project execution. Companies implementing SAP report higher satisfaction due to reduced errors, better resource utilization, and
enhanced decision-making capabilities. Although some firms have yet to transition, the benefits of SAP adoption such as increased
productivity, cost savings, and improved operational transparency make it a crucial tool for modern construction material
management.
The comparative analysis between conventional material management methods and SAP-based systems highlights to maximize
profitability, transitioning from conventional material management to advanced techniques is essential. The SAP system enables
real-time tracking of material consumption, inventory levels, and material locations, providing higher management with accurate
data also facilitates efficient inventory monitoring on-site while minimizing human errors.
The primary obstacles to SAP adoption include its high initial investment, reaching up to ₹2 crore, and the lack of consensus among
board members. Implementing SAP is financially viable for construction firms with an annual turnover exceeding ₹250 crore. SAP
implementation can lead to a 75% reduction in manpower costs and an 80% decrease in time spent on material management
activities.
References
1. Carlos H. Caldas, “Materials Management Practices In the Construction Industry” Practice Periodical On Structural Design
and Construction, © ASCE, ISSN 1084- 0680/04014039(2008).
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3. A.R.Patil “Analyzing Material Management Techniques On Construction Project” International Journal Of Engineering And
Innovative Technology Volume 3, Issue 4, October 2013
4. SudhanvaKadoli, DigvijayPatil, Ajit Mane, Ajinkya Shinde, ShrikantzKokate- “An Enterprise resource planning (ERP)
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