Material flow is a subset of logistics that involves the storage, packaging, and transportation of all types of items. Internal material flow refers to the movement of items within a corporation. Material flow functions as a supply chain management model that depicts the transportation of raw materials, parts, work-in-process inventory, and finished goods as a flow; flow is how work moves through a system.

Regular material flow assessments can be used to successfully and sustainably optimize the logistics chain from the supplier to the client. These material flow assessments document the procedures, storage, and transport operations in order to identify material flow flaws. The goal is to design material flows solely to reduce costs, shorten throughput times, and eliminate waste.

Because industrial material flow can quickly become quite complicated, various specialized simulation tools for complex systems have been developed. Typical tools include AnyLogic, AutoMod for logistics systems, and Plant Simulation for manufacturing systems.

When a corporation has a "good" material flow, materials at various stages move consistently and predictably, but a "poor" flow means that there are many stops and starts in the process, resulting in an inefficient system. When processes are uneven and supplies are stored or stopped in the middle of production, the company loses time, money, and resources. Excess inventory can result in longer lead times and defective products, and a poor material flow might make it difficult for management to reorder materials on time.