The design of a materials handling system, supporting a manufacturing or assembly line, is a complex and challenging task. Still, materials handling is in many cases seen as secondary to the manufacturing system design, and even more so in comparison to the product development. This project describes aspects on the material handling function in a lean production environment, with a specific focus on the design process. Various materials handling concepts are investigated, such as milk runs and water spider. An industrial case at Volvo Construction Equipment (VCE), Eskilstuna, Sweden, builds the base for applying the concepts as well as the criteria for developing a performance measurement scheme for materials handling.