Material
Material is anything made of matter, constituted of one or more
substances. Wood, cement, hydrogen, air and water are all examples of
materials. Sometimes the term "material" is used more narrowly to refer
to substances or components with certain physical properties that are
used as inputs to production or manufacturing. In this sense, materials
are the parts required to make something else, from buildings and art to
stars and computers.
A material can be anything: a finished product in its own right or an
unprocessed raw material. Raw materials are first extracted or harvested
from the earth and divided into a form that can be easily transported and
stored, then processed to produce semi-finished materials. These can be
input into a new cycle of production and finishing processes to create
finished materials, ready for distribution, and [construction].
Examples
Cotton
An example of a raw material is cotton, which is harvested from plants. Cotton
can be processed into thread (also considered a raw material), which can then
be woven into cloth, a semi-finished material. Cutting and sewing the fabric
turns it into a garment, which is a finished product.
Steel
Steelmaking is another example – raw materials in the form of ore are mined,
refined and processed into steel, a semi-finished material. Steel is then used as
an input in many other industries to make finished products.
Chemistry
In chemistry materials can be divided into different typologies in relation to their
composition, for example:
•metals and alloys
•ceramics
•plastics
•semiconductors
composite materials
Manufacturing a product needs input of raw materials.
Raw materials are main component of the product.
There are two types of materials .
1.Direct Material
The materials required for producing a product are called direct materials.
Direct materials are also known as raw materials or input materials.
Direct raw materials constitute the main component or part of a finished product.
It is identified in terms of cost per unit of output. Wood for furniture industry,
sugarcane for sugar mills and textile for garment industry are some
of the examples of direct materials
2. Indirect Material
The materials that can not be form as the main part of a finished product are
called indirect materials.
Therefore, such materials can not be easily identified with the product,
Nails used in furniture industry and threads used in garment industry are
some examples of indirect material.
Material control
The publication of the Institute of Cost and Management
Accountants on Budgetary Control defines Material
Control as “the function of ensuring that sufficient goods
are retained in stock to meet all requirements without
carrying unnecessary large stocks”.
When the function of indexing, buying, receiving,
inspection, storing and buying the goods are separated,
it is essential that these should be properly co-ordinate
so as to achieve the advantages of specialization.
Material controls basically aims at efficient purchase, storage and
consumption of materials. The following are the major objectives of
materials control.
1. To ensure better quality of materials at right quantity at right time for
efficient and uninterrupted production of output.
2. To maintain the cost of materials at the minimum level.
3. To purchase materials at a reasonable price.
4. To minimize the handling cost and time in storing and using the
materials.
5. To provide information to the management about raw materials, their
costs and availability.
6. To protect materials against loss by fire, theft and leakage.
7. To avoid obsolescence of materials by adopting an appropriate method
of materials issue.
Requirements of a System of Materials Control:
The important requirements or essentials of
adequate satisfactory system of materials control
are as follows:
1.Proper Coordination
2.Competent Purchasing Agent
3.Use of Standard Forms
4.Control by Budgeting Materials and Equipment
5.Storage Location
6.Operation of Perpetual Inventory
7.Standards or Level to be Fixed
8.Storage Control and Issue
9.Internal Check
10.Development of Controlling Accounts and Subsidiary R
ecords
11.Regular Reports
Proper Coordination:
Proper coordination of all departments involved, in
material purchasing, receiving, testing, approving,
storage, issue and accounting is essential.
Competent Purchasing Agent:
Centralization of purchasing in a purchasing department
under the direct and authority of a competent trained
purchasing agent is also considered essential.
Use of Standard Forms:
The use of standard forms for orders, requisition etc.,
upon which written and signed instructions are given are
essential for proper control of materials.
Control by Budgeting Materials and Equipment:
Use of materials, supplies and equipment budgets so that
the economy in purchasing and use of materials can be
realized, is important factor for adequate control of
materials.
Storage Location:
Storage of all materials and supplies should be in a designated
location properly safe guarded under supervision and proper planning
should be there for storing and issuing of materials.
Operation of Perpetual Inventory:
Operation of proper perpetual inventory system should be used so
that it is possible to determine at any time the amount and value of
each kind of materials in stock. It also enables the comparison of
book inventory with the result of physical counting.
Standards or Level to be Fixed:
A minimum quantity of each item of materials, below which point the
inventory is not allowed to drop, and a maximum quantity, above
which stock is not carried should be fixed. In the same manner
ordering level and economic order quantity may be determined.
Storage Control and Issue:
The proper operation of a system of stores control and issue is
introduced so that there will be delivery of materials upon
requisitions to departments in the right amount at the time they are
needed.
Internal Check:
The operation of internal check should be
introduced to ensure that transactions involving
materials and equipment are checked by reliable
and independent officials.
Development of Controlling Accounts and Subsidiary Records:
Controlling accounts and subsidiary records reveal
summary of detailed materials costs at each stage
of materials receipt and consumption from the
storeroom to finished goods.
Regular Reports:
Regular reports and information should be
provided for the management in connection with
the purchase of materials, issues from stock,
inventory balances, obsolete stock, goods returned
to vendors, and spoiled of defective units.
