Material Control
Material Control
Material control may be defined as the regulation of the functions of
an organization relating to procurement, storage and usage of materials
in such a way as to maintain an even flow of production without
excessive investment in material stock. Material control involves
control of three important functions.
1. Procurement
2. Storage
3. Usage.
Just as the handling of cash is of utmost important in the case of
non-manufacturing business, an efficient handling of materials is of
vital importance in the case of a manufacturing business.
Material constitutes an important part of cost of production of an
article. This cost account for nearly 60 per cent of the cost of
production of a large number of of private and public sector
organizations. Therefore, proper control in handling the material of a
business plays a vital role in the success of the business. If the raw
material or other spare parts are not available readily, there could be
chances of loosing machine time and labor cost and which ultimately
result in production loss.
The material can be divided into tow categories:
1. Direct Materials: The materials which can easily be identified
and attributed to the individual units are known as Direct materials.
These materials from part of the finished product. Yarn required for
the production of cloth and leather used for manufacture of shoes are
examples of direct materials. All costs which are incurred to obtain
direct materials are known as "direct material cost".
2. Indirect Materials: Indirect materials do not form part of the
finished product and cannot be conveniently and accurately allocated to
a particular unit of product. Examples of such materials are
lubricating oils, cotton wastes and consumable spare parts required for
the maintenance of machines etc. Cost associated with indirect
materials are known as "indirect material cost"
Grouping of materials in to direct or indirect sometimes become a
matter of convenience. For convenience, materials of small value which
should actually be treated as direct may be treated as indirect for the
sake of simplicity. For example, thread used in the manufacture of
Shirts should be classified as direct material. Considering the time
and expenses involved in measuring the thread required for each shirt,
it is desirable that the cost of thread be treated as indirect material
cost.
Objectives of Material Control
Following are the objectives of Material control.
- Continuous availability of all types of materials in the factory ensures uninterrupted production. Lack of material may interrupt continuous production.
- It can prevent losses caused by over stocking materials.
- It can help maximum utilization of economy. Working capital may stuck up by over stocking materials.
- Material control provides information regarding exact position of stock available to the management. Frequent stock position is essential for better management of the business.
- It helps the maximum utilization of storage capacity of the organization and can prevent losses during storage.
- It can ensure the quality of material. Quality of material may decrees, if it is not stored properly.
- Ordering right quantity of goods can save transport cost and handling charges.
Advantages of Material Control
Following are the main advantages of material control.
- It minimizes capital investment in the stock of materials.
- It eliminates wastage and loss of materials arising on account of spoilage, theft, pilferage etc.
- It ensures uninterrupted production.
- It reduces the cost of storage and transportation.
- It aids the management to create proper purchase policies regarding materials.
- It ensures the purchase of material at the reasonable price.
- It facilitate the inventory control and valuation of closing stock.
