Materials Control - Material Costs, Cost Management | Cost Management - B Com PDF Download

Meaning:

Material control is the main component of the process of material management.

Control over materials is of utmost importance for smooth and uninterrupted functioning of an organisation.

A few definition of the term are given as under:

“Material control is a systematic control over purchasing, storing and consumption of materials, so as to maintain a regular and timely supply of materials, at the same time, avoiding overstocking.”

“Material control refers to the management function concerned with acquisition, storage, handling and use of materials so as to minimise wastage and losses, derive maximum economy and establish responsibility for various operations through physical checks, record keeping, accounting and other devices. ”

In simple words, material control refers to the various measures adopted to reduce the amount of loss of materials at the time of receiving, storing and issuing the raw materials. Material control in practice is exercised through periodical records and reports relating to purchase, receipt, inspection, storage and issuing direct and indirect materials. Proper control over material can contribute substantially to the efficiency of a business.

Objectives of Materials Control:

The following are the main objectives of materials control:

(a) To enable uninterrupted production:

The main object of material control is to ensure smooth and unrestricted production. Production stoppages and production delays cause substantial loss to a concern.

(b) To ensure requisite quality of materials:

The quality of finished products depends mainly on the quality of raw materials used. If quality of the raw materials is not up to desired standards, the end product will not be of desired quality which affects the sale of the product in the market resulting in loss of profits as well as goodwill of the concern. It is of vital importance to exercise strict control and supervision over the purchases, storage and handling of materials.

(c) To minimise wastage:

The loss of material may occur on account of rust, dust, dirt or moisture, bad and careless handling of materials, poor packing and many other reasons. The causes responsible for such losses must be brought to light and utmost efforts should be made to minimise the wastage of raw materials. This is possible only by introducing an efficient materials control system.

(d) To fix responsibility:

A proper system of materials control also aims at fixing responsibility of operating units and individuals connected with the purchase, storage and handling of materials.

(e) To provide information:

Another objective of materials control is to provide accurate information regarding material cost and inventory whenever needed by management.

Necessity and importance of material control:

In a productive undertaking the need of materials control arises on account of the following reasons:

1. For keeping the stock of raw materials within limits in the stores i.e., to avoid overstocking and understocking of raw materials, materials control is significant.

2. It ensures proper storage of materials. For the proper preservation and safety of materials, adequate storage facilities are to be provided. With the help of proper storing of materials, quantity of materials as and when required can be issued to various jobs.

3. For knowing proper cost of production, control over materials is indispensable.

4. Certain techniques and methods are developed under the system of materials control thereby ensuring optimum utilisation of materials.

5. In order to undertake continuous checking of materials, the necessity of a proper system of materials control cannot be ignored.

6. A well managed system of materials control ensures the availability of different kinds of materials without delay.