What are the essential prerequisites for Material Control?
Or
Explain the factors to be considered for effective material Control?
For effective material control the following factors should be given due importance.
1.Factors relating to Purchases:
a. All materials to be purchased should be scheduled in advance, keeping in view the production requirements and information regarding different sources of purchases.
b. The systematic purchase procedure should be followed for the purchase of materials. The exception may be made in case of urgent requirement.
c. As far as possible, all purchases should be centralised or decentralised.
Centralised purchasing:The requirement of different departments should be made by one department (purchase department).
In other words, when one specific department purchases all short of material for the whole organisation is called centralised purchasing.
It is suitable for small organisations and the purchase manager is the head of the department.
Advantages Of Centralised purchasing:
- All records are kept at one place.
- Better control on purchasing is possible.
- It ensures uniform purchasing procedure.
- The more discount can be obtained.
Disadvantages of Centralised purchasing:
- It is unsuitable when branches are situated in different places.
- It may cost delay in opening Material.
- It is not suitable for perishable goods.
Decentralised Purchasing: when the materials are purchased by each department as per requirement is known as Decentralised Purchasing. It is suitable for large organisation departments to have authority to purchase.
Advantages Of Decentralised Purchasing:
- It is suitable for perishable goods.
- It is suitable where branches are in different places.
- The advantages of the local market can be enjoyed.
- The transportation cost can be reduced to a better exchange.
Disadvantages of Decentralised Purchasing:
- The greater quantity of material can not be purchased.
- The higher trade discount is not possible.
d. Economic ordering quantity in respect of each material should be fixed purchases should be made according to such EOQ. So, that ordering and carrying cost can be kept minimum.
2. Factors relating to storage:
a.All the materials received from the suppliers should be strictly inspected by competent inspectors in order to be sure that the material received is as per quantity and quality ordered. In small organisations this is done by the stores department, but in big organisations this is done by the receiving department.
b. The proper classification and Configurations of materials in the store should be made.
c. All possible preventive steps should be taken by the storekeeper to check material losses in the store.
d. No unauthorised persons should be allowed to enter into the store in order to check theft, pilferage of material.
e.Minimum level, maximum level and reordering level etc should be set in respect of each material in the store to check over stocking and under stocking.
f. Perpetual inventory system should be followed to check the quantity of material in the store.
g. The storekeeper should be advised to prepare periodical reports regarding obsolete, spoiled and scraped materials in the store and send the support to the management. The management can take steps to dispose of such materials before they are completely wasted.
h. Adequate store records should be maintained and they should always be kept up to date.
i.Information about availability of materials should be regularly given to the management. On the basis of such information the management will make purchase and production planning.
3.Factors relating to issue:
a.All materials should be issued against properly authorised material requisitions.
b. A good method of material issue should be followed to charge the cost of the material to the job, order or process to which such materials are issued.
c. Over issue and under issue of materials should be avoided.
d. Surplus materials returned to the store should be properly accounted for.
e. Transfer of material from one job to another should also be accounted for.
f. Standard forms for requisitions orders, issue, transfer of material from the job to the store should be used.
4.Factor to be considered at the time of use:
a.The production workers should be properly trained to handle the materials carefully during production.
b.Strict supervision should be followed to avoid excessive wastage of materials by workers.
c.Standard quantity of material to be lost in production process should be prescribed.