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Friday, May 09, 2014

Material Control: Objectives and Essentials

INVENTORY OR STORE OR MATERIAL CONTROL
Store control aims at achieving savings in material cost, improvement in material handling, increased production and avoidance of over investment or under investment in inventories. The important objectives of material control are:
Objectives of store control: The following are the important objectives of store control
a. to make available the right type of raw material at the right time in order to have smooth and continuous flow of production;
b. to ensure effective utilization of material;
c. to prevent over stocking of materials and consequent locking up of working capital;
d. to procure appropriate quality of raw materials at reasonable price;
e. to prevent losses during storage of materials;
f. to supply information to the management regarding the cost of materials and the availability of stock;

Essential of store control: The following at the essentials of good system of material control.
a. There should be proper co-operation and co-ordination among the departments dealing with materials.
b. All purchases must be centralized and must be made through an expert purchase manager.
c. All items in the stores should be classified with codes.
d. Receiving and inspection procedure should be chalked out.
e. Ideal storage and preservation facilities will have to be provide.
f. Stores control measures like ABC analysis, perpetual inventory system, stock verification should be introduced.
g. There should be an efficient system of internal audit and internal check.
h. Maximum level, minimum level and re-order level of stock should be fixed to avoid over-stocking or shortage of materials.
i. Appropriate records should be maintained to control issues and utilization of stores in production.
j. There should be a system of regular reporting to management regarding materials purchases, storage and utilization.
Advantages of store control: The following are the main advantages of store control:
a. It helps to eliminate or minimize waste through control of purchases, storage and issue of materials.
b. It facilitates detection and elimination of fraud and pilferage by implementing stock control measures.
c. It facilitates maintenance of stocks at appropriate levels so that production is not stopped for want of materials. Thus, it prevents production delays.
d. It ensures up-to-date maintenance of stock records.
e. It avoids over investment in inventories.
f. It facilitates preparation of accurate monthly financial statements required for various management information reports.

g. It furnishes quickly and accurately the value of materials and supplies used in various departments.