Materials control is achieved through an effective organisation structure which defines authority and fixes responsibility and provides a system of checks and balances. The size of a company, number of purchased items in a finished product, physical size, weight and unit value of items and time required to manufacture a product are factors that will influence the organizational and personnel requirements in a materials control system.
According to functional organisation, purchase of raw materials and other items may be under the supervision and control of a purchase manager and finished goods under the control of a sales manager. The production manager/executive may supervise all types of inventories.
Since all the decisions and activities of the different departments in the materials control system are inter-related, there is need to co-ordinate the different materials control activities.
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This is the reason that in some manufacturing firm’s materials control is centralized in one department called the materials control department manned by a responsible person. Although the materials control system is influenced by many factors differing among firms, the followings are the general requirements of every system of materials control:
1. Centralised purchasing under the direction and authority of a competent purchasing executive.
2. Co-ordination between sales and production budgets, requisitions, purchasing, receiving, testing, storage handling and disbursing.
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3. Communication between sales, production and purchasing departments regarding all changes which may influence materials requirements.
4. Use of standard printed forms reporting all steps in the acquisition and use of materials.
5. Proper storage of all materials and supplies.
6. Establishing and operating a system of internal checks so that all transactions involving materials, supplies and equipment purchases are checked and approved by a number of properly authorised persons.
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7. Operation of a system of stores control and issue so that there will be delivery of materials upon requisition to departments in the right amount at the time they are needed.
8. Perpetual inventory system which lists at all times the quantity and value of each kind of material in inventory.
9. Control accounts and subsidiary ledgers which detail and summarize purchases, issues, returns, spoilage and amount of materials used by a department or in the production of an order.
10. Regular reports of materials purchased issued from stocks, goods returned to vendors, and spoiled or defective units, obsolete stocks and inventory balances.