Material control, Managerial Accounting

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MATERIAL CONTROL

It is said that "any fool can sell"—it is buying at the right price that is more critical to the achievement of a satisfactory return on capital employed.  Buying price is important of course, but buying the right materials, is equally important if production targets are to be achieved and investment in inventories to be minimized.

What to order:

This is governed by product specifications, but an efficient buyer will always have his ear to the ground to discover new and substitute materials and components of advantageous quality and price. Other economies can be realized by reducing the variety of materials purchased by standardization, e.g. reducing the variety of colors of paint stocked, or by introducing value analysis into the decision process.


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