## Material Cost Control
Materials typically form the largest single component of total production cost. Proper recording and control is therefore the first line of defence against cost overruns.
### Why Control Matters (Six Dimensions)
| Dimension | Impact of Poor Control |
|---|---|
| Quality of finished product | Inferior raw materials → inferior output; over-spec materials → unnecessary cost |
| Price competitiveness | High material cost raises product price → loss of market share |
| Production continuity | Stock-out of even a cheap item (e.g., lubricating oil) can halt a machine |
| Stock-holding cost | Overstocking → interest, warehousing, deterioration, obsolescence |
| Wastage & losses | Pilferage, breakage, evaporation inflate cost invisibly |
| Management information | Accurate records enable informed procurement and inventory decisions |
### Requirements of Material Control (10-point checklist)
1. Co-ordination of all departments: Finance, Purchasing, Receiving, Inspection, Stores, Accounting, Payment.
2. Standard purchasing procedure — competitive enquiries, favourable terms.
3. Standard forms for orders, receipts, and issues.
4. Material budgets for economy in purchasing and use.
5. Internal check system — all transactions approved and auto-checked.
6. Well-designated, safeguarded storage locations.
7. Perpetual inventory + continuous stock-checking.
8. Stores control/issue system — right material, right amount, right time.
9. Controlling accounts and subsidiary records showing receipt and consumption costs.
10. Regular reports: purchases, issues, balances, obsolete stock, returns, spoilage.
### Three Elements of Material Control
```
Material Control
├── Procurement Control
├── Storage Control
└── Usage Control
```
Each element covers specific operations: purchasing → receiving → inspection → storage → issuing → record-keeping → stock audit.