My Ssec Capstone Project RAW MATERIALS CONTROL AND MANAGEMENT

RAW MATERIALS CONTROL AND MANAGEMENT

RAW MATERIALS CONTROL AND MANAGEMENT:
The need for management and control of raw materials arises in view of the fact that it is
highly important to ensure that the objectives of the organization as far as management of
materials is concerned are achieved. One of the major objectives of the management is to
produce cement at the least possibIe cost while earning the highest possible return on
investment. To achieve this laudable objective, there is the need for an effective, control
system, starting from the procurement of raw materials to the final stage of production.
The stores department of the company is charged with the responsibility of managing and
controlling the raw materials and the finished goods inventory to ensure efficient, effective
and adequate use in order to minimis wastage that lead to a reduction in the profit of the
organization. To this effect, the following internal control measures are adopted:
a. Provision of the control of stocks of materials by establishing maximum
and minimum quantity limits through and independent recording in stock
ledger control accounts as well as continuous recording.
b. Physical stock checks in order to determine the exact quantity of stock on
hand and subsequently, reconcile same with the stock accounts.
c. Continuous stock taking: This form of stock taking goes a long way in
placing greater moral checks on the staff of the store department with
regards to stealing or mis-appropriation of goods or products.
d. All stock issues to Factory and stores are supported by duly authorized
requisitions.
Also, in order to minimis waste, the management of the Nigerian Cement Company, Nkalagu
ensures that only the exact quantity of raw materials are supplied to the factory on a daily
basis. The method of issuing the raw materials to the production department, is on the basis
of last-in-first-out (LIFO). None of the raw materials is perishable hence there is no need
for special storage arrangement.
RAW MATERIAL PROCUREMENT AND DISTRIBUTION:
The board of directors of the company is the principle policy making body. The board is
headed by the appointed chairman.
The authority for purchasing and inventory control is in the purchasing divisions; which has
the store as one of its units. This function is delegated to the purchasing manager, and is
performed after receiving request from each of the departmental managers. The accounting
department ensures that payments for raw materials purchased are made and necessary
records kept. In the Nigerian Cement Company, there is a laid down procedure for stock
procurement and handling. This is depicted in the chart below:
Production department + stores -+ purchasing
J. -?= L. P. 0.
Accounting dept. +- Supplier
J.
Goods received

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