Effective raw material management is essential for business operations, as it directly impacts production efficiency, cost control, and customer satisfaction.
You may also struggle to manage your inventory effectively. This can lead to overordering goods and materials, forcing you to sell excess stock at discounted prices. On the other hand, having low stock levels may prevent you from fulfilling customer orders.
That is why using Labamu’s Raw Material Management feature can be a smart solution for managing the materials your business needs. Here is a complete explanation.
What are raw materials?
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Raw materials can be defined as unprocessed materials used to create a product. For example, the raw materials used to manufacture children’s toys may include plastic, wood, paint, and glue. In other words, raw materials are input goods or inventory that manufacturers use to produce products.
In terms of production, there are two main types of raw material inventory, as follows:
1. Direct Materials
This refers to materials that are used directly in the production of a product or are part of the bill of materials for the finished goods. For example, direct raw materials for making a chicken rice bowl include rice, chicken, seasonings, vegetables, and packaging.
2. Indirect Materials
Meanwhile, indirect materials refer to supplementary items needed in the production process but do not become part of the finished product or are not included in the product’s bill of materials.
For example, indirect raw materials for a chicken rice bowl include the stove, frying pan, other cooking utensils, disposable gloves, and cleaning supplies.
Benefits of Raw Material Inventory Management
Raw material inventory management plays a crucial role in the success and profitability of a business, especially if your business relies on a steady supply of materials to produce goods or deliver services.
With effective raw material inventory management, you ensure that your business has the necessary materials on hand, minimizing the time spent waiting for restocks. It also helps you project how much material may be needed as your business grows.
Here are some key functions of effective raw material management.
1. Ensuring Uninterrupted Production
By maintaining an adequate stock of essential materials, your business can consistently meet customer demand and avoid disruptions in the production process. This allows you to fulfill orders quickly and maintain a competitive edge in the market.
2. Minimizing Stockouts and Backorders
Both can negatively affect customer satisfaction and the overall reputation of your business, as they lead to production stoppages. With effective raw material management, you can minimize stockouts by accurately forecasting demand and optimizing safety stock levels.
3. Reducing Risks and Uncertainty
Raw material shipments are vulnerable to various risks and uncertainties, including natural disasters, political instability, and other unforeseen events. Implementing raw material inventory management can help mitigate these risks.
4. Managing Costs and Cash Flow
Raw material inventory represents a significant portion of a business’s assets and capital investment. Therefore, with efficient inventory management, you can optimize costs and cash flow by minimizing storage expenses, reducing excess inventory, and optimizing order quantities.
Use Labamu’s Raw Material Management Feature!
If you feel it’s time to implement raw material inventory management, one of the best tools you can choose is the Labamu app, which comes with a Raw Material Management feature.
With this feature, you can manage your raw material inventory either manually or automatically, making inventory synchronization more practical. In addition, it also helps you create detailed lists of the raw materials required for each product.
By using the Raw Material Management feature according to categories, you can create a more organized storage structure. You can even record important recipes and consolidate raw material stock in one place,
Here are some advantages of the Raw Material Management feature in the Labamu app.
1. Management Efficiency Your raw material organization will become more structured, allowing each material to be used more efficiently and helping to prevent waste.
2. Time-Saving With the interconnected system within the feature, you can save time in managing and monitoring your inventory.
3. Consistency and Quality You can create detailed recipe notes, including units and measurements, within the feature. This ensures that you consistently produce high-quality products for your loyal customers.
How to Manage Raw Materials
Here’s how to manage raw materials using the Raw Material Management feature in the Labamu app.
- Go to the “Manage” menu, then select “Raw Material Management”.
- Click ‘+ Ingredient
- Enter the raw material details, such as name, photo, and price.
- Assign a category and unit for each raw material.
- Click “Save Raw Material.”
So, what are you waiting for? Start using Labamu’s Raw Material Management feature by downloading the app on Google Play or the App Store, and experience the ease of managing all your raw material inventory.
