What is Raw material

Every other product we use has been produced using some or the other raw material. It is the most important component of inventory for any manufacturing unit and hence, management of raw material inventory also becomes important. For example, natural latex derived from trees is used to make many finished products such as mattresses, gloves, balloons, rubber bands, tennis shoes, and mane.

" In short, an unprocessed raw or minimally processed material (obtained as mineral ores, natural oil, agricultural product) that undergoes a transformation for creating a finished product in huge quantities is called a raw material. "

Types of raw materials

Although all raw materials are obtained naturally, they can be divided into 3 types from which it is obtained.

Plant/tree-based – materials like vegetables, fruits, flowers, wood, resin, latex are obtained from plants and trees.
Mining-based– materials like minerals, metals, crude oil, coal, etc. are obtained by mining the earth.
Animal-based– materials like leather, meat, bones, milk, wool, silk are all obtained from animals.

Apart from this, a manufacturing unit divides the feed-stock into 2 main categories.

Direct raw materials, The primary component from which a finished product is made is called direct raw material. For example, wood is a direct raw material from which furniture such as chairs, tables, beds, etc. are made. Another example is shoes used to make purses, shoes, bags, etc.

Indirect raw materials, on the other hand, indirect raw materials are materials that complement the finished products from direct materials. For example, glue, nails, varnishes, etc. used in making wooden furniture such as chairs, tables, beds, etc. All are indirect raw materials. Similarly, the buckle, metal hoof, zip, glue, fabric, paint used in making leather purses, shoes and bags are all indirect raw materials.

Importance of raw materials

From the definition and meaning discussed above, it is clear that raw materials are required for the manufacture of any finished product, which is then processed and made into finished goods.

This is where inventory management comes into the picture. It is important to maintain the Raw materials inventory in the proper quantity and in the right place as to avoid any issue from the products we sell.

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