Get to Know More about Raw Materials

Raw materials are usually a term that we often hear when dealing with industry. Raw materials themselves are generally also called unprocessed materials.

For those of you who don’t know, one of the company that supply raw materials is Korindo Trading. It is one of the biggest companies that supplied most of the raw material in the business. raw materials themselves are materials that are still raw or have not undergone further processing. Examples of raw materials include wood, china, vegetables, or even mining materials, such as petroleum, coal, and many more.

Learn More About Raw Materials

When we talk about industry, raw materials are something that will later be used to produce a product. Of course, it also needs to be understood that the use of the most dominant material will later become the dominant one in the final product.

So, now we can conclude together, that the term raw materials itself will refer to the use of the main ingredients that are used to make a product. The reason is, because a product has been made, of course, it requires more than one ingredient in the manufacturing process.

Regardless of how big an industry is, of course, every industry will need raw materials which will later be processed into a product. In simpler terms, raw materials are materials that can later be used to help produce a particular product.

Types of Raw Materials

If perhaps you are someone who operates in an industry that focuses on manufacturing, of course having an understanding of various types of raw materials is a necessity. It is no longer a secret that the manufacturing industry itself will involve various types of raw materials in the production process.

So, for those of you who don’t understand the types of raw materials, you need to know that raw materials themselves are divided into two types. Namely direct raw materials and indirect raw materials. Below is a brief explanation that we can explain to you.

1. Direct Raw Materials

Among the various types of raw materials used to produce a product, of course, there will be a basic material that will play a very important role. Of course, without these main basic ingredients, a product cannot be created.

Well, these main raw materials are also called direct raw materials. One easy example that you might be able to understand well regarding direct raw materials is wood. In furniture making, wood is the main raw material needed to make a furniture product. Likewise, wheat is needed for wheat flour production.

Usually, the costs that a business will need to incur to purchase raw materials directly will be directly proportional to the number of final products that will be produced.

Just as explained earlier, Korindo Trading itself is a company that produces raw materials for industrial purposes. Korindo is a company that operates in various business lines and one of them is the procurement of raw materials such as hardwood, plywood, and veneer.

2. Indirect Raw Materials

Meanwhile, indirect raw materials are materials that will play a role in the process of making a product but will not appear directly in the final product.

If we refer to examples of furniture production, wood is something that is also included in the direct material category, while nails and paint are examples of indirect raw materials.

For both direct and indirect materials, of course, their presence will be equally needed in a production, because it will be something that keeps production running smoothly. For this reason, you have to know the various types of raw materials, so that you can make plans for procuring both materials accurately.

Factors Affecting the Availability of Raw Materials

Of course, to keep the production process running smoothly, of course, you as a business person must ensure that the materials you need for your industrial needs are still available. However, of course, you as a business person cannot guarantee this because various factors can influence the amount of raw material availability.

1. Raw Material Purchase Patterns

The value of the raw material inventory itself in a production-related activity will usually be greatly influenced by the pattern of purchasing. These purchasing patterns will be very different from each other and will make the total value of optimal purchases very different.

For example, material A and material B have the same selling price and also different agreement models. As a simple example, material A will be purchased on credit and with a maturity of 90 days and the company can then start ordering again before the maturity date.

On the other hand, material B can be purchased with new and different conditions, so it can be ordered again when the invoice from the previous purchase has been completed. Purchasing patterns like this will certainly influence the availability of each ingredient.

2. Raw Material Prices

Procurement of materials is also closely related to costs or investments that a company may need to spend. The nominal cost or investment will of course be very closely related to the price of each material.

Therefore, the procurement department in a company must monitor material prices in detail. The reason is, of course, because the purchase price will later become the basis for calculating the amount of funds that need to be invested by a company.

3. Material Usage Projections

In every process such as product manufacturing, this production section will of course have documentation regarding the amount of materials that will be used. This data will have a significant influence in helping to determine estimates of the use of materials that will be used in the future.

This usage projection is very important to know so that later the company can secure resources, as well as anticipate material shortages.

Source of Raw Materials

Sources of raw materials also vary, of course depending on their use. Sources of raw materials themselves can come from wood, plants to animals. For a company, you can rely raw materials from Korindo Trading. The company itself is a supplier of raw materials in the form of wood, which can later be used for various kinds of production, such as furniture, paper tissue and many others.