How to control material costs?

Materials Cost is the price paid and the cost incurred by an organization in procuring materials for production. If material cost is effectively controlled we must have a proper system of material control and the following are the fundamental requirement of such a control :-

(a) Definite responsibility in respect of every function of material control should be specified and allocated.
(b) Proper co-ordination between the various sections/departments responsible for different function should be achieved.
(c) Purchasing function should be centralised as far as possible and entrusted to a competent person conversant with purchasing function.
(d) Controlled procedure should be standardised ad uniform forms and documents should be used all over the organisation.
(e) To facilitate the control procedures materials requirements budget and materials purchased budget should be prepared.
(f) Adequate provision for proper storage facilities and suitable arrangements for storing materials should be made.
(g) A proper system of stock control should be introduced and maintained.
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