Types of Raw Materials in Industry

In an industry, both home industries and large-scale industries certainly have raw materials that are processed into a product. Raw materials are materials used in making products, these materials are thoroughly seen in finished products (or constitute the largest part of the form of goods). While the cost of raw materials is all costs to obtain up to the material ready for use which includes the price of materials, transportation costs, storage and others.

Understanding the raw materials is important for business owners. Especially for businesses engaged in manufacturing. The choice of raw materials greatly influences how the final product can even affect how a company performs.

Types of Raw Materials

The types of raw materials according to Gunawan Adisaputro and Marwan Asri are as follows:

1. Direct Raw Materials

Direct raw materials are all raw materials that are part of the finished goods produced. Costs incurred to purchase raw materials directly have a close relationship and are proportional to the number of finished goods produced.

2. Indirect Raw Materials

Indirect raw materials or also called indirect materials are raw materials that play a role in the production process but are not directly visible in the finished goods produced.

As an example of this type of raw material is if the finished goods produced are tables and chairs, then the raw material directly from the manufacture of tables and chairs is wood, while those included in indirect materials are nails and plamir which function as wood adhesives and paint base for the chairs produced.

Factors Affecting Raw Materials

1. Estimated Usage

Estimated amount of raw materials that the company will use for the production process in the next period.

2. Price of Raw Materials

The basis for preparing business calculations must be provided for investment in these raw materials.

3. Inventory Costs

Costs needed by the company to buy raw materials.

4. Spending Policy

An important factor in the amount of raw materials funded by the company.

5. Real Use

The use of raw materials is actually from the past and that is a factor that requires attention.

6. Waiting Time

This is the right grace period, the company can also buy raw materials at the right time to minimize the risk of accumulation or lack of inventory.

Types of Industry Based on Raw Materials

After you know what are the types of raw materials, now will be explained about the types of industries that can be classified based on the raw materials used. Each industry requires different raw materials, depending on what will be produced from the industrial process. Based on the raw materials used, industries can be divided into:

1. Extractive Industries

The raw materials are obtained directly from nature. For example the agricultural products industry, fisheries, forestry, animal husbandry, and mining. All industries engaged in fields with main raw materials from natural products are classified as industries with extractive raw materials.

2. Non-Extractive Industries

Industries that further process the results of other industries. For example the plywood, spinning and fabric industries. This type of industry facilitates you to meet daily needs such as furniture needs , clothing needs to vehicles.

3. Facilitative Industry

Industrial activities that sell services for the needs of others. For example banking, trade, transportation, expeditions and insurance. If you have a bank account or have sent goods using expedition services or purchased insurance policies, these three industries are industries with service raw materials.

Also read:  Differences in Raw Materials and Auxiliary Materials, and How to Manage Them with a Journal

Those are some things that need to be understood about the types of raw materials in an industry. Raw materials are the main thing that supports the production process. In addition, the cost of raw materials is also very influential in financial statements in an industry. In an industry, the selected raw material affects how much profit is obtained and even affects how consumers see a company from its products. So understanding raw materials is quite important for business owners.

To make it easier to calculate costs, you can use Journal. With the work in progress feature of the Journal, you can easily calculate the cost of production. In the Journal, you can also record and monitor the production of goods easily, so as to avoid the difference in goods.


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