Material Requisition – Meaning, Procedure and Problems. Meaning of Material Requisition, Everything you want to know about Material Requisition. Material requisition may seem like a petty matter, but in fact it plays a vital role in manufacturing process. Material Requisition is important role in production scheduling. This article will explain all about material requisition.
Material Requisition – Meaning, Procedure and Problems
What is Material Requisition?
Material requisition refers to the document which authorizes the material to be drawn from storage or warehouse for further manufacturing.
Who requests for material?
Generally Production manager will fill out the Material Requisition Form and will submit the same to the Storage department , which will in turn issue required material to the production.
Why material requisition is filled in?
- For tracing and opting for appropriate material from existing inventory.
- For reducing the inventory for the items picked out.
- For charging the cost of material so requisitioned to the work in process or job in process.
- For ordering the material which have crossed reorder level.
Procedure for material requisition
Enquiry for material
The production manager will devise the production schedule which will state the material required (in quantity) for a particular predetermined output (in quantity).Production manager will fill in the Material Requisition Form and submit the same to the Warehouse.
After receiving the material requisition form , the purchase manager will look into existing inventory.He will send a copy of material-requisition to Accounts Department for accounting and simultaneously will send a copy to Stores / warehouse department.In case , the inventory has come down to reorder level point, he will send purchase order to supplier.
The stores department will check on existing inventory and will issue the requisite material with delivery note . The production department will issue Goods received note to stores department / warehouse.
Problems encountered and its solutions in material requisition process
Where the material are purchased at high prices
The purchase manager may have insider relation with the supplier.This will be done for illegal consideration from such supplier who will quote higher prices.The purchase manager will receive commission for approving and purchasing the material.
This can be resolved by resorting to standard costing method , which will present the variances which will be easier to analyse and identify the weaknesses.
The purchase manager can try and put up fictitious purchases.This can be resolved by putting up physical controls at each stage of purchase.
Less quantity received on purchasing
The clerk may record less number of material in absence of any appropriate check at this stage. Such embezzled material could be sold individually or can be used for personal purposes.This situation can be resolved by setting physical checking at the inwards gate.
The normal loss recording could be a matter of concern. It is generally predetermined.Regular physical stock taking could prevent any unwarranted losses which cant be termed as normal losses.
Losses at the stage after material is issued to production
This can’t be measured as the material is in transit and any abnormal losses due to theft or misplacement cant be detected and reported.This could result in short receipt of material at production stage.This could be easily resolved by maintaining standard usage allowance and will give out variances which will be easier to detected.
Materials-requisition is the important stage in supply chain.This could result in unnecessary wastage or losses or cost consumption, which will inflate the WIP costs which will in turn increase the final cost of production.
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