Definition of Raw Materials and Their Types

Definition of Raw Materials and Their Types – In the industrial world, the name of raw materials cannot be separated. Raw materials cannot be separated from the industrial world because every product that comes from the industry must be produced from the best raw materials. Raw materials are not only used in large industries, but can also be used in the home industry. However, usually raw materials are often associated with large companies.

Raw materials in the industrial world are the most important factor in the sustainability of an industry. An industry that does not have raw materials cannot produce a product. Therefore, to maintain the smooth production process, the supply of raw materials must be monitored properly.

Matobers, want to know more about raw materials? In order to find out more clearly about what raw materials are and the types of raw materials, then you can read this article to the end. So, happy reading.

Definition of Raw Materials

In knowing something, it is necessary to know its meaning first. Therefore, below will explain some of the notions of raw materials.

1. According to KBBI

In the Big Indonesian Dictionary (KBBI) raw materials are materials to be processed through the production process into finished goods or basic necessities to make something.

2. According to Sofjan Assauri

Raw materials are all production materials which include all materials used in a company, except for various kinds of materials that will physically be combined with the products produced by a company.

3. According to Hanggana

Raw material is a material that functions to produce finished goods, these materials will be intertwined or production materials become one with finished goods. Apart from that, Hanggana also said that in a company, raw materials and supporting materials cannot be separated because these two materials greatly affect the production process to production results.

Based on the definition of raw materials above, it can be said that raw materials are the main materials that exist in a company and are needed in producing or creating a product.

Entrepreneurs who have large companies should know the expenses for raw materials. This is because the expenditure of raw material costs will determine the progress of a company. Thus, spending on raw material costs becomes crucial for company owners.

Raw materials that can be processed into finished goods will benefit every individual, especially in carrying out daily activities. Therefore, companies must maintain the stability of raw materials so that finished materials can still carry out production, so that the needs of each individual can be met.

Types of Raw Materials

Raw materials in an industry are divided into two types, namely direct raw materials and indirect raw materials.

1. Direct Materials ( Direct Materials )

Direct raw materials are the main ingredients in the production process that are needed by a company and can be seen directly. With direct raw materials, the production process will run smoothly, so finished goods will be easy to produce.

In purchasing raw materials directly as soon as possible to do. Therefore, the costs incurred to obtain direct raw materials must be issued immediately so that the production process can be carried out immediately.

Thus, direct raw materials can be regarded as a very important main ingredient. So, there are no raw materials, so no finished goods are produced. If finished goods are not produced, a company will suffer losses.

2. Indirect Materials ( Indirect Materials )

Indirect raw materials are materials that can help the production process, but are not directly visible in the finished goods produced from a production. If direct materials must be available in order to carry out the production process, then indirect raw materials do not have to exist and a production continues. In other words, the presence or absence of indirect raw materials, the production process will continue.

When buying indirect raw materials, you should first find out whether the raw materials are really needed by the company or not. If the company buys indirect raw materials in excess it can cause losses to a company.

In short, every indirect raw material is a companion material to the main raw material. Even though it is a complementary material, indirect raw materials still have a role in the production process.


Factors Affecting Raw Material Supplies

An entrepreneur or a company should know the factors that can affect the supply of raw materials. By knowing these factors, entrepreneurs or companies can calculate the raw materials used to load finished goods.

The right calculation will result in a stable financial condition of the company. If the company’s finances are stable, then an industry or company is developing in a better and more advanced direction.

Below will be explained several factors that greatly affect the supply of raw materials.

1. Forms and Functions of Purchasing Raw Materials

In business or business activities it is important to pay attention to the form and function of the raw materials to be used. By knowing the function and form of raw materials, the production process will run optimally. Production processes that run optimally can mean that all raw materials can be used or no raw materials are wasted.

If the company buys the wrong raw materials, it will cause losses to the company. In addition, raw materials that have been purchased cannot be used because they are not related to the production of finished goods. So, when running a business or business, never forget to pay attention to the form and function of raw materials.

2. Raw Material Prices

It should be that the price of raw materials to carry out a production must be considered. This is important because it greatly affects industry or company finances. By calculating the price of raw materials, the industry or company can estimate the selling price of finished goods, expenditure costs, and others accurately.

In other words, the raw material price factor becomes a basis for the industry or company in preparing raw material supplies. In addition, financial conditions that can be maintained properly will make the company or industry grow and develop well.

3. Estimated Use of Raw Materials

The estimation of the use of raw materials is a factor in the supply of raw materials that needs attention. The estimation of the use of raw materials serves to find out how long these raw materials can be used to produce finished goods.

This factor can be regarded as an important factor that can affect the supply of raw materials. By knowing the estimated use of raw materials, companies or industries will know the amount of raw materials needed when carrying out the production process.

4. Raw Material Purchase Costs

When buying raw materials, cost measurement must be considered because it will affect raw material inventory. In addition, the cost of raw material inventory also affects the company’s finances.

The cost of purchasing raw materials must be separated from other costs so that companies or industries have no difficulty in calculating raw material costs. Therefore, the cost factor of raw material inventory must be considered by entrepreneurs so that the company or industry continues to run.


5. Waiting Time for Ordering Raw Materials 

If an entrepreneur or company places an order for raw materials for the production process, then the length of time for the order must be considered. By calculating the length of time it takes to order raw materials, entrepreneurs or companies can estimate whether the supply of raw materials for production is sufficient or not.

Waiting time for ordering raw materials, should not be ignored and always pay attention so that raw materials do not experience shortages. Raw materials that do not experience shortages can cause the production process to not run, so the company does not get income.

6. Use of Raw Materials

The use of raw materials must be considered because it is closely related to the production process of finished goods. The use of raw material costs determines the costs that must be incurred to produce finished goods. Therefore, in order for the production process to run well, companies or industries must pay attention to the optimal use of raw materials.

7. Raw Material Purchasing Policy

In buying raw materials, companies or industries must pay attention to applicable policies, whether they are company policies or government policies. If the company ignores the policy, it can be said that the company has violated the applicable rules. In addition, the material policy for purchasing raw materials will affect the supply of raw materials.

8. Buy Back

In maintaining the supply of raw materials can be done by way of repurchasing. Repurchases need to be carried out by industries or companies so that material supplies are safely controlled. Therefore, repurchases are included in the factors that affect the supply of raw materials.

By repurchasing raw materials, the company can calculate how long the waiting time is. Waiting time for raw materials that has been calculated, so you can adjust the right time to use raw materials. In other words, raw materials that arrive on time do not need to be stored, thereby reducing a company’s expenses.

9. Securing Inventory of Raw Materials

The supply of raw materials must continue to exist so that the production process continues, so that the industry or company does not die. Therefore, securing the supply of raw materials must be guaranteed, both materials used directly or raw materials stored in advance.

If an industry or company is able to secure supplies of raw materials, it is highly likely that the production process will run smoothly. A production process that runs smoothly will result in production or finished goods according to the target market, so that there will be a lot of profit going to the company or industry.

Even though the use of raw materials has been calculated, it would be nice to keep securing raw material supplies.


10. Cost of Storage of Raw Materials

The storage cost factor must be considered because not all raw materials purchased directly will be used immediately. In fact, sometimes there are raw materials that need to be stored first, after being stored for a few days they can be processed.

Raw material storage costs that need to be calculated, such as electricity usage, room payments (if rented), and others. If the cost of storing raw materials is not calculated, then the industry or company will be surprised because there are unknown exit costs, so that the company’s or industry’s finances are in a mess.

Therefore, companies or entrepreneurs really need to calculate the costs needed to store raw materials.

Types of Industry Based on Raw Materials

Based on the raw materials available, the industry is divided into several types. Below will be explained several types of industries

1. Agro-Based Industry

Agro-based industries are industries whose main raw materials use vegetable products and animal products. In English, agro-based industries are also known as Agro Based Industries . For example, cotton textiles, milk, vegetable oil and others.

Agro-based industries convert vegetable raw materials and animal raw materials into finished goods. Finished goods produced from agro-based industrial production processes will be beneficial to people’s lives.

Thus, agro-based industries are very dependent on the survival of living things. If the living things needed to become raw materials for agro-based industries are no longer available, it is likely that the agro-based industries will suffer losses.

2. Mineral Based Industry

Mineral-based industries are industries whose main raw materials come from mining excavated products. Mineral-based industries usually provide raw materials needed for other industries. This industry can be referred to in English as ( Mineral Based Industries ).

This industry is very dependent on mining products. If mining results are small, then the finished goods produced will also be small. In fact, if mining products run out, then the main raw material for making finished goods cannot be done.

Raw materials originating from mineral-based industries will usually be used to make building materials or heavy equipment. This industry will be more profitable when so many other companies want to work together.

In the mineral-based industry, the more other companies that invite to work together, the greater the profit that the company will get.

3. Marine Based Industry

Marine-based industry is an industry where the main material for producing finished goods comes from the sea. Fish and marine life are very easy to find and very numerous. Marine life and marine fish are not always easy to find because in some seasons fish and marine life will be difficult to find.

Marine-based industries can also be referred to by the name ( Marine Based Industries ). To get raw materials from the industry, it is highly recommended to look at the season and weather. By looking at these two things, more fish and marine biota can be obtained, so that the production process runs smoothly.

Production processes that run smoothly can increase company profits. Finished goods that are usually produced by marine-based industries, such as fish oil, canned fish, and others.

4. Forest Based Industry

Forest-based industries are industries whose main ingredients come from the forest environment. Therefore, don’t overuse the main ingredients because if they run out, you have to wait a long time to get the main ingredients. In fact, some trees are no longer growing, because they were taken too much.

Forest-based industries are also known as ( Forest Based Industries ). Finished goods in this industry may increase in price. The increase in the price of finished goods occurs because the stock of the main material has run out, but consumer demand is getting higher.

Examples of finished goods from forest-based industries, such as furniture, paper, industry, and so on.

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An industry or company in carrying out a production really needs something called raw materials. Without raw materials in an industry or company, it is certain that there will be no such thing as a production process.

Therefore. This raw material really needs attention for the industry or company, especially its supply. In short, the industry or company should not experience a shortage of raw materials, because it can disrupt the smooth production.