Raw Materials
Manufacturing begins with raw materials. The final quality of the products
you produce can be no better than the quality of the raw materials you start
with. Likewise, the quality of any services you purchase that touches the
production of your product affects its quality as well.
Based on these premises, common sense dictates there are strong measures in
place for sourcing, purchasing, verifying, and tracking the quality of raw
materials and services. A major factor affecting availability, delivery, and
price is the
geographic origin of the raw materials. The choice of where to source the raw
materials is a business management decision and there are no set rules for
choosing between domestic or offshore sourcing. In addition to the quality
requirements, purchasing specification should contain the detailed information on
availability, delivery, and auditing. Clearly, auditing a service provider is more
of a challenge than a raw material supplier.
What Are Raw Materials?
Raw materials are materials or substances used in the primary production or
manufacturing of goods. Raw materials are commodities that are bought and sold on
commodities exchanges worldwide. Traders buy and sell raw materials in the factor
market because raw materials are factors of production, as are labor and capital.
Key takeaways
- Raw materials are the input goods or inventory that a company needs to manufacture its products.
- Examples of raw materials include steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.
- Raw materials can be direct raw materials, which are directly used in the manufacturing process, such as wood for a chair.
- Indirect raw materials are not part of the final product but are instead used comprehensively in the production process.
- The value of direct raw materials inventory appears as a current asset on the balance sheet.
Understanding Raw Materials
Raw materials are used in a multitude of products and can take many different
forms. Raw materials are the input goods or inventory that a company needs to
manufacture its products. For example, the steel used to manufacture vehicles
would be a raw material for an automobile manufacturer.
For manufacturing companies, raw materials inventory requires detailed budgeting and a special framework for accounting on the balance sheet and income statement.
Examples of raw materials include steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.
For manufacturing companies, raw materials inventory requires detailed budgeting and a special framework for accounting on the balance sheet and income statement.
Examples of raw materials include steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.
Accounting for Raw Materials
Manufacturing companies take special steps to account for raw materials inventory.
This includes three distinct inventory classifications on their balance sheet
compared to just one for non-manufacturers. The current assets portion of the
balance sheet represent the assets that are likely to be used up in less than one
year and include:
- Raw materials inventory
- Work-in-process
- Finished goods
All inventory, including raw materials inventory, should be valued at its
comprehensive cost. This means its value includes shipping, storage, and
preparation. The typical journal entries in an accrual accounting system for
the initial purchases of raw materials inventory include a credit to cash
and a debit to inventory. Debiting inventory increases current assets, and
crediting cash will reduce cash assets by the inventory amount.
When a company uses raw materials inventory in production, it transfers them from the raw materials inventory to the work-in-process inventory. When a company completes its work-in-process items, it adds the finished items to the finished goods inventory, making them ready for sale.
When a company uses raw materials inventory in production, it transfers them from the raw materials inventory to the work-in-process inventory. When a company completes its work-in-process items, it adds the finished items to the finished goods inventory, making them ready for sale.
Think for a moment about all the different kinds of materials which are in use
today, and their many differetns forms. We have an enormous range at our disposal
and new materials are being developed all the time.
Anyone involve in designing and making needs to know what materials are available, how they behave, how to obtain them and how to use them. This knowledge provides useful resources. Let's start from the beginning....
Raw materials are substances that are extracted directly from natural objects. They can be classified into three categories:
Anyone involve in designing and making needs to know what materials are available, how they behave, how to obtain them and how to use them. This knowledge provides useful resources. Let's start from the beginning....
Raw materials are substances that are extracted directly from natural objects. They can be classified into three categories:
animal: wool,silk, hides
vegetal: cotton, wood, cork, linen
mineral: copper, marble, clay, iron
Technical materials
are common materials used to make manufactured goods. Glass, steel and
metals, plastic, porcelain and ceramics, planks or concrete are examples
of materials.
Manufactures Goods
are any objects create by humans to satisfy their needs and improve their
standard of living. We get raw materials from nature, we process them to
make materials and finally we make goods with these materials.
Wood
Furniture as bookshelves, chairs and tables, papers, floors, construction
materials, wall pannelling, tool handles, decorative objects
Plastics
Tubing, packaging, toys, covering of wires, PVC, nylon, rubber
Stone
Construction materials, decorative objects, marble sculpture
Metals
Structural components, electrical components, machine parts, tools,
fixtures and fasteners
Ceramics
Bricks, roofing tiles and other construction materials, plates and bowls,
decorative objects, sinks, glass
Textiles
Threads, leather, clothing
Reputable products. Tecnnical expertiase. Responssive service.
Understanding your business, and earning it.
In the specialty chemicals business, your distributor should fulfill more
than your product order.
As our customer, you can:
As our customer, you can:
Make confident product choices
Our technical expertise goes beyond an in-depth knowledge of raw
materials to include your products and manufacturing processes. Utilize
the research and development tools available through our laboratory and
rely on us to help you select the best product for your specific
application.
Expect personal attention
Our staff of highly-trained professionals ensures you’ll consistently
receive the support you need, when you need it.
Benefit from continuous improvement
In an ever-changing industrial landscape, Basikore prides itself on
maintaining a strong network to stay ahead of trends and opportunities
within its markets. In addition, we are committed to achieving health,
safety and security through continuous improvement in chemical storage,
handling, transportation and disposal.
Industries we serve
Basikore was founded as a distributor initially serving the coatings and ink
industries. Since our inception, we have expanded our distribution to include the
various markets listed below. While our product line continues to grow and now
represents more than 30 high-quality industrial and specialty chemicals suppliers,
our commitment to delivering first-class service remains unchanged.
Oilfield
Paint & Coatings
Construction & Building Materials
Grease & Lubricants
Adhesives
Inks
Plastics
Cleaning Products
Driving innovation across the entire raw materials value chain
Basikore Innovation Themes
The transition to a circular economy is essential in the efforts to reduce
dependency on raw materials supply and create sustainable growth. Basikore unlocks
the potential of industrial symbiosis by applying a systemic perspective and
revitalising human capital in the raw materials sector through designing solutions
and closing material loops.
The shift towards renewable energies, e-mobility, and Industry 4.0 are examples of extensive innovation processes that trigger the need for new kinds of advanced materials. Within this context, Basikore funds new projects and businesses working on the substitution of critical, toxic and low performing materials reducing environmental impact and supply dependencies.
Recycling will have to evolve from a side stream to a major pillar of raw materials supply if we want to protect our planet and make business sustainable. End-of-life products must be considered as a resource for another cycle. In addition, the interactions between materials must be considered to define the best circular solution from a systemic standpoint.
The shift towards renewable energies, e-mobility, and Industry 4.0 are examples of extensive innovation processes that trigger the need for new kinds of advanced materials. Within this context, Basikore funds new projects and businesses working on the substitution of critical, toxic and low performing materials reducing environmental impact and supply dependencies.
Recycling will have to evolve from a side stream to a major pillar of raw materials supply if we want to protect our planet and make business sustainable. End-of-life products must be considered as a resource for another cycle. In addition, the interactions between materials must be considered to define the best circular solution from a systemic standpoint.
A complete raw materials value chain for minerals and metals makes China
attractive for a renewed exploration, mining and processing sector. Industry
know-how and new technology for mineral exploration will help unlock the
existing potential and building on existing strengths in industry, research and
infrastructure. Innovative technologies are required to further enhance mining
and processing capabilities while reducing their environmental footprint.
Basikore activities support new solutions and promote the benefits of a strong minerals and materials sector in modern society and the transition towards the green and circular economy.
Our Supply Chain department ensures the procurement of materials and the production plan, considering capacity and resources available in order to fulfil the demand, to guarantee the proper flow of materials from procurement to sale.
Basikore activities support new solutions and promote the benefits of a strong minerals and materials sector in modern society and the transition towards the green and circular economy.
Our Supply Chain department ensures the procurement of materials and the production plan, considering capacity and resources available in order to fulfil the demand, to guarantee the proper flow of materials from procurement to sale.