Manufacturing & production
Raw materials inventory control for Philippine manufacturers
Keep raw materials available without overstocking: planning from BOMs, lead times for imports, issuing to jobs, lot and expiry control, counts and slow-moving stock.
Raw materials sit between purchasing and production, and they are often the largest inventory a manufacturer holds. Too little and lines stop; too much and cash is tied up in materials that may expire or become obsolete. Raw materials control keeps the right materials available for the production plan, issues them accurately to jobs and keeps records that match the warehouse.
Planning materials from the production plan
Material needs come from the plan and the bill of materials:
Gross requirement = planned production × BOM quantity (including scrap allowance)
Net requirement = gross requirement − stock on hand − open purchase orders + safety stock
Example: next month's plan is 20,000 units, each needing 0.25 kg of a resin with a 4% scrap allowance. Gross requirement ≈ 20,000 × 0.25 ÷ 0.96 ≈ 5,208 kg. With 1,800 kg on hand, 2,000 kg on order and 600 kg safety stock, net requirement ≈ 5,208 − 1,800 − 2,000 + 600 = 2,008 kg to purchase.
See bill of materials and production planning.
Lead times and imported materials
Many Philippine manufacturers import key materials. Lead times include supplier production, shipping, port processing and delivery to the plant. Plan with:
- Realistic lead times based on recent history, not supplier promises
- Safety stock reflecting lead time variability (reorder points)
- Tracking of shipments in transit with expected arrival dates
- Alternative suppliers for critical single-source materials (supplier management)
Issuing materials to production
Accurate issues are the basis of job costing and stock accuracy:
| Method | How it works | When to use |
|---|---|---|
| Issue to job | Warehouse issues materials against a job order | Make-to-order, high-value materials |
| Backflush | Components deducted automatically when output is reported | High-volume, stable BOMs |
| Kitting | Materials for a job picked together before release | Assembly operations |
Whatever the method, record returns of unused materials and excess issues with approval. Unrecorded returns and extra issues are a main source of raw material variances.
Lot, expiry and quality status
For food, chemicals, pharmaceuticals and some plastics, control:
- Lot numbers from receiving through production for traceability (quality control)
- Expiry dates with first-expired-first-out issuing
- Quality status: quarantined until approved, then released
Counting raw materials
Use cycle counts for high-value and high-usage materials and reconcile usage regularly:
Usage variance = actual quantity issued − standard quantity for actual output
Large variances point to BOM errors, scrap, unrecorded issues or theft. See cycle counting.
Slow-moving and obsolete materials
Product changes and over-buying leave materials nobody needs. Review monthly:
- Materials with no movement in 90 or 180 days
- Materials for discontinued products
- Near-expiry lots
Decide whether to use, sell, return or write off, with approval. See inventory valuation.
Controls
- Raw material stores with restricted access
- Issues only against approved job orders or requisitions
- Separate roles for requesting, issuing and recording
- Regular reconciliation of issues vs. standard usage
Where Cirquolus fits
Cirquolus Production management supports planning, job orders and cost monitoring; purchasing and supplier management handle buying; and warehousing manages stock, transfers and valuation. Inventory audits include materials reports.
Frequently asked questions
How do you control raw materials inventory?
Plan from the production schedule and BOMs, buy with realistic lead times and safety stock, issue accurately to jobs, control lots and expiry, and count regularly.
What is backflushing?
Automatically deducting component materials from inventory when finished output is reported, based on the BOM.
How do you calculate raw material requirements?
Multiply planned production by BOM quantities including scrap, then subtract stock on hand and open orders and add safety stock.
What causes raw material variances?
BOM inaccuracies, scrap above standard, unrecorded issues or returns, and theft.
Bring this workflow to a Cirquolus demo.
Show us your current process, companies and branches. We will map it to the modules you need and propose a realistic rollout.