Meaning And Features Of Raw Materials

The material, which is indispensable to use for production of any finished physical goods, is called raw materials. The raw materials used in production process are (i) Natural goods like minerals, land, forest, materials found in seas. Coal, petroleum, copper, iron, gold, magnesia, limestone etc. found in mines and wood, herbs, etc. found in forest and valuable stones, shells found in seas are the examples of natural raw materials. (ii) Agricultural goods like wheat, maize, paddy, cotton, jute, sugarcane, potato, fruits, vegetables, animal products, cattle etc. and eggs, milk, dairy products, are the examples of raw materials necessary to produce finished goods.

Finished goods are produced using different natural raw materials and agro-products according to the nature of business. But features of these raw materials may be different. Supply of natural resources remains limited. Quantity of such materials cannot be increased as desired. Big producers keep control of such materials. Due to heavy weight, per unit price of natural materials have generally low price. As natural materials become available only in certain places, long distance lies between producer and business user. So, transportation is very important to transport such materials. These materials should be carefully graded and standardized. Price is determined by supply and demand situation. Due to limited supply of such raw materials, business users are compelled to book necessary raw materials in advance for a year.

On the other, many but scattered small farmers living far from market areas supple agricultural raw materials for business. Producers or the farmers control supply of these raw materials. Their supply cannot be quickly increased or decreased in large amount. Agro-products are perishable and cannot be produced at same cost for year-round

As the quality of finished goods depends on the quality of raw materials; while purchasing raw materials; quality, price, quantity, suppliers' reputation should be carefully considered. High level executive and  skilled technicians involve in purchasing the raw material that share larger part of total production cost.

According to the differences between the features of natural and agricultural raw materials, consideration in their marketing also should be different. The use of natural raw materials should be minimum depending on the nature of the materials and distribution channel should be shorter. Most of producers send raw materials directly to business users. If needed, they may use one intermediary or middleman between producer and user. 

Features Of Raw Materials

1.Low Unit Price
Per unit price of raw materials remains very low.

2. Short Life Span
Generally, life span of raw materials is short, mostly it is of perishable nature.

3. Purchase Frequency
Raw materials are frequently bought.

4. Large Quantity
Raw materials are bought in large quantity.

5. Sources Of Materials
Mainly, there are two sources of raw materials i.e. agro-raw materials and natural raw materials.

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