Raw material, also known as feedstock, unprocessed material, or primary commodity, is the material manufacturing businesses use in the manufacturing of products. In simple words, the raw material is the basic material used to make a product.
This is bought and sold on commodities exchanges around the globe, and by traders as well. Raw materials are an essential factor of production, just like labour and capital.
In accounting, businesses value inventory (raw material) at its comprehensive cost, i.e. the cost including shipping, storage and preparation.
Raw materials are categorized based on where they're derived from, i.e. on the basis of their origin. Raw materials can be :Plant-Based
Raw materials extracted from flora (plant life - plants and trees) are known as plant-based raw materials. Materials belonging to this category include wood, rubber, latex, and other similar items.Animal-Based
These are the raw materials obtained from fauna, i.e. animal life. The materials include leather, bones, milk and silk.Mining-Based
These are the most scarce raw materials, as they have a limited supply and are non-renewable. Such raw materials include fossils, minerals, oils, metals and coal.
Apart from this, raw materials are classified into two more categories:Direct Raw Materials
These materials are used to make another material. For example, wood is used to make wooden furniture.Indirect Raw Materials
These materials are used as a supplement to make a finished product. For example, glue is used as a supplement to make wooden furniture.
In order to produce any product, raw materials are crucial. Without raw materials, no finished product can be produced. Therefore, raw materials exist at the core of all the finished products we consume.
For a manufacturing business to run its production function continuously, it needs to always maintain a minimum raw material inventory. This system is known as inventory management. In its absence, or in case of improper management, the complete production cycle, and thus the complete business, can come to a halt.
And not just at a micro level, but at the macro level as well, there are numerous advantages of using raw materials. At a macro level, the raw material is the backbone of manufacturing in any economy. The importance of raw material can be precisely understood by considering the fact that in the absence of the same, a country will not be able to manufacture any kind of products and will have to import everything. So, there is always important use of raw materials, not just in business or in an industry, but in the running of any economy.
1. They enable manufacturing businesses to continue their operations.
2. They help in keeping the wheels of an economy moving.
3. All manufacturing businesses depend on raw material. In its absence, countless businesses will shut down, and countless skilled and unskilled workers will go jobless, giving economic shocks to the nation.
4. They save a country from importing raw material, thus saving itself a lot of money and saving itself from inflation and currency devaluation.
5. Raw materials lead to production, leading to enough supply to meet the demand, keeping prices low, and ultimately, providing its citizens with a good standard of living.
With the above-mentioned facts, we can perfectly understand the advantages of raw materials in every economy.
There have always been various markets where any and every kind of raw material can be found. And with the rapid increase in the digital marketplace, various digital platforms provide excellent markets to buy raw materials. One such platform is EFL Connections, which is an excellent market to buy raw materials in India, where buyers can purchase raw materials at an affordable price. EFL Connections enables you to buy raw materials at best prices in India. Currently, it has the availability of raw materials in the steel and plastic segments.
In the steel raw material segment, it has the supply of Coated, Cold-Rolled, Galvanized, Hot-Rolled, Stainless and Structural raw material.
In the plastic raw material segment, it has the supply of HDPE, LDPE, LLDPE, Poly Propylene (PP), PVC-Resin and Ethylene-Vinyl Acetate (EVA).