Historical Context
Materials requisition has roots in traditional inventory management practices where organizations needed a systematic method to track the issuance and consumption of materials. This practice became formalized with the advent of modern business processes and the need for stringent financial controls.
Types/Categories
- Manual Materials Requisition: Handwritten forms that require manual authorization and record-keeping.
- Digital Materials Requisition: Electronic forms within an Enterprise Resource Planning (ERP) system, offering automated tracking and approval workflows.
Key Events
- Early 20th Century: Introduction of formal materials requisition practices in manufacturing industries.
- 1980s: Digital revolution leads to the adoption of computerized materials requisition systems.
- 2000s: Integration of ERP systems streamlining materials requisition across industries.
Detailed Explanations
A materials requisition form includes several crucial elements:
- Description of Material: Detailed information about the item requested.
- Commodity Code: Unique code identifying the specific material.
- Job Number/Accounting Code: Identifies the project or department for which the material is requisitioned.
- Value: Monetary value of the material being transferred.
This form must be completed accurately and authorized by the appropriate personnel. It serves as a critical document for inventory control, ensuring materials are available for production without overstocking.
Mathematical Formulas/Models
Inventory Valuation Formula:
Charts and Diagrams
graph TD
A[Store Inventory] -->|Materials Requisition| B[Project/Department]
B -->|Approval| C[Inventory Update]
C -->|Debit Expenditure| D[Accounting Department]
Importance
Materials requisition is vital for:
- Cost Control: Helps track material costs associated with specific jobs or departments.
- Inventory Management: Prevents overstocking and stockouts, ensuring smooth operations.
- Financial Accuracy: Ensures accurate debiting of expenditures and crediting of stock, aiding in precise financial reporting.
Applicability
Applicable in various industries such as:
- Manufacturing
- Construction
- Retail
- Healthcare
Examples
- Manufacturing Plant: Requesting raw materials for production.
- Construction Site: Requisitioning cement and steel for a project.
Considerations
- Accuracy: Ensure precise details are entered to avoid discrepancies.
- Authorization: Only authorized personnel should approve requisitions.
- Audit Trail: Maintain records for future audits and reviews.
Related Terms with Definitions
- Purchase Order: A document sent to a supplier to purchase materials.
- Bill of Materials (BOM): A comprehensive list of materials required for production.
- Stock Transfer: Movement of inventory from one location to another within an organization.
Comparisons
- Materials Requisition vs. Purchase Order: A requisition is internal, whereas a purchase order is external to suppliers.
- Manual vs. Digital Requisition: Manual is prone to errors, while digital offers efficiency and accuracy.
Interesting Facts
- The concept of materials requisition can be traced back to ancient civilizations where inventory control was crucial for managing resources.
Inspirational Stories
Toyota’s Just-In-Time Inventory System: An excellent example of efficient materials requisition within the automotive industry, reducing waste and improving productivity.
Famous Quotes
- “The biggest room in the world is the room for improvement.” – Helmut Schmidt
Proverbs and Clichés
- “Measure twice, cut once.”
Expressions, Jargon, and Slang
- Pick Ticket: A document used to retrieve items from inventory.
- Backorder: An item that cannot be fulfilled due to lack of inventory.
FAQs
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What is the main purpose of a materials requisition? To control the issuance of materials from inventory to specific jobs or departments.
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Who is responsible for approving a materials requisition? Authorized personnel such as department managers or project supervisors.
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How does a materials requisition affect financial records? It credits inventory and debits the specific expenditure account related to the material usage.
References
- “Inventory Management and Control”, by Donald W. Fogarty, Blackwell Publishers.
- “Cost Accounting: A Managerial Emphasis”, by Charles T. Horngren, Srikant M. Datar, and Madhav V. Rajan.
Summary
Materials requisition is a fundamental practice in inventory management, ensuring proper issuance, tracking, and financial accounting of materials. Its evolution from manual forms to digital systems has significantly improved efficiency and accuracy in various industries. Understanding and implementing a robust materials requisition process can lead to better resource management, cost control, and operational efficiency.
