Material Wastages Report 2022

Answer 1 part 2
Based on ABC/ Pareto Analysis, conducted above, the following
recommendations may be suggested for material resources planning and
management in regard to the following elements:
(a) Reporting material wastages: Under Pareto 80-20 rule or for some analysts
90-10 rule, it is easy to identify that 80%/90% of wastages under contract
works is generally from 20%/10% of the materials. Accordingly,
management can take strict actions to control the waste from such critical
materials so as to reduce the overall wastage in the contract works. By
identifying this critical materials, strict monitoring and issuance
requirements may be imposed whereby the wastage of materials shall be
reduced to minimum. The course of action to be followed is described as
under:
Items forming part of 80%/90%-20%/10% rule and falling in category of
80%-90% shall be actively monitored with increased focus on issuance and
quality control. Remaining items shall be less actively managed.
Further, categorisation of materials is presented as under:
Material Unit cost Units Unit %
Cumulati
ve %
of Units
Total
Cost
Total
Cost %
Cumulati
ve %
of Total
Cost
Category
M12 110 10000 20.2 20.2 1100000 20.34 20.34 A
M04 250 2500 5 25.2 625000 11.56 31.9 A
M11 50 12000 24.24 49.44 600000 11.1 43 A
M5 250 2000 4 53.44 500000 9.25 52.25 B
M10 80 6000 12.12 65.56 480000 8.88 61.13 B
M22 80 6000 12.12 77.68 480000 8.88 70.01 B
M25 6000 80 0.23 77.91 480000 8.88 78.89 B
M2 1800 180 0.4 78.31 324000 6 84.89 B
M1 500 500 1 79.31 250000 4.62 89.51 B
(b) Critical procurement decisions: Based on above pareto analysis,
management of the company shall take vigil actions to find areas where
negotiation of contracts should be done, vendors to be consolidated,
decisions regarding changing sourcing methodology and timing, so as to
ensure saving of stock and its availability. Based, on above analysis we may
decide the materials which are costly and shall negotiate or design its
procurement policy more effectively.

Answer 2
Stock of Materials
Based on the analysis conductedM1, M10, M11 falls in both Vital category of
VED and category A and B of the ABC analysis. Thus, significant step shall be
taken by the management to ensure the availability of such stock along with
proper procurement strategy so as to reduce wastage of such stocks and reduce
the cost of such stocks. Further, steps shall be taken by management to ensure
the stock of material without significantly increasing the holding cost
Also, M2 & M 12 fall in both Essential category of VED and category A and B of
the ABC analysis. Similar actions as stated above shall be followed but with lower
stringency.
Rest goods are desirable and who falls in A and B category shall not be hoarded
much and shall be available as per requirement. Cost of the same shall be
reduced by reducing inventory block up.
Controlling material wastages
Based on discussion above, steps shall be taken by company to reduce the
material wastage of goods falling in the category of vital and A and B category.
Further, actions shall be taken by management to cover the damages or wastage
in essential and a and b category as these goods form a significant part of cost
and are required in quantity. Also, goods which don’t fall in the said two
categories, their holding shall be reduced so as to eliminate wastages.
Materi
al
Total
Cost%
Cumulative total
cost %
Catego
ry VED
M12 20.34 20.34 A E
M04 11.56 31.9 A D
M11 11.1 43 A V
M5 9.25 52.25 B D
M10 8.88 61.13 B V
M22 8.88 70.01 B D
M25 8.88 78.89 B D
M2 6 84.89 B E
M1 4.62 89.51 B V
Answer 3
Security of Costly Inventory in Project Sites
Audit of material supplies should be done regularly because the issues come
from inaccurate data present which lead the management to take wrong