Raw Material Tracking for Small Manufacturing Units in India — A Practical Guide
By Vidya Kathare
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For a small manufacturing unit in India, running out of a critical raw material stops production — and finding out too late is almost always the result of manual tracking: a register that is not updated, a reorder that was not raised, or stock that was consumed faster than expected. Real-time raw material tracking means knowing exactly how much of each material is in stock, at what level to reorder, and getting an automatic alert before you run short.
- Raw Material
- The input stock consumed in production - sheet, components, fasteners, chemicals.
- GRN (Goods Receipt Note)
- The document confirming material received against a purchase order; it updates stock.
- Reorder Level
- The stock level at which a purchase request must be raised to avoid running out.
- Stock Ledger
- The full transaction history of a material - every receipt and issue, with running balance.
- BOM (Bill of Materials)
- The component list and quantities needed to make one finished product.
Why Small Manufacturers Struggle with Raw Material Tracking
The pattern is the same across small units: the tools have not kept up with the operation. Typically:
- Stock is managed in a physical register or Excel, updated when someone remembers.
- There are no alerts when stock is low — you find out at the machine.
- Multiple people issue material with no central record, so the figure drifts.
- GRNs are not matched to purchase orders, so over-billing and short deliveries go unnoticed.
- Slow-moving raw materials quietly tie up working capital with no report to surface them.
The Raw Material Tracking Workflow Every Small Manufacturer Needs
Six steps turn raw-material control from reactive to automatic — each step is a documented Fast Inventory capability:
| Step | What happens | Fast Inventory feature |
|---|---|---|
| Supplier delivery | Goods arrive | GRN against PO — scan or manual entry |
| Quality check | Inspect before accepting | GRN inspection OK/Not OK split |
| Stock posted | Accepted qty added to stock | Automatic after GRN approval |
| Material issued | Raw material given to production | Barcode scan + issue record |
| Reorder triggered | Stock hits minimum level | Auto purchase request raised |
| Slow-moving check | Monthly stock review | Slow / non-moving stock report |
Setting Reorder Levels for Raw Materials — A Simple Formula
The reorder point is straightforward arithmetic: reorder point = average daily consumption × supplier lead time. For a material consumed at 10 units a day with a 5-day supplier lead time, you reorder when stock reaches 50 units — the quantity you will burn while waiting for delivery.
| Term | Formula | Example (a small unit) |
|---|---|---|
| Daily consumption | Total units used ÷ working days | 10 units/day |
| Lead time | Supplier delivery time in days | 5 days |
| Reorder point | Daily consumption × lead time | 50 units |
Add safety stock on top for variability. For the full method, including safety stock and minimum/maximum levels, see how to set reorder levels, and the wider playbook on reducing stockouts in manufacturing.
How Much Does Raw Material Tracking Software Cost for a Small Manufacturer in India?
Fast Inventory’s Manufacturing — Item Wise plan is the entry point for a small manufacturer at ₹46,000 per year (about ₹3,833 per month), plus a one-time setup cost. Put that against the alternative: a single production stoppage from a raw-material stockout — idle labour, expedited freight, a late customer delivery — typically costs more than a full year of the software.
How Fast Inventory Tracks Raw Materials
Fast Inventory (by Fast Technology) gives a small unit the controls it has outgrown the register for:
- GRN against PO + barcode receiving — receive and scan material in; quantities matched to the order.
- Barcode issue — record material issued to production with a scan, so stock stays accurate.
- Auto purchase request — raised automatically when a material hits its reorder level.
- Stock ledger — full transaction history per material, item- and location-wise.
- Slow / non-moving report — surface idle raw materials tying up cash.
- Item Master with reorder & min/max — reorder level and quantity maintained per material.
See the full vertical: inventory software for manufacturers, and how a GRN process works.
Frequently asked questions
What is the best way for a small manufacturer to track raw materials?
Track every receipt and issue at the moment it happens, using barcode scanning so the on-screen figure always matches the shelf. Set a reorder level per material so the system warns you before you run short, and review a slow-moving stock report monthly to free up cash. That replaces the register that is never updated with a live, accurate stock figure.
How do I know when to reorder raw materials in a small factory?
Set a reorder level for each material based on how fast you consume it and how long the supplier takes to deliver: reorder point = average daily consumption x supplier lead time. When stock falls to that level, the system raises a purchase request automatically, so you reorder before production is affected rather than after.
Can inventory software prevent production stoppages from raw material shortages?
It removes the most common cause - finding out too late. With min/max levels in the item master and automatic purchase requests at the reorder level, a shortage becomes an alert and a draft purchase order days in advance, instead of an idle production line discovered on the day.
How does a GRN help small manufacturers control raw material costs?
A GRN matches the goods actually received against the purchase order, so short or excess deliveries and rate mismatches are caught at the dock rather than at month-end. Inspection at GRN also separates accepted from rejected material, so you only pay for and stock what passed quality.
What does raw material tracking software cost for a small manufacturer in India?
Fast Inventory's Manufacturing - Item Wise plan is Rs 46,000 per year (about Rs 3,833 per month). In context, a single production stoppage caused by a raw-material stockout typically costs more than a year of the software.