1. Pre formulation study & requirement of raw material
Sub-topic: Sourcing of raw material
Luqman Syamimi Amira Liana Azalea

2. Introduction
Raw material refer to those basic material that are utilized by manufacturers and producers as the foundation for the production of their various goods and products.

3. Sourcing of raw material
Understand cost structure & drivers
Identify the Supply Market, Distribution and Logistics Network
Develop a Pricing Mechanism
Develop Alternate Sources and Establish a Competitive Situation

4. Understand cost structure & drivers
Freight and packaging costs can range anywhere between 8%–25% of
total costs for commodity raw material.
Identify the Supply Market, Distribution and Logistics Network
important to consider the use of distributors while developing an effective supply setup.
A few points to consider while evaluating a supplier’s fit:
a) Delivery lead time
b) Delivery method (tank truck vs. rail cars vs. marine) and the ability of
the supplier to use a particular delivery method throughout the year
c) Availability of storage facilities and capacities
d) Repacking capabilities

5. Develop a Pricing Mechanism
Monitoring pricing on a monthly basis can be an arduous task and requires constant vigilance to ensure supplier pricing is in line with the market.
Developing pricing mechanisms can be an effective tool in ensuring pricing remains competitive and also eliminates the need for manual intervention.
Develop Alternate Sources and Establish a Competitive Situation
-   A crucial element of sourcing commodity chemicals is the development of alternate sources.
- commonly used best practice is to maintain a primary and secondary supplier for each material, thus ensuring suppliers remain price competitive