Stores Management Objective & Service

Objective – To provide the service to Production or Operating Functions.Services•Balanced flow of Materials•Provide Maintenance materials, Spare parts,•Receive & dispatch Finished parts.•To accept & store scrap & arrange for Disposal

Responsibilities of Stores

• Receiving and Dispatch:• Inspection of Materials• Issue of materials & maintenance of records• Warehousing / Storing and preservation• Stock control records• Identification and disposal of scrap, obsolete and surplus materials• Physical stock taking/ stock verification• Identification and codification• Inventory control• Material Handling• Dispatch of finished & Rejected goods• Processing of customers orders• Packing• Safety & Security of Stores & human being.

Stores Receiving & Dispatch Functions• Receipt of Purchase Orders and Amendments• Receipt of Dispatch Documents• Receipt of Dispatch Documents Directly from the Suppliers• Receipt of Dispatch Documents from Accounts when negotiated through Bank• Recording of RR/PWB/LR/AWB etc.• Collection of Consignments from the carriers- Road Transporters and Railways

Parcel/Goods Yard• Receipt of Consignment brought on Door Delivery basis• Materials Inward Register (MIR)• Claims for Non-Delivery• Accounting of Demurrage• Payment of freight/ Misc. or other charges to the carriers• Daily Receipt Report• Treatment of Materials received from User Department and sent for repair• Issue of Urgently Required Materials from Receipt & Despatch Section• Regularization of Emergency materials collected from supplier by User

Departments

Organization

Each person must know • what he has to do, how to do it, when he has to it.• How to co-ordinate his work with others• To whom he should report 7 who reports to him.These questions are answered when we organize the workOrganization Involves• Breaking down all work necessary to achieve the objective

into individual jobs or Providing tasks.• a formal system of coordinating the efforts of various

individuals.

Stores organization• Traditionally Stores department had been attached to Production & finished good

to sales department.• Now a days it is under Materials Manager who has same status as other

Departmental Heads of Production, Sales etc.• Stores Department is organized depending on size of & requirements of the

organization.

Stores OrganizationMaterials Manager

Head Stores

Finished Good Store Raw /Heavy Stores

General Stores

Finished Goods Stores

Raw Material Heavy Stores

Stores Manager

Receipt Manager

Gate Entry Officer

Finished Parts Stores Officer

Minimax Stores Officer

Centralized & De-centralized Stores

• Centralized – one big Stores supplying parts to all product lines

• Decartelized – it is stores located near to product line.

Advantages of Centralized Stores• A much Wider range of goods can be provided to all users.• Inventory Can be minimum• better control• Economy in space.• Bigger storage space provide for modern handling methods.• Delivery at single point reduces cost of delivery.• Receipt & inspection can be efficiently organized• Stock Turnover increases.• Less manpower is required.

Disadvantages

• Extra Handling & transportation is required & hence staff.• More internal documentation.• In case of Fire there is greater risk.• Storage of flammable liquids can be dangerous.

Types of Stores

• Functional Stores• Physical - Depending on size & location

Functional Stores• Raw Material • General Stores- Paints, Cleaning materials, cutting oils, hand gloves• Tool stores• Scrap & Salvage Stores• Packing Stores• Spare Parts Stores• Receipt Stores• Quarantine Stores• Finished Goods Stores.• Work-in-progress• Stationary Stores• Bonded Stores• Cold stores

• Refrigerated stores• Flammable Material stores• Open yard, Transit, shed storage.

Physical Consideration• Central Store• Sub-store• Departmental storage• Group Store• Sit e Store• Transit store.

Location of Stores• Government or Municipal regulations• Availability of services like water electricity, Transport• Adequacy of roads connecting connectivity.• Space availability• Cost of land available.• Safety & security of stores

Stores Accounting

• a) To know stock of any item in stores without resorting to physical counting.

• b) To establish link between physical stock and Stores Account Records (Priced Stores Ledger maintained by Accounts Department)

• c) To facilitate materials planning and provisioning.• d) Supply information for stock- taking.• e) To provide information to store- personnel regarding location

of items.• f) Serve the purpose of price list as purchase prices and sources

of supply

Stock Taking & Reasons

• To verify the accuracy or stores records• To support the value of stock shown in the balance sheet by

physical verification• To identify slow moving and non- moving items (In absence of

computerized accounting system)and considers the need for holding them any more.

• To disclose possible loss of materials• To ensure that discrepancies, if any are properly investigated

and accounted for, adjustment vouchers are raised for write off/ write on shortages/excesses so as to bring the book balance at par with ground balance.

Reasons for Discrepancies• Human error of omission-wrong issue of materials, wrong codification, wrong

posting in stock- records etc• Weight differences - when items are received in bulk and issued on piece-meal • Measurement differences:• Improper stock- taking• Improper documentation may also be one of the reasons for discrepancies in

stock.• Confusion of unit of measurement• Deterioration due to inherent characteristics of items. Because of inherent

characteristics• of the items some losses have to be there, items like petrol, HSD etc.

Frequency of Stock Taking• Quarterly• Half Yearly• Yearly• Perpetual stock taking• Daly Stock taking• Monthly Stock taking

SCRAP, OBSOLETE ANDSURPLUS AND DISPOSAL ITEMS IDENTIFICAION

• Obsolescent – Item is going out of use, but is not completely unusable• Obsolete - no longer usable due to change in operational or production

methods• Surplus – Qty in stock is more than normal requirement• Scrap – material whose value is in terms of material content i.e. Metal,

paper, cloth. Ferrous scrap - Non Ferrous – waste.• Salvaging – Recovering or saving material from equipemt , property to

obtain useful parts.• Reclamation – bringing back to original serviceable condition,Rethreading

of Tyres. Servicing of machineries.

Reasons for obsolete & surplus stocks

• A change in design of manufactured equipment• Change in method of manufacture• Reduction volume of production• Change in product itself• Spare parts of machineries where old equipment are

decided to sell off• Wrong Decisions of Management.

Committee for Disposal of scrap, surplus & obsolete items

Salvage Committee:• Salvage Committee shall be responsible for identification of scrap,

obsolete and surplus materials and advise utilization/ disposal in the most economical manner.

Objectives of the Committee:• The basic objectives of this Committee are to inspect scrap, inactive,

surplus and obsolete items, determine their classification and quantities and mode of disposal to best advantage of organization.

• Composition of Salvage Committee• At each power station, there shall be standing Salvage Committee. The

Committee shall be comprising of representative from O&M/ User, Finance and Materials Departments and co-opt member from any other department for special categories of items.

Functions of Committee• Identification of items and classification into scrap, surplus and obsolete

categories.• To recommend possible utilization of surplus materials within the power

station or within the Corporation for on-going works/future works.• Decide whether worn out spares, assemblies are repairable and if so, the

extent and mode of repair and estimated cost.• Recommending mode of disposal i.e. auction, tendering or sale to

employees , second hand dealer, Original suppliers.• Fixing reserve prices of items recommended for disposal keeping in view

factors- Rates of scrap metal appearing in Trade Journal- Scrape sale schedule prepared - Condition of materials to be disposed off - Local condition of unit disposing off scrap including geographical location

Disposal of surplus and obsolete materials:

• Use within the unit shall be considered by consulting all the user departments- some of the items may be used as substitute to some other materials, as it is or with some economical modifications.

• Circulate details to other units of the organization to facilitate inter unit transfers. While circulating the details of spares, it shall be ensured that full specifications, part No, if

any; name of manufacturer and model of equipment are furnished.• If buy-back clause is operative with Original Equipment Manufacturer, surplus and obsolete materials shall be returned to them in exchange of certain fast moving and

immediately required spares.• Original equipment manufacturer may be consulted for disposal of obsolete spares. They may

furnish vital information as to who are the other customers using such equipments so that they may be approached. Sometime original equipment

manufacturer or supplier may take back obsolete materials to meet outstanding orders of other customers.• Before disposing off obsolete materials as scrap, financial sanction is need to be obtained

to write off their value, which may be huge as compared to scrap value.

Store Planning

• Circulation– Free-flow layout – Grid layout– Loop layout – Spine layout

LO 2

Store PlanningFree-flow layout

Fixtures and merchandise are grouped into free-flowing patterns on the sales floor.

Grid layout The counters and fixtures are placed in long rows or ‘‘runs,’’ usually at right angles, throughout the store.

Loop layout A major customer aisle begins at the entrance, loops through the store—usually in the shape of a circle, square, or rectangle—and then returns the customer to the front of the store.

Spine layout A single main aisle runs from the front to the back of the store, transporting customers in both directions, and where on either side of this spine, merchandise departments using either a free-flow or grid pattern branch off toward the back side walls.

LO 2

Free-Flow Layout

LO 2

Advantages and Disadvantagesof Free Flow Layout

• Advantages• 1. Allowance for browsing and

wandering freely• 2. Increased impulse purchases• 3. Visual appeal• 4. Flexibility

Disadvantages• 1. Loitering encouraged• 2. Possible confusion• 3. Waste of floor space• 4. Cost• 5. Difficulty of cleaning

Grid Layout

LO 2

Advantages and Disadvantages ofGrid Layouts

Advantages1. Low cost2. Customer familiarity3. Merchandise exposure4. Ease of cleaning5. Simplified security6. Possibility of self-serviceDisadvantages1. Plain and uninteresting2. Limited browsing3. Stimulation of rushed shopping

behavior4. Limited creativity in decor

Loop Layout

Spine Layout

LO2

AS/RS Systems – Narrow Aisles = More Storage Space