Stores Management

STORE MANAGEMENT

STORES MANAGEMENT
INTRODUCTION
THE TERM STORES, STOREHOUSE, WAREHOUSE ETC REFER TO THE PHYSICAL PLACE BE IT A BUILDING OR A ROOM ETC. WHERE MATERIALS OF ALL VARIETY ARE KEPT.
THE FUNCTION OF STORES IS TO RECEIVE, STORE AND ISSUE MATERIALS.
STORES ARE NORMALLY DIVIDED INTO VARIOUS SECTIONS SUCH AS -
RECEIVING SECTION
TOOL STORES
GENERAL STORES
RAW MATERIALS STORES
FINISHED PARTS STORES ETC.
STORES PLAYS A VITAL ROLE IN THE OPERATIONS OF A COMPANY
STORES NETWORKS ARE INCREDIBLY COMPLEX AND THEREIN LIES THE OPPORTUNITY OF IMPROVEMENT.

STORES MANAGEMENT
STORES FUNCTION AS AN ELEMENT OF MATERIALS DEPARTMENT, HAS AN INTERFACE WITH MANY USER DEPARTMENTS IN ITS DAILY OPERATIONS.
THE BASIC PURPOSE SERVED BY STORES IS THE PROVISION OF UNINTERRUPTED SERVICE TO MANUFACTURING DIVISIONS.
STORES ACT AS A CUSHION BETWEEN PURCHASE AND MANUFACTURING ON ONE HAND AND MANUFACTURING AND MARKETING ON THE OTHER.
THE INHERENT LIMITATIONS OF FORECASTS MAKE THE STORES FUNCTION A NECESSITY.
STORES FUNCTION IS AN INSEPARABLE PART OF ALL BUSINESS AND NON – BUSINESS CONCERNS, WHETHER THEY ARE INDUSTRIAL OR SERVICE ORIENTED, PUBLIC OR PRIVATE, SMALL OR LARGE.
THE TASK OF STORE KEEPING RELATES TO SAFE CUSTODY AND STOCKING OF MATERIALS, THEIR RECEIPTS, ISSUES, AND ACCOUNTING WITH THE OBJECTIVE OF EFFICIENTLY AND ECONOMICALLY PROVIDING THE RIGHT MATERIAL AT THE RIGHT TIME WHENEVER REQUIRED IN THE RIGHT CONDITION TO ALL USER DEPARTMENTS .

STORES MANAGEMENT NECESSITY OF STORES
ONE MUST ALWAYS REMEMBER THAT EVEN THOUGH STORE KEEPING DOESN’T ADD ANY VALUE TO THE PRODUCT IN THE NORMAL SENSE, IT IS AN ESSENTIAL FUNCTION AND JUST CANNOT BE WISHED AWAY.
AT TIMES STORES MAY ADD TIME UTILITY OR VALUE BY PRESERVING SCARCE MATERIAL THAT MAY BE REQUIRED IN FUTURE.
BY PROPER PRESERVATION AND STORAGE, THE STORE DEPARTMENT AVOIDS ANY DEPRICIATION IN THE VALUE OF INVENTORY.
THE FINANCIAL VIEW CONSIDERS STORES AS AN OVERHEAD I.E. A COST WITH NO RETURN.
THIS ALL THE MORE HIGHLIGHTS THE NEED FOR ECONOMIC OPERATION AND EFFICIENT STORES MANAGEMENT.

THE COST OF STORES CAN BE CATEGORIZED INTO A CAPITAL COST COMPONENT AND REVENUE EXPENDITURE COMPONENT.
THE CAPITAL COST CONSIST OF THE SUNK COST IN LAND BUILDING, ROADS, YARDS, MATERIAL HANDLING EQUIPMENT AND RELATED FACILITIES.
BECAUSE OF THE VERY IRREVERSIBLE NATURE OF THIS COST, PROPER PLANNING OF STORES CAN GO LONG WAY IN REDUCING THIS CAPITAL EXPENDITURE THAT MAY ALSO HAVE A BEARING ON THE REVENUE EXPENDITURE IN THE STORES.
THE REVENUE COMPONENT OF STORES EXPENDITURE CONSISTS OF SALARIES AND WAGES OF STORE PERSONNEL, MAINTENANCE COST, STATIONARY COST, COMMUNICATION EXPENSES, AND INVENTORY CARRYING COST

ONE MUST ALWAYS REMEMBER THAT EFFICIENCY IN STORES OPERATIONS CANNOT BE BUILT OVERNIGHT BUT HAS TO BE THOUGHT OF RIGHT FROM THE INITIAL PLANNING STAGE.
STORES MUST BE VISUALIZED AS AN INTEGRAL PART OF THE PURCHASING – MANUFACTURING – MARKETING LINK.
UNFORTUNATELY, STORES MANAGEMENT IS LOOKED DOWN UPON BY MANY AS AN OPERATIONAL CLERICAL FUNCTION AND FAILS TO ATTRACT APPROPRIATE TALENT BECAUSE OF ITS UNDERDOG NATURE .
ONE HAS TO BEAR IN MIND THAT THE STORES MANAGER HEADS THE SINGLE LARGEST GROUP OF CURRENT ASSETS AND HIS PERFORMANCE IS THE KEY TO SMOOTH PRODUCTION AND SUBSEQUENT MARKETING.
MANY DECISIONS RELATED TO STORES HAVE A DRAMATIC IMPACT ON THE OPERATIONAL EFFICIENCY OF THE PRODUCTION DEPARTMENT AND PROFITABILITY OF THE ENTIRE ORGANIZATION.
EVEN SEEMINGLY ROUTINE DECISIONS SUCH AS SELECTION OF RACKS, SHELLS, BINS, MATERIAL HANDLING EQUIPMENT, SAFETY PRACTICES, INSPECTION PROCEDURES ETC. ARE REFLECTED IN THE OPERATIONAL EFFICIENCY.
ONE MUST APPRICIATE THE ROLE OF STORES IN MAINTAINING OPTIMUM INVENTORY AND HIGHLIGHTING EXCEPTION CASES THROUGH BUILDING UP OF PROPER MIS BY MAINTAINING ACCURATE RECORDS.

STORES MANAGEMENT FUNCTIONS OF STORES
THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE;
TO RECEIVE RAW MATERIALS, COMPONENTS, TOOLS, SPARES, SUPPLIES, EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM.
TO PROVIDE ADEQUATE, PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS.
PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN / INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS.
ARRANGE FOR INSPECTION OF INCOMING MATERIALS.
ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY
ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME.
MAINTAIN ACCURATE AND UP – TO – DATE RECORDS OF MATERIAL RECEIVED, ISSUED, REJECTED, DISPOSED, AND QUANTITY ON HAND OF ALL THE ITEMS.

STORES MANAGEMENT FUNCTIONS OF STORES
THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE;
ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL, ACCOUNTS AND OTHER CONCERNED DEPARTMENTS.
UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE.
TO HIGHLIGHT STOCK ACCUMULATION, DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION, WHEREVER NECESSARY.
TO MINIMISE OBSOLESCENCE, SURPLUS AND SCRAP THROUGH PROPER CODIFICATION, STANDARDIZATION, PRESERVATION AND HANDLING.
TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING.
TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY.
TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS.
DEPENDING UPON THE NATURE OF BUSINESS (I.E. MANUFACTURING, TRADING SERVICES, ETC,) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST.

STORES ORGANIZATION
ORGANIZATION IS A VEHICLE TO ACHIEVE THE PREDETERMINED OBJECTIVES.
IT IS A FRAMEWORK OF TASKS, RESPONSIBILITIES, AUTHORITIES, AND ASSCIATED PERSONNEL.
THE TYPE OF ORGANIZATION MUST BE GEARED TO ACHIEVE THE DESIRED OBJECTIVES EFFICIENTLY AND ECONOMICALLY.
ORGANIZATION IS BASED ON COMMONALITY OF CERTAIN TASKS AND SPECIALIZATION OF WORK.
IT IS AN INDISPENSIBLE MEANS TO GOOD MANAGEMENT.
A FAULTY ORGANIZATION STRUCTURE CAN SERIOULY HAMPER ITS PERFORMANCE.

STORES ORGANIZATION
STEPS IN ORGANIZATION;
IDENTIFY THE ENTIRE GAMUT OF TASKS TO BE PERFORMED
GROUP AND RE – GROUP THE TASKS ACCORDING TO CERTAIN WELL – DEFINED COMMON CHARACTERISTICS.
DEFINE AND DELEGATE RESPONSIBILITY AND COMMENSURATE AUTHORITY.
ESTABLISH REPORTING AND STRUCTURAL RELATIONSHIPS BETWEEN ALL POSITIONS.
STORES ORGANIZATION MUST COMPRISE OF THE FOLLOWING:
OUTLINE AND COMMUNICATE TO ALL CONCERNED, THE PRIMARY AND OTHER OBJECTIVES OF THE STORE FUNCTIONS.
DEFINE CLEAR - CUT RESPONSIBILITIES.
BESTOW APPROPRIATE AUTHORITY AND PRACTICE DELEGATION OF POWER TO ENABLE FULFILLING THE GIVEN RESPONSIBILITIES.
ESTABLISH PROPER COMMUNICATION CHANNELS
ALLOCATE TASKS TO QUALIFIED PERSONNEL.
IN SHORT, STORES ORGANIZATION CAN BE DEFINED AS THE SYSTEMATIC COORDINATION AND COMBINATION OF EFFORTS IN A FASHION THAT RESULTS IN AN OPTIMUM EFFICIENCY AND MINIMUM EXPENDITURE.

STORES ORGANIZATION
TRADITIONALLY STORES FUNCTION HAS BEEN VISUALISED AS A PART OF PRODUCTION DEPARTMENT AND WAS NEVER GIVEN THE ATTENTION AND IMPORTANCE IT RIGHTFULLY DESERVED.
THE CONVENTIONAL PRACTICE IS TO LOCATE THE STORES NEAR USER DEPARTMENTS SO AS TO MINIMIZE MATERIAL HANDLING COST AND ENSURE TIMELY SUPPLIES SO AS TO ALLOW SMOOTH PRODUCTION.
THE MATERIALS DEPARTMENT IS SELDOM CONSULTED IN ASPECTS SUCH AS STORES LOCATION AND LAYOUT.

STORES MANAGEMENT CENTRALISED & DECENTRALISED STORES
THERE ARE BOTH ADVANTAGES AND DISADVANTAGES ASSOCIATED WITH A CENTRALIZED OR DECENTRALIZED STORES.
A VERY BIG ORGANIZATION HAVING A PORTFOLIO OF NUMEROUS PRODUCTS MAY HAVE A HUGE MAIN STORE ALONG WITH NUMBER OF SMALLER DECENTRALIZED STORE SECTIONS.
THIS ARRANGEMENT DOES AWAY WITH DUPLICATION OF EFFORTS IN COMMON ACTIVITIES.
ALL ITEMS OF COMMON USAGE MAY BE STOCKED IN A CENTRAL STORE TO KEEP THE INVENTORY AT OPTIMUM LEVELS.
ALSO RECEIVING CAN BE DONE CENTRALLY SO AS TO HAVE EFFECTIVE COMMUNICATION LINKS WITH THE PURCHASE DEPARTMENT AND VARIOUS SUPPLIERS.
THE PROBLEM OF CENTRALIZATION OR DECENTRALIZATION IS A VEXED ISSUE AND ONE CANNOT LOOK FOR THUMB RULES TO DEAL WITH THE SAME.
IT IS MORE A MATTER OF CONVENIENCE AND SUITABILITY TO THE OPERATING ENVIRONMENT THAN A QUESTION OF CHOICE OF ONE STRUCTURE OVER ANOTHER.
HOWEVER THE GUIDING PRINCIPLE HAS TO BE THAT THE OVERALL STORES CONTROL HAS TO BE UNIFIED IN THE HANDS OF A CHIEF STORES OFFICER FOR EFFECTIVE COORDINATION WITH OTHER INTERFACING DEPARTMENTS AND PROPER INTERNAL CONTROL OF STORES.

ADVANTAGES OF CENTRALIZED STORE :
OPTIMUM LEVEL OF SERVICE TO USERS DEPARTMENT.
BETTER INTERNAL CONTROL,
ECONOMY IN STORAGE SPACE AND MATERIAL HANDLING.
SINGLE POINT DELIVERY AND SINGLE POINT INSPECTION.
SPEEDY COMMUNICATION WITH PURCHASE DEPARTMENT AND VARIOUS SUPPLIERS.
PROVIDES OPPORTUNITIES FOR STANDARDIZATION,
PROBABILITY OF OBSOLESCENCE IS REDUCED DUE TO HIGHER INVENTORY TURNOVER,
USERS DEPARTMENTS ARE PROVIDED WITH A WIDE VARIETY OF MATERIALS.
AVOIDS DUPLICATION OF EFFORTS .

DISADVANTAGES OF CENTRALIZED STORE :
MAY CREATE BOTTLE NECKS IN MATERIALS RECEIPT, INCOMING INSPECTION AND ISSUES – THE BASIC FUNCTION OF ANY STORES,
IT MAY NOT BE SENSITIVE TO THE NEEDS OF INDIVIDUAL USER DEPARTMENTS,
MAY NOT BE LOCATED AT THE OPTIMUM LOCATION AND THUS RESULT IN INCREASED MATERIALS HANDLING AND TRANSPORTATION COSTS.
IMPROPER MIS AND CONTROL PROCEDURES MAY RESULT
INACCURATE SHORTAGES AND UNANTICIPABLE PERFORMANCE.
REQUIRES MORE INTERNAL DOCUMENTATION,
RISK IS ACCENTUATED IN CASE OF NATURAL OR MANMADE CALAMITIES SUCH AS FIRES.

STORES LOCATION AND LAYOUT GUIDING PRINCIPLES OF STORES LOCATION
THE FOLLOWING DECISIONS ARE A PART OF THE LOCATION DECISION –
ONE STORE OR MANY STORES?
SHOULD IT REPORT TO THE PRODUCTION DEPARTMENT OR TO THE MATARIALS DEPARTMENT ?
WHAT TRANSPORT FACILITIES ARE TO BE USED ?
IS THERE A CHANCE OR NEED FOR FUTURE EXPANSION ?
WHAT IS THE NUMBER AND VARIETY OF MATERIALS USED IN THE FIRM ?
GUIDING PRINCIPLES OF STORE LOCATION :
BASIC OBJECTIVE OF STORES IS TO MAXIMISE SERVICE TO USER DEPARTMENTS AT OPTIMUM OVERALL COST.
PRIORITY MUST BE GIVEN TO MINIMUM MATERIAL HANDLING AND TRANSPORTATION EXPENDITURE.
INCORPORATE IN – BUILT FLEXIBILITY TO DEAL WITH FUTURISTIC REQUIREMENTS,
ADEQUATE COMMUNICATION LINKS MUST BE ARRANGED FOR.
ADEQUATE SAFETY MEASURES MUST BE AVAILABLE AT HAND,
PREPLAN ABOUT THE NATURE, QUANTITY OF MATERIALS TO BE DEALT WITH.
FACTOR IN THE NUMBER OF END USERS AND SUPPLIERS.

STORES LOCATION AND LAYOUT GUIDING PRINCIPLES OF STORES LAYOUT
GUIDING PRINCIPLES OF STORES LAYOUT:
THE DETERMINING FACTORS OF A PROPER STORES LAYOUT ARE ECONOMY AND EFFICIENCY.
AN UNDERUTILIZED WAREHOUSE IS INDICATIVE OF WASTAGE OF CAPITAL AND ONE THAT HOLDS TOO MUCH REPRESENT WASTAGE OF TIME AND LABOUR.
THE OBJECTIVE MUST BE TO ENSURE A CONTINUOUS UNHINDERED WORKFLOW THROUGH THE STORES SO THAT IT CAN OPERATE CONTINUOUSLY AND PROVIDE OPTIMUM SERVICE.

STORES LOCATION AND LAYOUT GUIDING PRINCIPLES OF STORES LAYOUT
GIVEN BELOW ARE SOME THUMB RULES FOR PROPER STORES LAYOUT.
MAXIMUM STORE SPACE UTILIZATION SUBJECT TO MINIMUM MATERIAL HANDLING AND MAXIMUM SPEED OF MOVEMENT,
A STRAIGHT FLOW IS THE SIMPLEST AND MUST BE USED IN VARIOUS COMBINATIONS TO FORM ‘U’ , ‘E’, ‘T’ ETC FLOW.
ARRANGE FOR SEPARATE, DEMARKATED AREAS FOR INCOMING, OUTGOING MATERIAL, MATERIALS RECEIVED BUT YET TO BE INSPECTED, MATERIAL RECEIVED - INSPECTED - AND REJECTED, TOXIC OR HAZARDOUS MATERIAL, SCRAP AND OBSOLETE MATERIALS ETC.
AN ITEM MUST BE LOCATABLE WITH MINIMUM EFFORT AND EXPENSE OF TIME,
ADEQUATE LIGHTING, VENTILATION, AND PROPER COLOUR SCHEMES MUST BE DEVISED,
PROVIDE FOR HEATING, COLD STORAGE, AIRCONDITIONING, AND OTHER ENVIRONMENTAL REQUIREMENTS AS AND WHEN NECESSARY.
KEEP SAFETY APPLIANCES SUCH AS GOGGLES, APRONS, HAND GLOVES, ETC, AT ACCESSIBLE PLACES,
SCREEN THE STORES DEPARTMENT FROM UNAUTHORIZED ACCESS TO OTHER PARTIES.

STORES SYSTEMS & PROCEDURES
THE STORES FUNCTION DEALS WITH THREE MAJOR ACTIVITIES :
RECEIPT
STOCKING
ISSUES

STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION
THE RECEIPT SECTION :
THE RECEIPT FUNCTION IS THE LAST STEP IN THE PURCHASING ACTIVITY AND THE FIRST LINK IN THE STORES FUNCTION.
THIS DEALS WITH THE FUNCTION OF RECEIVING AND PHYSICALLY HANDLING DELIVERED MATERIALS, AND VERIFYING THAT THE DELIVERIES CORRESPOND EXACTLY AS TO THE NATURE AND QUANTITY AS PER SPECIFIED IN PURCHASE ORDER.
INSPECTION OF INCOMING MATERIALS RANGES FROM SIMPLE COUNTING TO ELOBORATE LABORATORY TESTING AND STATISTICAL TESTS.
ALL INCOMING SUPPLIES ARE RECEIVED, CHECKED AND DULY INSPECTED BEFORE FURTHER PROCESSING OF STORAGE OR USE.
THIS SECTION IS ALSO CALLED AS GOODS INWARD SECTION.

GENERALLY THE INCOMING GOODS MAY BE FROM ONE OR MORE OF THE FOLLOWING SOURCES :
SUPPLIERS THROUGH RECEIVING SECTION ON GOODS INWARD NOTE (GIN).
USER DEPARTMENTS THAT RETURN SURPLUS STOCK, OBSOLETE STOCK AND SCRAP ON MATERIAL RETURN NOTE.
TRANSFER FROM OTHER STORES ON STORE TRANSFER NOTE.
EQUIPMENT RECEIVED AFTER MAINTENANCE AND REPAIRS ON STORE CREDIT NOTE OR COMPLETION SLIP.
GOODS REJECTED BY CUSTOMERS
OUTSIDE PARTIES, OF SUB – CONTRACTED GOODS

FUNCTIONS OF RECEIVING SECTION :
THE BROAD FUNCTIONS OF A RECEIVING SECTION CAN BE OUTLINED AS FOLLOWS :
RECEIVE INCOMING MATERIALS,
PHYSICALLY CHECK RECEIVED MATERIALS
ARRANGE FOR SPEEDY AND PROPER INSPECTION,
RAISE GOODS INWARD NOTE,
NOTIFY USER DEPARTMENTS ABOUT AVAILABILITY OR NONAVAILABILITY OF MATERIALS REQUISITIONED BY THEM,
INFORM PURCHASE SECTION REGARDING EXCESS SUPPLY, SHORTAGE, OR DEFECTIVE SUPPLY,
DELIVER MATERIAL TO APPROPRIATE STORES FOR STORAGE,
PREPARE RECORD KEEPING.

THE TASKS OF GOODS INWARDS SECTION STARTS EVEN BEFORE THE MATERIALS ENTER THE STORES.
WHEN A PURCHASE ORDER IS PLACED, ONE COPY OF THE SAME IS SENT TO STORES.
THE COPY INFORMS THE STORES INCHARGE ABOUT THE ITEM DESCRIPTION, THE QUANTITY, QUALITY / GRADE / TYPE, AND DELIVERY DATE, SUPPLIERS NAME ETC.
IT IS THE TASK OF THE RECEIVING SECTION IN CHARGE TO CLASSIFY SUCH PURCHASE ORDERS AS PER A SUITABLE BASE / BATCH SUCH AS TYPE OF ITEM, SUPPLIER, DELIVERY DATE ETC.
THIS COPY OF THE PURCHASE ORDER HELPS TO PREPLAN FOR LABOUR TO RECEIVE AND UNLOAD THE MATERIAL, MAKE ADEQUATE ARRANGEMENTSW FOR SEPARATE SPACE AND INFORM INSPECTION DEPARTMENT ABOUT PROBABLE SCHEDULE OF INSPECTION.

ONCE THE SUPPLIERS DESPATCH THE GOODS THROUGH THEIR CARRIER THEY ARRANGE TO SEND AN ADVICE NOTE TO THE RECEIVING STORES.
SUCH AN ADVICE NOTE PROVIDES INFORMATION ABOUT DATE OF DISPATCH, CARRIER DETAILS, DESCRIPTION OF CONSIGNMENT, PACKAGING, LABELING, HANDLING INSTRUCTIONS, VALUE OF THE CONSIGNMENT, REFERENCE OF THE CORRESPONDING PURCHASING ORDER ETC.
THE ADVICE NOTE IS SENT IN SUFFICIENT ADVANCE TO HELP MAKE SUITABLE ARRANGEMENTS AND EXPEDITE CLEARANCE OF GOODS AND RELATED DOCUMENTS.
ON RECEIPT OF GOODS, THOSE ARE PHYSICALLY VERIFIED AND TALLIED WITH THE CONSIGNMENT NOTE SENT BY THE CARRIER.
THUS, THE THREE DOCUMENTS, VIZ. PURCHASE ORDER COPY, ADVICE NOTE, SENT BY THE SUPPLIER, CONSIGNMENT NOTE SENT BY THE CARRIER, MUST TALLY WITH EACH OTHER AND WITH THE RECEIVED CONSIGNMENT

TYPE OF RECEIVING SECTIONS :
RECEIVING SECTION CAN BE OF VARIOUS TYPE. THE PROMINENT TYPE ARE DISCUSSED BELOW:
CENTRALIZED RECEIPTS: THIS IS A PART OF A CENTRAIZED STORE SET UP WHERE ALL MATERIALS ARE RECEIVED, PHYSICALLY CHECKED, INSPECTED AND EITHER STORED FOR DISTRIBUTION TO USERS OR ARE DIRECTLY DISPATCHED TO VARIOUS SUB – STORES ALONG WITH THE GOODS INWARD NOTE.
SEMI – CENTRALIZED RECEIPTS : IN THIS ARRANGEMENT THE RECORD KEEPING PART IS CENTRALIZED AND SPECIAL, HIGH VALUE MATERIALS ARE RECEIVED CENTRALLY. MOST OF THE OTHER INCOMING MATERIAL IS DIRECTED TO RESPECTIVE STORES AND IS CHECKED AND VERIFIED AND GOT INSPECTED BY THE RESPECTIVE STORES RECEIVING SECTION STAFF. THIS ARRANGEMENT PRECLUDES THE POSSIBILITY OF BOTTLENECKS DUE TO A HEAVY WORK LOAD ON THE RECEIVING SECTION. IT ALSO SAVES ON TRANSPORTATION COSTS FROM CENTRAL STORES TO SUB – STORES AND THEN TO THE USER DEPARTMENTS.
THE CENTRAL STORES CARRIES OUT TASK OF PREPARING AND RECORDING GIN.
DECENTRLIZED RECEIPTS : THIS ARRANGEMENT ATTACHES A RECEIVING SECTION TO EVERY STORES. THIS IS USUALLY USED WHEN THE VOLUMES OF INCOMING MATERIALS IS USUALLY HIGH AND USERS DEPARTMENTS ARE SPREAD OVER A WIDE GEOGRAPHICAL AREA. GINs ARE PREPARED SEPARATELY AT EACH RECEIVING SECTION

STORES SYSTEMS & PROCEDURES THE RECEIPT PROCEDURE
ALL INCOMING MATERIALS MUST NECESSARILY PASS THROUGH THE RECEIPT SECTION AND IN NO CIRCUMSTANCE GO DIRECTLY TO THE USERS DEPARTMENT.
THE RECEIVING INCHARGE MUST COMPLETE ALL DOCUMENTATION AND PAPER WORK AT THE RECEIPT STORES BEFORE THE DISPATCH OR STORAGE OF GOODS.
ON RECEIVING THE CHALLAN AND OTHER DOCUMENTS FROM THE CARRIER, THE CONSIGNMENT IS UNLOADED AND IS CHECKED AGAINST THE PACKING LIST.
APPROPRIATE ENTRIES ARE MADE ON THE DELIVERY NOTE AND A COPY OF THE SAME IS RETURNED TO THE CARRIER.
IF THE DELIVERY NOTE IS RETURNED SIGNED, WITHOUT ANY QUALIFYING STATEMENTS THEN THE CONSIGNMENT IS DEEMED TO BE IN PROPER CONDITION.

WHEN MATERIALS ARE RECEIVED FROM SUPPLIERS AN ENTRY IS MADE IN THE ‘DAILY GOODS RECEIPT REGISTER’.
THE CONTENTS OF THE DAILY GOODS RECEIPT REGISTER ALSO CALLED ‘GOODS INWARD REGISTER’ ARE AS FOLLOWS :
DATE AND TIME OF RECEIPT
NAME OF THE SUPPLIER
NAME OF THE CARRIER
CHALLAN NUMBER AND DATE
ITEM DETAILS AND DESCRIPTION
QUANTITY AND VALUE OF ITEMS
PURCHASE ORDER REFERENCE
CARRIER DETAILS (RR NUMBER, LORRY NUMBER ETC.)
GOODS INWARD NOTE REFERENCE
REJECTED MEMO REFERENCE
RECEIVED BY
INSPECTED BY

ON FILLING UP THESE DETAILS THE NEXT STEP IS PHYSICAL VERIFICATION BY COUNTING, WEIGHING OR MEASURING AND TALLYING THE OUTCOME WITH THE CHALLAN OR DELIVERY NOTE.
THE SAME IS ALSO TALLIED WITH THE PURCHASE ORDER.
NORMALLY RANDOM SAMPLE CHECKING OF PACKAGES IS DONE.
THE RECEIVING SECTION STAFF DOES CHECKING BUT IT MAY BE FOLLOWED UP BY SECOND CHECK CONDUCTED BY THE INSPECTION DEPARTMENT.
THE TASK OF THE INSPECTION DEPARTMENT IS TO CONDUCT A DETAILED INSPECTION IN RESPECT OF QUALITY AND NATURE / TYPE OF GOODS.
THE TIME ELEMENT IS IMPORTANT IN THE SENSE THAT ANY UNCALLED DELAY AT THIS STAGE LOCKS IN MATERIALS THAT MAY BE OTHERWISE REQUIRED FOR USE BY USER DEPARTMENTS.
THE SHORTAGES MUST BE CLAIMED IMMEDIATELY AS THEY ARE TIME BARRED AS PER STANDARD PURCHASE CONTRACT.
ANY DISCREPANCIES PRESENT HAVE TO BE NOTIFIED WITHIN A TIME FRAME SO AS TO INFORM THE SUPPLIERS ABOUT FOLLOW UP ACTION.

STORES SYSTEMS & PROCEDURES GOODS INSPECTION NOTE
GOODS INSPECTION NOTE :
ONCE THE GOODS ARE CERTIFIED AS ACCEPTABLE BY THE INSPECTION STAFF AN INSPECTION REPORT (GIN) IS PREPARED.
THIS REPORT FORMS THE BASIS OF GOODS RECEIPT NOTE.
THE GIN IS A CERTIFICATE TO THE ACCOUNTS DEPARTMENT FOR CLEARING PAYMENT OF GOODS WHENEVER DUE AND FOR DEBITING THE STORES WITH THE VALUE OF GOODS RECEIVED.
IT IS ALSO AN INFORMATION TO PURCHASE SECTION REGARDING THE RECEIPT OF GOODS, AND AN ADVICE TO THE STORES TO TAKE THE MATERIALS INTO ITS CUSTODY AND RECORD THEM IN THEIR BOOK.

STORES SYSTEMS & PROCEDURES GOODS INSPECTION NOTE
GIN TYPICALLY GIVES THE FOLLOWING INFORMATION :
DATE OF PREPARATION OF GIN,
DATE OF RECEIPT OF MATERIALS,
CONSIGNOR
SUPPLIER’S NAME AND CHALLAN NUMBER OR INVOICE NUMBER
PURCHASE ORDER REFERENCE
MODE OF TRANSPORT
STORES TO WHICH MATERIALS ARE TO BE SENT
CLASS AND CODE NUMBER, DESCRIPTION OF MATERIALS
QUANTITY RECEIVED UNDAMAGED AND NUMBER OF PACKAGES
QUANTITY ADVISED, RECEIVED, ACCEPTED, REJECTED ETC.
TRANSPORT AND RELATED CHARGES PAID / TO PAY
DAMAGE / SHORT / EXCESS REMARKS
INSPECTION REPORT OR REJECTION NOTE OR DISCREPANCY REPORT NOTE NUMBER
SIGNATURE OF INSPECTOR
SIGNATURE OF RECEIPT CLERK
THE GIN MUST ACCOMPANY ALL THE MATERIALS SENT FOR STORAGE, RECORDS OR DISPATCH TO USERS DEPARTMENTS. PRE – PRINTED MULTICOLOURED GINS MAY BE USED FOR SPEEDY IDENTIFICATION AND RECORDS

STORES SYSTEMS & PROCEDURES INSPECTION
INSPECTION :
PHYSICAL VARIFICATION IS FOLLOWED BY DETAIL INSPECTION.
WHILE PHYSICAL, QUANTITATIVE CHECKING IS A SEMI – SKILLED TASK, INSPECTION IS A SKILLED OPERATION AND CALLS FOR THE ARRANGEMENT OF SPECIALIZED TRAINING OF PERSONNEL, PROPER TESTING FACILITIES AND METHODS.
GOODS MUST BE INSPECTED FOR QUALITY TO ENSURE THAT THEY ADHERE TO SPECIFICATIONS AS DESCRIBED IN THE PURCHASE ORDER.
THE FIRST TASK IS TO ENSURE THAT THE MATERIAL DELIVERED ARE THE SAME AS THOSE ORDERED, OF THE RIGHT QUALITY – DIMENSIONS, CHEMICAL CHARACTERISTICS, ETC, AND ARE IN PROPER CONDITION.
THE INSPECTION IS PARTICULARLY NECESSARY IN THE CASE OF RAW MATERIALS AND COMPONENTS THAT GO INTO THE FINAL PRODUCT.
ONE OR MORE INSPECTORS OF THE INSPECTION DEPARTMENT THAT MAY BE A PART OF THE MATERIALS DEPARTMENT GENERALLY CARRY IT OUT.
HOWEVER IT IS DESIRABLE TO HAVE INCOMING INSPECTION DONE BY INDEPENDENT INSPECTORS SO AS TO GIVE AN UNBIASED VIEW ON THE QUALITY OF MATERIAL PURCHASED.
AT TIMES THE USER DEPARTMENT MAY CARRY OUT INSPECTION.

INSPECTION : -------------------------------------------------------------------
INSPECTION MAY BE PERFORMED IN THE RECEIVING SECTION OR IN A PLACE SPECIFICALLY DEMARCATED FOR INSPECTION.
INSPECTION IS ALSO CARRIED OUT AT SUPPLIERS PREMISES IF SPECIFIED IN THE PURCHASE CLAUSE, OR IF PAYMENT IS TO BE MADE BEFORE DELIVERY, IF DURING MANUFACTURE OF OUT SOURCED COMPONENTS QUALITY HAS TO BE ASCERTAINED, AND TO AVOID LAST MINUTE REJECTIONS.
QUALITY OF RAW MATERIALS SUCH AS IRON, ALLOY STEEL MAY BE VERIFIED IN A METALLURGICAL LABORATORY.
COMPONENTS, SUB – ASSEMBLIES, SPARES ARE CHECKED WITH RELEVANT DRAWINGS AND INSPECTION EQUIPMENTS.

THE USUAL INSPECTION METHODS ARE AS FOLLOWS:
VISUAL - A VERY RUDIMENTARY METHOD FOR CHECKING STATIONARY ITEMS, GROCERIES, ETC.
BY TOUCH – APPLIED IN CASE OF TEXTILES FABRICS, AGRICULTURE PRODUCE ETC.
BY SMELL - CHEMICALS, POWDERS, OILS, ARE TESTED BY THIS METHOD.
BY COMPARISON WITH SAMPLES GIVEN BY SUPPLIERS DURING NEGOTIATIONS FOR AWARDING CONTRACTS
BY ACTUAL TESTING BY METROLOGICAL EQUIPMENT.
ISI TEST.
STATISTICAL QUALITY CONTROL AND RELATED CONCEPTS SUCH AS ACCEPTABLE QUALITY LEVEL (AQL) MAY BE USED FOR INSPECTION.

STORES SYSTEMS & PROCEDURES DISCREPANCIES
DISCREPANCIES:
VARIOUS DISCREPANCIES SUCH AS - LOSS OF PACKAGE,
DAMAGED PACKAGES, SHORTAGES, DAMAGES TO GOODS,
WRONG ITEMS SUPPLIED, EXCESS SUPPLIES ETC. MAY OCCUR.
THESE ARE NOTIFIED TO THE SUPPLIERS IN A DISCREPANCY REPORT ALONG WITH A COVERING LETTER.
COPIES OF THE REPORT ARE SENT TO PURCHASE SECTION AND ACCOUNTS DEPARTMENT FOR APPROPRIATE ACTION.
LOSS OF PACKAGES : A SHORT LANDING CERTIFICATE MUST BE OBTAINED FROM THE DOCK AUTHORITIES IN CASE OF CONSIGNMENT SHIPPED BY SEA AND AT THE SAME TIME A CLAIM BILL MUST BE SUBMITTED TO THE STEAMER AGENT WITH ADVICE TO THE INSURANCE COMPANY.
IN CASE THE PACKAGE WAS SENT BY RAIL, ENDORSEMENT SHOULD BE OBTAINED ON THE RAILWAY RECEIPT AND THE CLAIM SHOULD BE PREFERRED ON THE RAILWAYS.
IF A PACKAGE HAS LANDED BUT IS NOT TRACEABLE, A “ NOT FOUND “ APPLICATION IS TO BE SUBMITTED TO THE PORT COMMISSIONER WHO WILL INITIATE NECESSARY INVESTIGATIONS.

DISCREPANCIES ;----------------------------------------
DAMAGED PACKAGES : IN CASE OF DAMAGED PACKAGES A SURVEY SHOULD BE ARRANGED WITH THE AGENT WITHIN THREE DAYS OF LANDING OF GOODS.
IF SUCH A SURVEY CANNOT BE ARRANGED, AN INSURANCE SURVEY SHOULD BE CONDUCTED BEFORE COLLECTING THE MATERIAL FROM THE DOCK AND A CLAIM FOR ANY LOSS OR DAMAGE TO ARTICLES SHOULD BE LODGED WITH THE INSURANCE COMPANY.
ALL ORIGINAL PACKING LISTS MUST BE PRESERVED.
IN CASE OF ITEMS DESPATCHED BY RAIL, THE PACKAGE MUST BE OPENED IN THE PRESENCE OF RAILWAY INSPECTOR AND THE STATION MASTER AND THE LIST OF LOST / DAMAGED ARTICLES MUST BE PREPARED TO CLAIM THE SAME FROM RAILWAYS OR THE INSURANCE COMPANY.

DISCREPANCIES ;----------------------------------------
MINOR SHORTAGES AND DAMAGES; SUCH INCIDENTS CAN ONLY BE NOTICED ON OPENING THE PACKAGES.
INCOMING GOODS ARE USUALLY INSURED AND INSURANCE COMPANY OR THE SUPPLIER MEETS THESE CLAIMS.
AT TIMES, IF THE CLAIMS ARE NOT MET ONE HAS TO WRITE OFF THE VALUE.
THE GIN IN SUCH CASES WILL BE ACCOMPANIED BY A WRITE OFF REQUISITION TO ADJUST THE RECORDS ACCORDINGLY.
MAJOR SHORTAGES AND DAMAGES; AS THESE INVOLVE HIGHER VALUES THESE MUST BE DEALT CAREFULLY.
ALL ORIGINAL PACKAGES, PACKING SLIPS, DELIVERY CHALLANS, MUST BE PRESERVED AND INSURANCE SURVEY MUST BE IMMEDIATELY ARRANGED.
A CLAIM WILL BE PREFERRED ON THE INSURANCE COMPANY AND THE CONSIGNOR WILL BE NOTIFIED OF THE SAME.
AT TIMES IT MAY HAPPEN THAT THE PACKAGE IS INTACT BUT THERE IS A SHORTFALL IN THE QUANTITY OF GOODS, CLEARLY IMPLYING THAT THE GOODS WERE SHORT SHIPPED BY THE CONSIGNOR IN THE FIRST PLACE.
SUCH CLAIMS MAY OR MAY NOT BE ACCEPTED BY THE CONSIGNOR, IT HAS TO BE ROUTED THROUGH INSURANCE COMPANY TO SETTLE THE CLAIM.
ANY CLAIMS FOR DAMAGED MATERIALS EXCEPT THOSE DUE TO DEFECTIVE PACKING , ARE USUALLY MET BY THE INSURANCE COMPANY.

DISCREPANCIES ;----------------------------------------
SHIPPING WRONG ITEMS; THIS IS A RESULT OF SHEAR CARELESSNESS OR OVERSIGHT ON THE PART OF THE SUPPLIER.
THIS OCCURRENCE MUST BE IMMEDIATELY NOTIFIED TO THE SUPPLIER AND TO THE PURCHASE DEPARTMENT.
THE SHIPPED ITEM MUST BE HELD IN A SEPARATE PHYSICAL SPACE UNTIL FURTHER COMMUNICATION FROM THE SUPPLIERS.
EXCESS SUPPLY : AT TIMES SUPPLIERS SEND EXCESS QUANTITY AS AN ALLOWANCE FOR WASTAGE IN TRANSIT THAT IS USUALLY NOT TREATED AS EXCESS SUPPLY.
IN CASE OF GENUINE EXCESS SUPPLY THE SUPPLIER AND THE PURCHASE DEPARTMENT MUST BE INFORMED AND THE EXCESS QUANTITY MAY BE ACCEPTED OR RETURNED AS PER THE ADVICE OF THE PURCHASE DEPARTMENT.
IN CASE OF EXCESS ITEMS ARE RETAINED THE ORIGINAL PURCHASE ORDER MAY BE AMENDED OR THE NEW ONE MAY BE INITIATED.

STORES SYSTEMS & PROCEDURES REJECTION
REJECTION :
IF GOODS ARE REJECTED FULLY OR PARTIALLY A REJECTION NOTE FORM IS RAISED AND A COPY IS CIRCULATED TO THE PURCHASE SECTION AND TO THE SUPPLIER.
SUCH MATERIAL MUST BE MARKED APPROPRIATELY AND STORED IN A SEPARATE AREA TO AVOID MIXING WITH ACCEPTED LOT OR ENTERING THE NORMAL FLOW OF MATERIALS.

STORES SYSTEMS & PROCEDURES THE ISSUE SECTION
THE TERM ISSUES IMPLIES THE NORMAL SUPPLY OF MATERIALS FROM STORES TO VARIOUS USER DEPARTMENTS.
EFFICIENT ISSUE OF MATERIALS FROM THE STORES IS THE BENCHMARK TO JUDGE THE PERFORMANCE OF STORE FUNCTION.
MOST USER DEPARTMENTS JUDGE THE EFFECTIVENESS OF STORES BY THE SERVICE LEVELS OF THE STORES.
FOR THE PURPOSE OF ISSUES THE ITEMS CAN BE CLASSIFIED INTO TWO CATEGORIES :
ITEMS ISSUED ON REQUISITIONS FOR DIRECT USE,
ITEMS ISSUED ON LOAN AND SCRAPED IN DUE COURSE.

STORES SYSTEMS & PROCEDURES THE ISSUE SECTION
THE FACTORS TO BE TAKEN CARE OFF ;
AUTHORISATION OF ISSUES
REQUISITIONS
MATERIAL INDENT FORMS

STORES SYSTEMS & PROCEDURES ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS
PRICING RULES GOVERNING ISSUES OF MATERIALS;
FIRST – IN – FIRST OUT METHOD (FIFO METHOD)
LAST – IN – FIRST – OUT – METHOD (LIFO METHOD)
AVERAGE COST METHOD
REPLACEMENT PRICE METHOD
ACTUAL PRICE METHOD
INFLATED PRICE METHOD.

STORES SYSTEMS & PROCEDURES ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS
THE MATERIALS STORED IN THE STOCK – ROOM ARE ISSUED TO VARIOUS JOBS OR PRODUCTION DEPARTMENTS AGAINST THE AUTHORISED MATERIALS REQUISITIONS.
THE ISSUES ARE RECORDED IN THE STORE LEDGER AND THE RESPECTIVE JOBS OR PRODUCTION DEPARTMENTS ARE DEBITED WITH THE PRICE OF THE MATERIAL ISSUED.
AS THE TIME OF PURCHASES AND THE TIME OF ISSUES ARE MOSTLY DIFFERENT AND THE MARKET PRICE OF THE MATERIALS TENDS TO VARY, THE PROBLEM OF PRICING THE MATERIALS ISSUED NECESSITATES CERTAIN POLICY FORMULATIONS.
IT IS AN IMPORTANT CONSIDERATION NOT ONLY UNDER STORE MANAGEMENT BUT ALSO FOR COSTING AND PRICING POLICIES.
THE FUNDAMENTAL CONSIDERATION IS WHETHER TO PRICE THE ISSUES AT HISTORICAL PRICE I.E., THE ORIGINAL PURCHASE PRICE, AT THE REPLACEMENT PRICE I.E. THE PREVAILING MARKET PRICE AT THE TIME OF ISSUE OR AT SOME OTHER PRICE.
THE VARIOUS METHODS ARE USED FOR PRICING THE MATERIAL ISSUES WHICH ARE BASED ON DIFFERENT PRINCIPLES.

ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS FIRST – IN – FIRST – OUT – METHOD (FIFO METHOD)
FIFO METHOD, AS ITS NAME SUGGESTS, IS GOVERNED BY THE PRINCIPLE THAT THE MATERIALS WHICH ARE RECEIVED FIRST ARE ISSUED FIRST.
THE ISSUES ARE PRICED AT THE COST PRICE OF THE OLDEST CONSIGNMENTS TILL IT GETS EXHAUSTED.
AS SOON AS THE OLDEST LOT IS EXHAUSTED, THE ISSUES ARE PRICED AT THE COST PRICE OF THE NEXT OLDEST LOT IN THE SEQUENCE, E.G. THE FOLLOWING TRANSACTIONS OCURRED DURING THE FIRST WEEK OF APRIL 2007:
APRIL 1, 300 UNITS PURCHASED @ Rs. 10 PER UNIT APRIL 3, 600 UNITS PURCHASED @ Rs. 15 PER UNIT APRIL 5, 500 UNITS ISSUED TO JOB NO. 1001 THE ISSUE OF 500 UNITS WILL BE PRICED AS UNDER; FROM THE FIRST LOT : 300 @ Rs. 10 = 3000 REMAINING 200 UNITS FROM SECOND LOT = 200 UNITS @ Rs. 15 = 3000 TOTAL PRICE OF THE ISSUE 500 UNITS = 6000 THE VALUE OF THE CLOSING STOCK OF 400 UNITS ( I.E. SECOND LOT 600 UNITS LESS 200 UNITS ISSUED WILL BE COSTED @ Rs. 15 I.E. THE VALUE OF CLOSING STOCK WOULD BE Rs. 6000.

ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS LAST – IN – FIRST – OUT – METHOD (LIFO METHOD)

STOCK VARIFICATION
THE STORES MANAGER HOLDS THE PHYSICAL CUSTODY OF THE MATERIALS AND IS RESPONSIBLE FOR SAFE UPKEEP AS WELL AS FOR ANY MAJOR DISCREPANCY.
HE MUST CONSTANTLY REVIEW THE STOCKS AND RECONCILE THE PHYSICAL AND BOOK STOCKS, WHICH DIFFER IN ALMOST ALL ORGANISATIONS.
THE MAGNITUDE OF THIS PROBLEM WILL INCREASE AS THE NUMBER OF TRANSACTIONS INCREASE, BECAUSE MISTAKES MAY BE COMMITTED IN TRANSACTIONS AND THIS CAN ACCUMULATE TO MAJOR DISCREPANCIES.
FOR EXAMPLE, IF THE WEIGHING SCALE INDICATES 1 KG LESS EVERY TIME THEY WEIGH, AND THERE ARE 100 WEIGHING IN A PERIOD, THE STORE KEEPER WOULD HAVE ISSUED 100 KG WITHOUT ANY RECORDS AND WILL FIND HIMSELF SHORT WHEN THE PHYSICAL CHECK IS MADE USING THE SAME WEIGH BRIDGE.

STOCK VARIFICATION
ISSUES WITHOUT INDENTS,IMPROPER CHECK OF RECEIPTS,
PILFERAGE, OBSOLESCENCE, DETORIORATION AND DAMAGE DUE TO DIFFERENT CAUSES OF IMPROPER STORAGE,
SHRINKAGE, EVAPORATION, SPIILAGE, ETC. ARE OTHER FACTORS THAT HAVE TO BE CONSIDERED IN THIS CONTEXT.
IN ORDER TO EXERCISE STRICT CONTROL ON THE ABOVE, THE STORE MANAGER MUST VERIFY THE STOCKS PERIODICALLY.
EXPERIENCE INDICATES THAT MANY DISCREPANCIES IN PRACTICE ARE DUE TO IMPROPER DOCUMENTATION, LIKE -
COMPLYING WITH URGENT ISSUES WITHOUT VOUCHERS,
DELAYS IN POSTING THE RECEIPTS AND ISSUES AND
ISSUE BY NUMBERS, RECEIPT BY WEIGHT AND ACCOUNTING BY NUMBERS, ETC.

PROCESS OF VERIFICATION
STOCK VERIFICATION CAN BE DEFINED AS THE PROCESS OF PHYSICAL COUNTING, WEIGHING OR MEASURING THE STOCK OF MATERIALS THAT IS HELD AND MAKING A RECORD OF THESE FIGURES.
NORMALLY PERSONNEL FROM THE ACCOUNTS DEPARTMENT ARE GIVEN THIS RESPONSIBILITY.
SOMETIMES THE AUDITORS ( OR BANKERS TO WHOM THE STOCK IS HYPOTHETICATED) – ALSO UNDERTAKE THE VERIFICATION OF STOCKS ON A SAMPLE BASIS ; IN ORDER TO CHECK THE REALITY OF THE PERFORMANCE STATEMENTS.
A WELL DEFINED VERIFICATION PROCESS, CAN ALSO PINPOINT ANY DRAWBACKS OR SHORTCOMINGS IN THE METHODS OF STORAGE, MOVEMENT OF MATERIALS, HANDLING OF MATERIALS, OBSOLESCENCE, ETC.
A REGULAR VERIFICATION PROCESS ENSURES THAT THE SYSTEM AND PROCEDURES LAID IN THE MANUAL ARE ADHERED TO.

PHYSICAL VERIFICATION OF STOCKS STARTED OFF AS A PERIODIC EXERCISE, USUALLY COINCIDING WITH THE ANNUAL ACCOUNT CLOSING, UNDER THE DIRECTION OF ACCOUNTS DEPARTMENT.
THIS PROCEDURE ACTING AS A POSTMORTEM EXERCISE, CAN STOP THE NORMAL FUNCTION OF THE PLANT TOWARDS THE YEAR END, IF THE NUMBER OF ITEMS ARE LARGE.
SINCE THERE IS AN URGENCY FOR QUICK COMPLETION, THIS MAY LEAD TO AN INEFFECTIVE VERIFICATION PROCESS.
TO OVERCOME THIS DIFFICULTY, MATERIALS ARE CHECKED THROUGHOUT THE YEAR AND VERIFICATIONS ARE SO STAGGERED, THAT ALL MATERIALS ARE COVERED IN A YEAR.
IT WILL BE ADVANTAGEOUS TO COVER THE HIGH CONSUMPTION VALUE A ITEMS MORE THAN THE OTHER ITEMS IN THIS PERPETUAL CONTINUOUS SYSTEM.
THE VERIFICATION PROCESS, WHETHER PERIODIC OR PERPETUAL SHOULD BE THOROUGH, OR WELL ORGANISED WEIGHING AND THE UNIT OF MEASUREMENTS MUST BE CONSISTENT AND THE MEASURING INSTRUMENTS MUST BE PROPERLY CALIBRATED, SO THAT MEASURING ERRORS ARE MINIMAL.
CARE SHOULD BE TAKEN TO AVOID DOUBLE COUNTING, OVERLOOKING ITEMS KEPT AT OLD PLACES, WITH ANCILLARIES AND IN TRANSIT, ETC.

THE PROCESS OF PHYSICAL VERIFICATION CAN BE COMPLETE ONLY IF NECESSARY FOLLOW – UP ACTION IS PLANNED.
AFTER TABULATION OF PHYSICAL STOCK, ATTEMPTS SHOULD BE MADE TO RECONCILE WITH BOOK BALANCE, INDICATING OPERATING STOCK PLUS RECEIPT MINUS ISSUES.
IT IS VERY COMMON THAT THE TWO SETS OF FIGURES FOR EACH ITEM MAY NOT TALLY AND HENCE THE PROBLEM ARISES IN STORES MANAGEMENT.
A DETAILED INVESTIGATION IS CALLED FOR, IF THERE ARE MAJOR DIFFERENCES PARTICULARLY IN HIGH VALUE ITEMS, TO AVOID RECURRENCE OF THE SAME IN FUTURE.
USUALLY, ORGANISATIONS FIX – UP LIMITS FOR DISCREPANCIES AND DISCREPANCY VOUCHERS ARE SIGNED BY THE APPROPRIATE AUTHORITIES.
HOWEVER, STOCK VERIFICATION SHOULD NOT BE PERCEIVED AS A WITCH HUNTING PROCESS AND STORE PERSONNEL MUST BE INVOLVED IN THE EXERCISE.
THE ORGANISATIONS WILL GAIN, IF THE STORES PERSONNEL ARE MOTIVATED BY A PROPER DEVELOPMENT OF THE ATMOSPHERE, CULTURE AND VALUE SYSTEMS.

Stores Management

by thombremahesh

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