Store keeping and inventory control

2. Store Keeping
.Store keeping is the ACCOUNTING of stock in store.
This stock may be of raw material, tools, work-in-
process and finished goods. Our some fixed assets
may also keep in the store. So, it is very necessary to
record each material’s quantity and amount when
material comes in the store or issue from the store or
balance. To maintain the accounts of store is the duty
of store keeper.

3. (1)Materials Receipt and
Accounting
Materials required for manufacturing process to run
are received from various sources from outside
which are verified and accounted for in the Stores.

4. Materials required are received from various sources
through various modes of transportation. The major
mode of transportation are Rail and Road. Other than
these the materials are also received through air, sea ,
courier, registered post or by hand (Door delivery).

5. Machines And Machinery Use In Store
Hand / Pallets Trolley:- Use for carrying materials
that are beyond carrying with ordinary hand.
 Fork Lifts:- Use for carrying heavy materials in
bundles which can not be carry with hand
Overhead crane:- Is almost the same with the fork
lifter, the difference is that it is being use inside very
large ware house.

6. Receipt, Accounting &
Documentation
 Once the consignments/materials are received in the Stores from the
Suppliers, actual quantity received & the condition of the material received
are further checked in detail after unpacking the packages and matching the
quantities with the suppliers delivery and the Purchase orders. Weightment is
resorted to wherever the weight is to be ascertained.
 The correctness/completeness and the quality of material received is checked
as per the terms of Purchase Orders. Then the document for receipt
accounting is prepared which is known as “Goods receipt note (GRN)” or
“Stores Receipt Voucher (SRV)”. GRN/ SRV is the document through which
the received materials are taken on charge in the plant, also the document
which communicates the acceptance/rejection of the material supplied and a
document enabling the payment to the supplier against the supply.

7. Storage of Materials - Stores
Custody
Safe custody of materials received in stores happens
to be the foremost activity and concern of any stores.
Materials received from various sources need to be
stored properly in Stores for ensuring the proper
upkeep of material till its use, to ensure security and
safety of the material, the ease of retrieval and
handling. The various aspects considered in the
storage of material are as given below:

8. The materials used by multiple users are usually
stored at a central stores from where all the users get
the material. On the other hand, material which are
used in a particular user department only can be
stored in a stores nearer to that department itself .
Such Stores are Sub stores in which all department /
shop/ user specific items and some regularly used
central items are stored.

9. Commodity wise Stores:
The storage of material is also done on the basis of the nature of
the commodity being stored as the storage requirement,
handling requirement and the precautions to be taken depend ,
to a great extent, on the commodity being stored. For example,
Lubricants are stored in a Lubricant stores in drums are located
in a central storage from where lubricants can be pumped out
to users. Similarly, Refractory bricks & other Refractory items
are stored in the Refractory Stores. Gasses are Stored in
cylinders in Gas stores. Mechanical & electrical Spares &
consumables are stored in the respective Spares Stores/
consumable stores.
Petrol & diesel are stored in centralized storage with pumping
facility for dispensing.

10. Documents used in stores
Purchase requisition /Internal Order.
This form is a document that shows the materials which are
required to complete specific jobs. The materials should be
monitored and re-ordered when levels become low. This form is
sent to the purchases department and is effectively an internal
purchase order.
Purchase order / LPO
A purchase order is prepared by the purchase department, but has its origins in the stores
department. This shows the materials that the company is ordering, and includes the
volume of materials, as well as the delivery details expected and the value of the materials
that are being ordered.
Goods received note
The goods received note is the document that shows the materials that have been received
from the supplier. This is vital, as it compares the ordered stock, with the stock that is
received.
Bin Card / Stock Card :
Bin card is the document in the stores custody where the history of transactions of an item
is maintained. There are separate bin cards maintained for each of the stores item under
separate catalogue number. Each receipt and issue transactions are posted in the bin card
giving the up to date stock position of the item.

11. Stores relations with other
functions
 Stores serves all departments of an organization, but the highest degree of relations are
between Purchase who feeds the stores, and Production whom the Stores supplies
various materials.
Stores and Purchase:
The two functions of materials management, Stores and Purchase, are complementary
to each other.
Stores and Production:
The production or the user department happens to be the main customer of stores. In
production meetings, if stores is represented, coordination can be excellent. Any change
in a production schedule needs to be communicated to stores to enable prompt
corrective action.
After all it is Stores that has to cater to the needs of the user departments
Stores and Sales:
The strong relationship between stores and sales exists in the marketing scenario where
Sales is the chief customer of the finished goods store.
Stores and Accounts:
Usually the accounts department does all the stores accounting ensuring a day-to-day
working relationship.
Stores and personnel:
Selection of the right person for stores work and an adequate training in storage,
preservation and accounting techniques is vital.

12. Inventory Management
Inventory Management refers to maintaining , for a given financial
investment, an adequate supply of raw materials to meet an expected
demand pattern of production.
Inventory management is also concerned with minimizing the total
cost of inventory. The three main factors in inventory control decision
making process are:
The cost of holding the stock (e.g., based on the interest rate).
The cost of placing an order (e.g., for row material stocks) or the set-
up cost of production.
The cost of shortage, i.e., what is lost if the stock is insufficient to
meet all demand.

13. Terminology used in Inventory
management / control :
Maximum Limit : When devising a suitable Inventory
model ,the Maximum limit establishes the upper limit to
which the stock of an inventory item shall be allowed.
Minimum Limit : It is the lower limit to which the stock
can be allowed to fall in course of replenishment of the
stock of an item. Normally, this is taken to be the safety
stock also.
Safety Stock: The stock that is maintained to counter the
variation in demand of an item during replenishment lead
time.

14. Setting of various stock level
 (a) Re-ordering level
It is the level of stock quantity between minimum and maximum level and
material order was sent for getting fresh stock.
maximum usage of stock X maximum delivery period
 (b) Minimum level
It is the minimum balance, which must be maintained in hand at all times, so
that there is no stoppage of production due to non availability of inventory.
Re-order level -( Normal usage X average period )
 (c) Maximum level
It shows maximum quantity which should be in the stock, if we buy more, it
means we are wasting money. re-order level X re-order quantity -
( minimum usage X minimum period )
 (d) Average Stock Level:- This is the average of minimum and maximum
level and it can be calculated by adding minimum level and maximum level
and divided by 2.
minimum level + maximum level / 2
 (e) Danger level:- It is the level at which normal issues of the raw material
inventory are stopped and emergency issues are only made.
average consumption X lead time for emergency purchase.

15. Think Safely
Work Safely
Behave Safely
THANKS