Stores in English

1. The Essentials - Stores
HASH MANAGEMENT SERVICES LLP
CHENNAI
PH: 91766 13965

2. Overview
 ‘The Essentials’ series from Business Sense is an initiative to empower the students(freshers) and
professionals in performing more efficiently and effectively in the organization
 This document is a part of the “Certified Manufacturing Professional” course offered by Business Sense
 This course is aimed at bridging the gap between the institutions and the industry by providing the
fundamentals of manufacturing management which are not offered by any of our
institutions/curriculum
 This course would immensely benefit students and professionals who are joining manufacturing
organizations
 For more details, please visit www.businessense.in
 At Business Sense, we help clients through consulting engagements focusing on improving their
Operations through Lean Manufacturing Implementation covering 5S, SMED, Kaizen and other tools.
 We also serve clients on Preparation of Detailed Project Reports, Market Assessments, and Supply
Chain Re-engineering.
 You can subscribe to our bi-weekly newsletter here.
 Follow us:
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3. Contents
 Section 1 – Introduction and Basic Processes
 Section 2 – Materials Classification Techniques
 Section 3 – Ordering Techniques
 Section 4 – Storage techniques
 Section 5 – MIS Reports and Analyses Points
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4. Introduction to Stores Function
 A professionally managed Store has a process and a space within, to receive the incoming
materials (Receiving Bay), keep them for as long as they are not required for use
(Custody) and then to move them out of stores for use (Issue)
 The objective is to efficiently and economically provide the right materials at the time
when it is required and in the condition in which it is required.
Stores
1 2 3 to
From
production
suppliers Receipt Issues
Holding / users
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5. Organization Structure
 This is a standard organization structure
for Stores Function
 Stores Manager reports to the CEO of the
CEO
company
 There would be a few Stores Executives /
Assistants reporting to the Stores Stores
Manager Manager
 Each Stores executive would typically
focus on a single raw material category Stores Stores Stores
Executive / Executive / Executive /
Assistant Assistant Assistant
 We have explained a typical functional hierarchy. It may
vary according to each organization
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6. Responsibilities of an Engineer in the Stores
Function
 Ensure that the materials are stored without any impact on the quality, physical and
chemical composition that the materials are intended for use in the subsequent functions.
 Ensure that the data/information and regular audits regarding the materials stock
positions and locations are updated daily and correctly.
 ABC Classification of Items ( along with Purchase function )
 Regular stock analysis and salvaging the non-moving items
 First-In-First-Out (FIFO) – Material Issues
 Regular coordination with the Purchase and Production teams to ensure the material
availability and issues.
 Ensuring that the stores is tidy, organized Search-free, bend-free, count-free & climb-free
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7. Key Activities of Stores Function
 Issues and Receipts entries done on the same day
 Make sure that Physical Stock and Book Stock are the same
 Store all the heavy items in the bottom racks
 Regular, Fast Moving items at the middle racks ( avoid climbing, bending)
 Slow Moving and Non-moving items at the top racks
 Rack Numberings along with the items stored inside list to be updated every 2
weeks
 Monthly Closing Stock report to be submitted to the senior management every
month
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8. Stores Process Flow - Receipts
 Stores executive receives materials along with the invoice and
Delivery Challan (DC)
 After checking the quality& Quantity of the received materials
against the PO, the Goods Receipt Note (GRN) is created by the
Stores Executive
 Invoice is sent to the Bill Passing / Accounts function for
payments to the supplier
 If the quality / Quantity of the incoming materials are not
according to the PO, Purchase and other relevant functions are
informed and necessary actions are taken
 Action ranges from sending back the materials to the suppliers in case of major
quality issues to adjustments in the payment schedules to the suppliers
*Any part supplies/ Quality issues / changes from the above mentioned processes
would be discussed with the Stores manager/ Senior Management and
necessary actions would be taken.
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9. Stores Process Flow – Holding / Custody
 Once received, the materials are stored in the allotted space
 The Stock position is updated in the bin card, system stock
/ledger on the same day
 Stock count: every month the closing stock report is prepared and
sent to the Stores Manager and the Senior Management of the
company
 Every day the stores executives count and verify the stock of at
least 5 A& B class items. Any discrepancy in the physical stock,
system stock/ledger and bin card should be reported to the Stores
Manager
*Any part supplies/ Quality issues / changes from the above mentioned processes
would be discussed with the Stores manager/ Senior Management and
necessary actions would be taken.
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10. Stores Process Flow – Issues to Production
 Whenever the materials are required for the production function, a Material Issue Requisition (MIR) is
created by the production supervisor and sent to the Stores Executive
 Against the MIR, Stores Executive issues the required quantity for the materials and immediately updates the
Bin card and system stock/ledger
 In case of a new customer order, the stores executive would create the Net requirement for the order based on
the Bill of Materials (BOM), Stock available in the stores corresponding to that order, Pending POs, and the
delivery schedule
 Indenting: The stores executive would raise a Purchase Indent (PI) to the purchase Executive during a new
customer order / the existing materials in the stores reaches the ordering points
*Any part supplies/ Quality issues / changes from the above mentioned processes would be discussed with the Stores manager/ Senior
Management and necessary actions would be taken.
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11. How Stores co-ordinate with other functions?
Stores - Process
Bill
Accounting
Passing
Invoice & GRN
Issues Net
Material Issue
Requirement
Requisition Slip Purchase
Indent Purchase
Stores Executive
Assistant
Production
Supervisors Materials
Receipts
Invoice,
Warehouse Delivery Challan
Perpetual Stock
Verifications
Shipments
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12. Contents
 Section 1 – Introduction and Basic Processes
 Section 2 – Materials Classification Techniques
 Section 3 – Ordering Techniques
 Section 4 – Storage techniques
 Section 5 – MIS Reports and Analyses Points
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13. ABC Classification
 Pareto Analysis / 80-20 rule
 20% of the items would constitute 80% of the value
 Few other examples:
 20% of the causes results in 80% of the defects
 20% of the population controls 80% of the wealth
Items Value
20% 80%
80% 20%
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14. ABC Classification
 In any organization, the raw materials form about
60~65% of the Cost of Goods Sold (COGS).
COGS:
All Raw Materials – 60~65%
Labor Cost – 7~8%
Power & utiities – 8~10%
.
.
.
_______________________
Total – 100%
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15. ABC Classification
 While analyzing the raw materials it would be clear that the top 20% of
the items would constitute about 80% of the purchase value. Next
30~40% items would constitute about 15% of the purchase value.
Remaining 50% of the items constitute 5% of the purchase value.
Few Items = More consumption in value
A Category
B Category
More Items = Low consumption in value C Category
Methodology of analyzing ABC items, and Lead time are explained in the “Certified Manufacturing
Professional” course. To access login to www.businessense.in
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16. Contents
 Section 1 – Introduction and Basic Processes
 Section 2 – Materials Classification Techniques
 Section 3 – Ordering Techniques
 Section 4 – Storage techniques
 Section 5 – MIS Reports and Analyses Points
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17. Ordering Techniques
Category Characteristics Ordering Techniques Reason
For items whose
Scheduled Shipments / Standard
consumption is regular
Order Quantity (SOQ)
through-out the season
Very High Value. Need to
A
monitor continuously
For items whose
Re-Order level consumption do not
follow a pattern
Moderate Value – Moderate
Order based on the Re-Order
B Impact on the Inventory Re-Order level
level
Holding
Low Value – No major impact
Do not focus more on the C
C on the Inventory Holding MinMax / Two Bin System
Category items
Cost
Methodology of calculating ROL, Scheduled Shipments, MinMax quantities are explained in the
“Certified Manufacturing Professional” course. To access login to www.businessense.in
Copyright of Hash Management Services LLP www.businessense.in

18. Contents
 Section 1 – Introduction and Basic Processes
 Section 2 – Materials Classification Techniques
 Section 3 – Ordering Techniques
 Section 4 – Storage techniques
 Section 5 – MIS Reports and Analyses Points
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19. Objectives of the Store
 Effective use of the space available
 Protection (of the materials & the personnel)
 Efficiency – how quickly can a material be delivered to
the user departments
 Productivity Improvement (Quick retrieval of the
materials, volumes handled)
 Mechanization – depending on the volume handled /
senior management’s decision
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20. Ensuring First-In-First-Out (FIFO)
 All the materials are stored inside the stores in
proper racks / bins. The bins should be labeled
properly for easy identification.
 The racks can be placed in a slight inclination so that
First-in-First-Out is followed.
Recent
Items placed Items for
at the rear issues taken
from the
front side –
to ensure
FIFO
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21. Rack Numbering and Maintenance
 Each bin should be given a
Rack Master List
identification number A1, A2,
S.no Rack No Items
B1, B2 etc. Rack Design - Sample
1 A1 Nuts
 An excel sheet containing the A1 A2 A3 A4 2 A2 Bolts
Bin identification number and – Nuts - Bolts -Screws - Washers
3 A3 Screws
the items present in the bin B1
B2 B3
B4
4 A4 Washers
– Rubber – Plastic
should be maintained. materials
- Threads - Nails
items 5 B1 Rubber Matls
 By this way, dependence on a C1 C2
C3 C4 6 B2 Threads
– Welding –Electrical
person is reduced - Tools -Adhesives
rods Items
7 B3 Nails
8 B4 Plastic items
 Any new person can look at
9 C1 Tools
the item in the excel sheet, go
10 C2 Adhesives
to the corresponding bin and
11 C3 Welding Rods
pick the item.
12 C4 Electrical
 Any changes in the material Items
storage bin should be updated
in the excel sheet
Detailed Storage techniques, MIS reports and templates are available in the “Certified
Manufacturing Professional” course. To access login to www.businessense.in
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22. End of Free Content
 Please visit our website www.businessense.in to access the full course – “Certified Manufacturing
Professional”
 Our website also contains list of ready-to-use templates and report formats containing Charts and
pivot tables.
 Templates and report formats are available for Purchase, Stores, Production, Quality, Maintenance and
HR functions
 These templates come in excel /word and can be downloaded and used right away
 At Business Sense, we help clients through consulting engagements focusing on improving
their Operations through Lean Manufacturing Implementation covering 5S, SMED, Kaizen and
other tools.
 We also serve clients on Preparation of Detailed Project Reports, Market Assessments, and
Supply Chain Re-engineering.
 You can subscribe to our bi-weekly newsletter here.
 Follow us:
Copyright of Hash Management Services LLP www.businessense.in