Click here to buy - http://imojo.in/bj9b8l This presentation is aimed at helping small and medium businesses in their Stores / Warehouse Management. The module starts with an introduction to the function, Roles and Responsibilities of executives in the function, Key tools and methodologies, ABC Analysis, Storage Techniques, Visual Representation of best practices and various templates for MIS analysis.

2. Introduction
Not quite sure if this book would be useful for you?
If you belong to any of the category of people mentioned below, then this book
is for you.
• Manufacturing Sector expects the engineers to be Job-
ready. However, the engineering curriculum does not
cover some of the basics required in the manufacturing
sector. This book would help in understanding the
basics, so that a fresh engineer can perform his role
immediately aCer joining the company.
Fresh Engineers
interested in joining
Manufacturing Sector
• This book can serve as an “InducIon Manual” for the
new Supervisors and Engineers in the shop floor. Job
ResponsibiliIes, Do’s and Don’ts for each role, Tools
and Techniques and MIS reports are explained for each
department. This would help in faster career growth.
Supervisors / Engineers
in the Shop floor
• This book can serve as a Quick Guide to teach you and
your employees, the basics of manufacturing
organizaIon. This would also help you in managing your
people, building the organizaIon to the next level by
creaIng strong processes.
Second GeneraIon
Entrepreneurs

3. Why this book?
• In India, several studies conducted on the employability skills state that
only 5% to 10% of the Engineers graduating from the Institutions are Job-Ready
/ Employable.
• Industries require workforce which are readily employable, so that they
do not have to spend a lot of money and effort on providing basic skills and on-
the-Job training
• While large organisations have Induction training for their employees,
many medium and small scale companies do not have proper structure to
provide this training
• Their employees work with very little awareness of the best practices of
the industry, making them frustrated, fire-fighting for day-to-day activities and
results in a lot of stress
• This also makes the companies uncompetitive, leading to poor business
performance, resulting in poor motivation of the people, and this becomes a
vicious cycle
• This publication is aimed at providing the fundamentals of manufacturing
management which are not offered by any of our institutions/curriculum to
Engineers and Diploma Holders who are joining Manufacturing Industry
• This is our initiative to empower the professionals in performing more
efficiently and effectively helping the organization and the nation
• In addition, this gives us immense satisfaction that we are giving
something back to the ecosystem we are working in and are able to challenge
the traditional way of thinking and practices.

4. What do we cover in the book?
A typical manufacturing company has Production, Production Planning,
Quality, Stores, Purchase, Maintenance, Finance & Accounts, Marketing,
Human Resources, Admin , Information Technology and Sales functions.
However, we would cover
1. Production
2. Production Planning
3. Purchase
4. Stores
5. Quality
6. Maintenance
functions in this book, since these are the major areas, an Engineer or a
Diploma/Degree Holder joins after his/her degree.

5. Structure of the contents
Each department / function is explained in the following structure:
• General Introduction to the Function / Department
• Organization Structure of the function
• Roles and Responsibilities of the key incharges
• Process Flow in the function
• Tools and Techniques required in the function
• Pictures and tables to demonstrate the activities (wherever applicable)
• MIS Reports and the Analysis to be done
• Key Result Areas (KRAs) and Key Performance Indicators (KPIs) for
each function

6. Chapter 1
Introduction

7. Introduction to Manufacturing
Company
A manufacturing company produces goods (or materials) using tools, machines,
chemical processing, biologic processing or formulation and with the use of
people. Manufacturing ranges from small hand-made products (Handicrafts
industry) to large / Hitech products (Aircraft / Bullet Trains).
A typical manufacturing company procures many parts/raw materials from
various suppliers (or Vendors), process them (discrete manufacturing or flow
manufacturing) and sell to its customers. These customers may be the end users
of the product or may use the products to make other products. For e.g. A glass
manufacturing company procures silica and other raw materials for making
glass. This can either be sold as end product to consumers (for home use) or to
an Automotive factory to use these glass for cars (of course, the grades would
be different).
In this book, we consider a typical manufacturing company consisting of a few
discrete manufacturing processes (e.g., Turning, Milling, Polishing, etc.).

8. There are various functions (or departments) in organisations, each focusing on
a few major activities.
1. Production Function - Focuses on the manufacturing of the product
2. Purchase Function - Focuses on purchasing / buying the raw materials
and consumables required for the production
3. Stores Function - Focuses on the receiving the incoming raw materials,
holding them properly and issuing them to the user department when there is a
need for the materials
4. Maintenance - To keep all the machines ready for production. To prevent
break-downs of machines,
Each function consists of a group of persons (or a single person) performing
their tasks.
A company is headed by the CEO / Directors / Owners depending on its
structure. Various levels of managers across various functions report to the CEO
/ Directors. Supervisors / In-charges report to the managers and they manage the
operators (shop floor employees across various levels)
Pic: 1.1 - Various Levels of Employees
CEO / VP / Promoter
Process steps that take time,
(VA)
A process step that transforms or
shapes a product or service, which is
eventually sold to a customer.
resources, or space, but do not add
value to the product or service.
Directors / Promoters
Managers (various levels)
Supervisors / Incharges
(various levels)
Operators / Employees
(various levels)
Senior Management Level
Middle Management Level
Junior Management Level
Employee Level

9. Internal and External
Customer
External Customer: A customer who buys the product / services of a
company. All the functions in an organization exist to fulfil the need of these
end customers. This customer is not a part of your organization but pays your
organization for the products / services.
Internal Customer: A member of the organization providing goods / services
for other members inside the organization. For e.g. Stores issues raw materials
to production. So Production function is a customer for Stores. Inside
Production function, each operation sends the product to the next operation thus
becomes a supplier to the next operation. These are called Internal Customers
and Internal Suppliers.
Pic: 1.2 - Internal Suppliers and Customers
Stores Production
Internal CustomerInternal Supplier

10. Goals of each department
Each department works with a set of goals which are aimed at satisfying /
exceeding their Internal / External customer’s needs. These goals are called Key
Result Areas (KRA’s) or Department Objectives / Targets.
Generally there are 6 major categories of objectives / KRAs:
1. Productivity
2. Quality
3. Cost
4. Delivery
5. Safety
6. Morale
These KRA’s needed to be measured through various Indicators. They are
called Key Performance Indicators (KPIs). For e.g. Productivity can be
measured by indicators like “output per person per day”, “Planned production
vs. achieved production”, “Utilisation of the machine”, etc. Similarly, Quality
can be measured by “Reduction in defectives”, “% of yield”, etc.
All the departments will have KRAs and KPIs to measure their performance.
Generally there would be a Monthly Review Meeting (MRM) to discuss the
performance and take corrective and preventive actions.

11. Chapter 2
Stores

12. Introduction to Stores
Store is one of the important areas in the shop floor, yet it is neglected in many
companies in improving their efficiency. Many Process Improvements
(Kaizens) happen in the shop floor and other areas, but they are not practised /
deployed in Stores. This results in poor management of stores and problems
arising out of this.
This section aims at providing the basic knowledge of managing the Stores
Function and bringing process improvements.
We have used a few pictures in this book, which were taken from public sources.
These are only for educational purposes. We do not own these images. The
Author and Hash Management Services LLP will not take ownership for these
images and any liability arising out of these images

13. Stores Function
This section explains the basics of Stores Function, its activities, some key
techniques for classification of materials and ordering methods
• A professionally managed Store has a process and a space, to receive the
incoming materials (Receiving Area), keep them for as long as they are not
required for use (Holding/Storage Area) and then to move them out of stores for
use (Despatch / Issue to the user)
• 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.
Pic: 4.1 - Stores Function Snapshot
Stores
Stage 1:
Receipt
Materials from
Suppliers
Stage 3:
Issue
Materials
issued to the
users
Stage 2: Holding

14. Stores Function Structure
• This is a standard organization structure for Stores Function
• Stores Manager reports to the CEO of the company
• There would be a few Stores Executives / Assistants reporting to the
Stores Manager
• Each Stores executive would typically focus on a single raw material
category
*We have explained a typical functional hierarchy. It may vary according to
each organization
Pic: 4.2 - Stores Function’s Structure
CEO
Stores
Manager
Stores
ExecuIve /
Assistant
Stores
ExecuIve /
Assistant
Stores
ExecuIve /
Assistant

15. Job Responsibilities of Stores
Manager
• 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.
• Regular coordination with the Purchase and Production teams to ensure
the material availability and issues.
• Ensuring that the stores are tidy, organized and search free.

16. Job Responsibilities of Stores
Executive
• Proper documentation and storage of materials including receiving,
identifying space, labeling, issuing and stock keeping
• Proper Indenting of the net requirement based on the Production Plan
• Updation of the bin-cards / system stock positions/ledgers
• Perpetual stock keeping – daily stock verification for 5 items
• First-In-First-Out (FIFO) – Material Issues
• Focus on A and B category items. MinMax model/Two bin system for C
category items
• To make the stores Search-free, bend-free, count-free & climb-free

17. Things-to-do in Stores
Function
• Analysis of A, B and C Category Items
• Helps in identifying the key materials and maintain their stock
• Helps in reducing the overall Inventory carrying cost
• Reduces the complexity and enhance the ease of operations in the purchase
function
• Lead time of all the items should be rechecked / evaluated every 3 or 6
months (Check out the calculation methodology of Lead time in Purchase
Section)
Pic: 4.3 - Pareto Principle
Mismanagement in these items
would have significant impact
on the business

18. Things-to-do in Stores
Function
• Issues and Receipts entries should be 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

19. 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.
Pic: 4.4 - Receipts from Suppliers

20. Stores Process Flow – Holding
/ Storage
• 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 discrepancy in stock/ Quality issues / changes from the above mentioned
processes would be discussed with the Stores manager/ Senior Management and
necessary actions would be taken.
Pic: 4.5 - Storage / Holding

21. 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
Pic: 4.6 - Issues to Production

22. Snapshot of Stores Function
• Please note these only the basic processes in the Stores Function.
• It may include a few more activities depending on the company’s
requirements
Pic: 4.7 - Snapshot of Stores Function
Stores
Assistant
Warehouse
Material Issue
Requisition Slip
Production
Supervisors Materials
Accounting
Invoice & GRN
Perpetual Stock
Verifications
Purchase
Executive
Purchase
Indent
Stores - Process
Shipments
Invoice,
Delivery Challan

23. Objectives of Stores
• 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
Pic: 4.8 - Bins in a store

24. Storage Techniques
• 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.
Pic: 4.9 - FIFO Racks
Recent
Items placed
at the rear
Items for
issues taken
from the
front side –
to ensure
FIFO

25. Storage Techniques
• Each bin should be given an identification number A1, A2, B1, B2 etc.
• An excel sheet containing the Bin identification number and the items
present in the bin should be maintained.
• By this way, dependence on a person is reduced
• Any new person can look at the item in the excel sheet, go to the
corresponding bin and pick the item.
• Any changes in the material storage bin should be updated in the excel
sheet.
Pic: 4.10 - Identifications template for materials

26. Storage Techniques
• Following are the items that can be stored in adjacent racks
• Different Product of the same type
• Product which are issued as sets (paint & paint brush)
• Products with similar weight & dimensions
• Heavier items to be kept in the lower racks
Pic: 4.11 - Arrangement of Items in the racks

27. Stores – Layout
• Each different value stream within the warehouse will use dedicated
space and assets
• Each value stream will have a dedicated flow
• The result will be better customer service, faster response and less
waiting time
Pic: 4.12 - Stores design / Layout of stores
Value Stream - X
Value Stream - Y
Value Stream - Z

28. Stores – Layout
• Warehouse layout must be designed in order to separate inbound and
outbound flows
• This means providing physically different spaces and aisles for
replenishment and for picking or operating inbound and outbound at different
times
• The result will be increased productivity, reduced stock loss and reduced
accidents
Pic: 4.13 - Stores design / Layout of stores
Inbound / Replenishment Flow
Outbound / Picking Flow

29. Stores – Layout
The warehouse layout must ensure there is no wasted transport or movement
• Long journeys
• Empty returns
Pic: 4.14 - Stores design / Layout of stores

30. Designing the Racks / Shelves
• Single floor facilities are better (wherever possible
• Move goods in a straight-line (avoid
zigzag/overlapping gangways)
• Use the most efficient materials handling
equipment
• Optimize aisle space
• Use full building height – design racks based on
the height of the materials stored/to be stored in each
rack (optimal air gap between the materials and the
inner edge of the rack)
Pic: 4.15 - Air-Free Racks

31. Designing the Racks / Shelves
• Based on the size of the materials, paste numbers zero to the storage
quantity at the bottom surface of the rack
• In this case the storage space is designed for 20 items. So numbers are
pasted from 0 to 19
• Immediately by looking at the number next to the material we can
identify there are 14 materials left in the rack : count-free
• If the next material is issued, number 13 will become visible. So we can
say without counting that there are 13 items remaining
Pic: 4.16 - Count-Free Racks

32. Storage of Materials
• Bin cards should be placed in each bin to indicate the quantity present in
the racks.
• Items which are frequently used/fast moving should be kept in such a way
that the stores executive does not bend/climb the racks to take the items.
• Items which are not used frequently/slow/rarely moving items can be kept
at the top of the racks. Heavy items should be kept at the bottom racks.
Bin Card - Template
Item code: Item Name
Unit of Measurement Rack No
Supplier Code Re-Order Level / Min Max Level:
Supplier Name Lead time
City of the Supplier Safety stock
Date Issues (subtract) Receipts (add) Available Qty
Pic: 4.17 - Bin Card Template

33. Stock Maintenance - Perpetual
Stock Count
• Stores personnel should maintain that the physical stock and the book
stock should be equal all the time
• Every day at least 5 ‘A’-category items should be counted and verified
for stock discrepancy – this is called Perpetual Stock Counting
• By this method the stock position of all the key items would be monitored
regularly
• In case of any discrepancy, Stores Manager should be informed
immediately
Pic: 4.18 - Perpetual Stock Count Template
S.no Item
Code
Item
description
Category Inspection
Date
Book
Stock
Physical
Stock
Difference Remarks Next
Inspection
Date

34. MIS Reports
The list below explains the various parameters to track, the reports to generate,
the frequency and the person-in-charge in the Stores function:
Report - 1
Report Name Monthly Stock Report
Nature of Report
Item-wise (Descending in Value Terms) including
issues to production
Frequently Monthly
Who Prepares it Stores Executive
Analysis Points
What are the category-wise consumption, receipts
and closing stock? Is the closing stock of A&B class
items more than 30 days of consumption? How to
bring the closing stock value down? Can we convert
any major item into batches of small quantity instead
of ordering one time?

35. MIS Reports
Report - 2
Report Name Non-Moving Stock Report
Nature of Report Item-wise / Category-wise
Frequently Every 3 months
Who Prepares it Stores Executive
Analysis Points
What are the major non-moving items? Why they have
not issued in the last 3 months? How to use / salvage
them?
Report - 3
Report Name Stock Discrepancy Report
Nature of Report Item-wise / Category-wise
Frequently Monthly
Who Prepares it Stores Manager
Analysis Points
What is the value of the stock discrepancy? In that what
is the value of A & B category items? Is there is
downward trend observed in the stock discrepancy
value? If not, why? What are the corrective actions taken
to avoid discrepancy in the future?

36. MIS Reports
Report - 4
Report Name Incoming Quality Report
Nature of Report Item-wise / Trend Chart presenting the last 3 months
Frequently Monthly
Who Prepares it Purchase Executive
Analysis Points
What is the Pareto of the quality issues in the incoming
materials? What is the trend? Is it for the same item /
from same supplier? What is the time taken by the
supplier to rectify/send new materials? How to avoid
this in the future?

37. What are the KRAs and KPIs
of your department?
Goals /
KRAs
Performance Indicators /
KPIs
Measure
Current
Level
Target
Productivity
Instances of Stock Out
Situation
in nos 3 0
Productivity Optimum Stock levels
in no of days
of stock
20 10
Productivity
Discrepancy between
Physical Stock and Book
Stock
in Nos 19 0
Quality
Wrong materials issued to
production
in nos 3 0
Cost
Value of Non-Moving
Items
in Rs.
Prepare your department’s KRA’s in case your organization does not have
them.

38. Learning’s from the Section
Now that you have completed this Stores Section, Are you clear on the
following?
• Key Processes in the Stores Function
• Roles and Responsibilities of Stores Personnel
• ABC Classification (Refer Purchase Function)
• Ordering Techniques for the various classification of items (Refer
Purchase Function)
• Stores Layout Design
• Tips to create Identification of materials
• Perpetual Stock Counts
• MIS reports to be generated by the Stores personnel and the analysis to be
done

39. Interested in buying the book? Please click on any of the following links to buy.
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40. Meet the Author
Ananth is the CEO and Founder of Hash Management Services LLP. Ananth
has over 12 years of experience in the areas of Implementation of Lean
Manufacturing concepts, Quality Management, and Supply Chain Management
initiatives. Some of the industries he works/worked with are Textiles, Leather
and Footwear, Castings and Forgings, Electronic Equipment, Pump
Manufacturing, Fabrication, White goods, Heavy Engineering and Light
Engineering sectors. He works with Industry bodies like CII, FICCI and
currently working with International Labour Organization (ILO) for
implementing their SCORE Program in a few auto ancillaries in Chennai. He is
also an empaneled Lean Manufacturing Consultant (LMC) with National
Productivity Council (NPC) and working on Implementing Lean Manufacturing
principles for Small and Medium Enterprises.
Prior to Hash Management Services LLP, he was a consultant with Deloitte`s
consulting practice in India. Earlier, Ananth worked with Titan Industries Ltd,
as a Senior Engineer responsible for productivity improvements and various
quality initiatives. He holds PGDM from the IFMR, Chennai and a Bachelors
degree in Mechanical Engineering from the Government College of
Engineering, Tirunelveli.
Please visit www.hashllp.com to know more about the ways we help
manufacturing companies improve their operations and profitability.

41. Disclaimer
The advice contained in this material is for a specific audience and not for
general public. The author designed the information to present his opinion about
the subject matter. The reader must carefully investigate all aspects of any
business decision before committing him or herself. The author obtained the
information contained herein from sources he believes to be reliable and from
his own personal experience, but he neither implies nor intends any guarantee of
accuracy. The author particularly disclaims any liability, loss or risk taken by
individuals who directly or indirectly act on the information herein. The author
believes the advice presented here is sound, but the readers cannot hold him
responsible for either the take or the result of those actions.

42. Acknowledgements
This book would not have been a reality without the contribution from V N
Shiju who worked with me on creating the contents, L S Kannan contributed
Quality section, Veerabaghu, my mentor and guide, my wife Jeyalakshmi who
helped me in documentation, A S Senthil Kumar, my first boss who helped me
understand the basics of manufacturing industry, my colleagues at Deloitte and
all my friends who stood by me during some of the toughest times in my life.