Production Management

3 Fundamental Activities of Stores Department

Working of Stores Department : The stores department performs the functions of receiving, storage, store accounting and issuing. The following are the details of the activities of stores department :

1. Receiving : The items ordered by purchase department are received by this section. The supplier delivers the items along with other documents to receiving section of stores department. The consignment is properly checked and entered in goods inward note. The discrepancy if any also recorded in this note.

Receiving section in stores department can be centralized, semi-centralized or decentralized. In a centralized receiving department all categories of items are received, checked and inspected at one common place. In semi-centralized light weight items are received, checked and inspected at one common place whereas heavy weight or items of unmanageable size are received, checked and inspected at the place of storage.

In both cases the records are maintained in the same stock book. In a decentralized system all items are received, checked and inspected by their respective departments.

The building where receiving section is located should have sufficient space for loading, unloading and inspection of the consignments. Receiving and dispatching sections should be at a distance from each other to avoid confusion among incoming and outgoing items.

In case of stores keeping finished goods, the up-to-date position of stocks inside the stores should be regularly communicated to marketing department of the organization.

2. Stores Section : This is a place where all materials received by the stores department are kept with protection against deterioration and pilferage. They are stored in such a way that their location is easily identified at the time of issue.

According to Kimball and Kimball, “A well developed stores system necessitated a system of identifying nomenclature so that location of all materials is easily found.”

Now the various stores operation viz. location, procedure layout, equipment and identification of stores section are described in detail :

(a) Location in stores section : Stores are to provide space to the materials till these are issued to the respective departments of the enterprise. Stores are in the form of covered sheds, buildings and open space. Generally the storing place should be situated near the operating departments but there are many other considerations which influence their location e.g. certain categories of items like explosives or other sensitive items should not be stored with general class of items. Gaseous items like oxygen cylinders etc. should be stored in more protective sheds. Some items may require air-conditioned space or space at some desired level of expenditure.

(b) Working procedure : The stores in-charge receives the materials from receiving sections along with goods inward note. The material is classified and coded according to their nature and use. The coded sign is inscribed on the items for identification. Items may also be identified by different colors. The items are then stored at assigned shelves or places inside the store. For quick and easy identification of the item’s category, a bin card is tagged with each shelf.

The bin card contains up-to date information about the receipt, issue and balance of the respective item in the stock. The materials from store section arc issued to respective departments on the instructions from dispatch section.

(c) Layout of Stores section : The layout of the stores section should be conducive to the materials to be stored and equipment viz. shelves, racks, almirah etc. handling equipment etc. There should be enough space of materials handling and labor movement. A good stores layout is characterized by

(i) flexibility in arrangement

(ii) convenience in physical of materials.

(iii) items used sparingly should be easy to be located.

(iv) efficient protection against deterioration and pilferage of materials.

(v) better stock control but minimum routine work like record maintenance etc.

(vi) efficient use of floor space and height.

(vii) safety from hazards, insurance etc.

(viii) proper illumination and ventilation.

(ix) proper security arrangements, so that no person other than stores staff can enter the store.

(x) heavy and bulky items should be stored as low as possible.

(xi) shelves and bins should not be very deep.

(d) Stores Equipment : A good store is equipped with various types of tools/equipment for handling, measuring and weighing the materials. The equipment should be such that stores investment and operating expenses are reduced. The various modes of storing are bins, racks, box pallets etc.

Material handling equipment in stores can be trolleys, mobile jigs, cranes, conveyor belts etc. There should be proper weighing and measuring instruments at the time of receiving and issuing the materials.

(e) Identification of materials in stores : Depending on the size and nature of the organization, the store can nave a variety of items in stock. It may not be possible to remember and locate these items inside the store simply by their names. The task can be simplified by proper coding of the items as well as their location in the store. This procedure avoids issue of wrong items and provides easy and quick location of desired items. Identification can also be done by :

(i) tagging some piece of paper or cloth with the items.

(ii) labels may be fixed on the items.

(iii) the coded number or any other identification mark may be embossed on the items.

(iv) painting or color coding of items.

Advantages of coding items :

(i) an asset in keeping records.

(ii) facilitates quick identification.

(iii) mechanized accounting is possible.

(iv) eliminates the chances of duplication of items.

3. Issue Section : This section handles the issue of materials when required by some department of the enterprise. Materials carry some money value and in order to avoid malpractices and to curb the tendency of waste, the items should be issued against proper requisition. The material requisition is a request to the stockroom to issue materials.

It gives details of the type and quantity of the material, the use to be made of them and is duly signed by some authorized person.

The requisitions should be properly checked and scrutinized before the issue of the material. The stock clerk puts the identification number of the desired materials on the requisition and passes it to the stock record clerk. The record clerk subtracts the amount of material issued from the record card. Calculates the balance in stock and sends it to the accounting department. The accounts clerk subtracts the value of the issued material from the material accounts and enters it to the account for which material is issued.

On the basis of the requisition, the stores staff finally collects the items from the stores and send them to the requisitioning department. All requisitions must be posted daily on the bin cards and the stock control cards. The fresh balance is stuck on every receipt or issue.

In some cases due to economy measures and convenience in handling operations the quantity of the material issued from the stores is more than the amount requisitioned from the concerned department. In such cases the charge is made for the actual quantity issued.

Similarly when excess materials are returned to stores a stores debit note or shop credit note is prepared to ensure the proper record and entry of the item in stores.

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