These four terms are common in materials management which we cannot ignore. (a) Bin cards. (b) Perpetual Inventory System, (c) Material Transfer note, (d) Purchase requisition.
(a) Bin Card : Bin card is one of the important store record maintained by the storekeeper of an industry. ‘Bin’ means a rack, container or space where raw-material goods are kept. The store is fitted with serially numbered bins, each meant for a particular type of material. A card is placed outside each bin and, whenever the materials are received or issued an entry is made on the card. This card is known as Bin Card.
Each bin card contains particulars regarding maximum, minimum and ordering levels, code number, description etc., of the material kept in bin. The bin cards assist the storekeeper to control the stock as they provide a continuous record of stock on each bin.
(b) Perpetual Inventory System – Perpetual inventory system is also known as automatic inventory system. According to the Institute of Cost and Management Accountants of London, it is a system of records maintained by the controlling department which reflect the physical movements of stock and their current balance.
Wheldon has given an explanatory definition of it. According to him, it is a method of recording stores balance after every receipt and issue, to facilitate regular checking and obviate closing down for stock taking.
The basic object of this system is to make available details about the quantity and value of stock of each item at all times. The system, thus, provides a rigid control over stock of materials as physical stock can regularly be verified with the stock records kept in the stores and the cost office.
(c) Material Transfer Note – Sometimes, direct transfers of material from one job to another are made just for the sake of convenience and to avoid unnecessary delay involved in movement of goods. As a policy, as far as possible, direct transfer of materials from one job to another should be discouraged because this will make difficult exercising of control over materials.
But when such transfers become inevitable, the material should accompany with a ‘Material Transfer Note,’ This ‘Note’ will contain details regarding materials and the ‘jobs’ involved. It will be signed by the foreman of the ‘Receiving Job’ and then, sent to the cost office for making appropriate entries.
(d) Purchase Requisition – The initiation of purchase begins with the receipt of a purchase requisition by the purchasing department. The purchase requisition is prepared by the storekeeper for regular stock items and by the departmental head for special equipment or materials not stocked as regular items.
The requisition is approved by one or more executives in addition to one originating the requisition. The requisition is prepared in triplicate, the original copy is rent to the purchasing department, the second is retained by the storekeeper or executive initiating the purchase requisition and the third copy is sent to the costing department.
The requisition contains particulars regarding quantity, the quality or material specifications and the date by which purchase of materials is required.