After materials purchased have been received and checked, the next step in the process of material control is the storing of materials or store keeping.
‘Store keeping’ refers to the safe custody of all items of raw materials, supplies, finished parts, purchased parts etc., in the store-room for which the store-keeper acts as a trustee. It is said to be the process of receiving and distributing stores or supplies.
According to Alford and Beatty, “Store keeping is that aspect of material control concerned with the physical storage of goods.”
In the words of Wheldon, “Store keeping is the physical storage of materials carried into the store-room in a scientific and systematic manner with a view to (i) saving them from all kinds of damages and losses, and (ii) exercising overall control over their movement.”
In short, store keeping refers to the art of preserving raw materials, work-in-progress and finished parts in the stores in the best possible manner. Generally, in small concerns, no importance is given to stores department. But it should be remembered that material pilferage, deterioration of materials and careless handling of materials lead to reduced profits or even losses. As such, it is necessary to maintain a well-equipped stores department to ensure maximum efficiency. Spriegel and Lansburgh have rightly remarked— “Poor control of materials is frequently accompanied by poor store-room administration in a way that may easily throw out of balance any operation programmes which have been adopted.”
Objectives of Store Keeping
An efficient system of store keeping has the following objects:
- To ensure uninterrupted supply of materials and stores without delay to various production and service departments of the organization.
- To prevent over-stocking and under-stocking of materials.
- To check in all materials as to quality and quantity.
- To minimize storage cost.
- To ensure proper and continuous control over materials.
- To ensure most effective utilization of available storage space and workers engaged in the process of store-keeping.
- To protect materials from loss and wastage due to defective storage.
- To identify and locate materials in the store-rooms without delay.
- To protect and safeguard material items against pilferage, theft and fire etc.
- To develop such a system so that fullest information about store items is available in the stores at every time.
Functions of Store Keeping
The principal functions of store-keeping to be performed by the Stores Department in an organization, are as follows:
- Issuing purchase requisitions as and when material is required.
- Receiving purchased stores from the Receiving Department and verifying that every lot of stores is supported by an indent, a purchase order and an inspection note.
- Preparing ‘Goods Received Note’ in accordance with the different stores lots received.
- Ensuring that all the Goods Received Notes are regularly posted to the Bin Card.
- Placing and arranging stores received at proper and appropriate places and adhering to the golden principle of store keeping i.e., ‘A place for everything in its place. ‘
- Minimizing the storage, handling and maintaining costs by preserving and handling the materials in the most economical and efficient manner.
- Issuing stores to various departments of the business and ensuring that all issues are properly authenticated and accounted for.
- Ensuring the adherence to the proper issuing procedure and system followed in the organization.
- Taking a periodical review of inventory by initiating various inventory control systems viz., perpetual inventory control system and ABC system of inventory control.
- Disclosing fullest and up-to-date information about the availability of stores whenever required, by maintaining proper stores records with the help of Bin Cards and Stores Ledger.
- Ensuring proper safety of materials against theft, pilferage and fire, etc.
- Supervising and co-ordinating the duties of different types of staff working under the headship of the store-keeper.
- Preventing entry of unauthorized persons in the stores.
- Maintaining proper stock-levels fixed in respect of every item of stores and replenishing them as and when necessary.
Store keeper and his duties
As we know that in a manufacturing concern, stores or materials represent an equivalent amount of cash. As such there should be a proper system of store-keeping which will ensure the safe custody of materials, easy location of the various items of stores, economic usage of storage space, regular and efficient flow of materials, maintenance of reliable stores records and an efficient assessment of stock position.
For efficient store-keeping, a separate Stores Department under the headship of a ‘store-keeper’ is set up. The store-keeper is a man of wide experience in stores routine. He is assisted by a number of store-men in the performance of his duties. The store-keeper is responsible for the safe performance of his duties. The main duties and responsibilities of a store-keeper are:
- To issue requisition on purchase department for purchasing materials at the right time.
- To accept into stores, materials supplied by suppliers or returned by production departments.
- To check in all materials as to quality and quantity.
- To keep all the materials in safe and convenient manner in appropriate bins and containers.
- To issue materials against proper authorization.
- To maintain proper records of receipts, issues and balance of materials.
- To watch levels of stock and replenish materials when necessary.
- To prevent the entry of unauthorized persons into the stores.
- To advise the management on the day-to-day affairs of the stores department.
- To dispose of scrap or obsolete materials.
Location of Stores
‘Location’ means the site for the store. The location of the stores should be carefully planned. An important factor to be considered when establishing a store set up is the question of locating it in the most appropriate place. The stores must be set up at a convenient and safe place, near to Receiving Department, easily accessible from all parts of the factory and by means of transport and free from the risk of fire, theft, etc. The general principle in determining the location of stores is to minimize the total kg. — km. cost of transportation of materials.
Factors determining the location of stores
The main factors which determine the location of store in a manufacturing concern may be given as follows:
1. Minimization of Material Handling Efforts: Minimisation of material handling efforts implies location of raw material store near the production shops and location of finished goods store and packing materials store near the assembly shop. The stores should be easily accessible by means of transport.
2. Nature of the Materials: The nature of the materials to be stored also affects the location of the store. Material that is not damaged by weather can be stored out of doors in a shed. But materials such as cement, plaster, etc., must not only be protected from the weather but must also be stored in a dry place.
3. Quantity, Weight, etc., of the Materials: The quantity of each of the goods to be stored must be taken into account for determining the location. When the quantities are known, adequate provision may be made for immediate and future storage needs.
4. Flow of Materials: Location of store should be convenient which allows for steady and regular flow of store items without any obstruction.
5. Free from Risk of Loss: Store must be set up at a safe place which is free from the risk of loss due to fire, theft, moisture, etc.
6. Flexibility: The location of store must be such which provides for its future expansion.
Layout of stores
‘Layout’ of stores refers to the physical arrangement of storage facilities or the internal arrangement or placement of materials inside the stores. Layout of stores aims at effective utilization of space available for storage of materials, making the receipt and issue of stores convenient, giving a better appearance to the store and reducing the chances of damage, wastage, pilferage and accidents.
It also aims at reducing the operating cost of storage. The layout of stores should be determined according to the class and quantity of materials to be stored and the general nature of the business. There should be proper and separate arrangement for different items of materials from the viewpoint of the economy in space, effective supervision, minimum of wastage and convenience in issue. The materials should be kept in bins, racks, shelves, drawers, drums, packages and containers.
Factors to be considered for determining stores layout
1. Similarity: Items of similar nature should be stored at one place for the sake of easy identification and convenient issue.
2. Popularity: The turnover of each item of stores should be considered so that fast moving items should be stored near the point of issue/usage.
3. Size of Item: Items of store which are large or bulky in nature should be stored near the point of use.
4. Nature of Materials: Nature of materials to be stored is also important in determining the layout of store. Hazardous, sensitive and perishable goods should be stored separately at safe places.
5. Physical Movement of Materials: The principle of ‘first-in-first-out’ should be strictly adhered to in the matter of physical movement of the materials.
6. Physical Facilities: Efficient layout should also consider the various physical facilities such as lighting arrangement, ventilation, wall paints, size of platforms, availability of cranes and handling equipment.