STORE MANAGEMENT

STORES MANAGEMENT
• INTRODUCTION
• THE TERM STORES, STOREHOUSE, WAREHOUSE ETC REFER TO THE PHYSICAL PLACE BE IT A BUILDING OR A ROOM ETC. WHERE MATERIALS OF ALL VARIETY ARE KEPT. THE FUNCTION OF STORES IS TO RECEIVE, STORE AND ISSUE MATERIALS. STORES ARE NORMALLY DIVIDED INTO VARIOUS SECTIONS SUCH AS RECEIVING SECTION TOOL STORES GENERAL STORES RAW MATERIALS STORES FINISHED PARTS STORES ETC. STORES PLAYS A VITAL ROLE IN THE OPERATIONS OF A COMPANY STORES NETWORKS ARE INCREDIBLY COMPLEX AND THEREIN LIES THE OPPORTUNITY OF IMPROVEMENT.

• •      • •

STORES MANAGEMENT
• • • STORES FUNCTION AS AN ELEMENT OF MATERIALS DEPARTMENT, HAS AN INTERFACE WITH MANY USER DEPARTMENTS IN ITS DAILY OPERATIONS. THE BASIC PURPOSE SERVED BY STORES IS THE PROVISION OF UNINTERRUPTED SERVICE TO MANUFACTURING DIVISIONS. STORES ACT AS A CUSHION BETWEEN PURCHASE AND MANUFACTURING ON ONE HAND AND MANUFACTURING AND MARKETING ON THE OTHER. THE INHERENT LIMITATIONS OF FORECASTS MAKE THE STORES FUNCTION A NECESSITY. STORES FUNCTION IS AN INSEPARABLE PART OF ALL BUSINESS AND NON – BUSINESS CONCERNS, WHETHER THEY ARE INDUSTRIAL OR SERVICE ORIENTED, PUBLIC OR PRIVATE, SMALL OR LARGE. THE TASK OF STORE KEEPING RELATES TO SAFE CUSTODY AND STOCKING OF MATERIALS, THEIR RECEIPTS, ISSUES, AND ACCOUNTING WITH THE OBJECTIVE OF EFFICIENTLY AND ECONOMICALLY PROVIDING THE RIGHT MATERIAL AT THE RIGHT TIME WHENEVER REQUIRED IN THE RIGHT CONDITION TO ALL USER DEPARTMENTS.


STORES MANAGEMENT NECESSITY OF STORES
• ONE MUST ALWAYS REMEMBER THAT EVEN THOUGH STORE KEEPING DOESN’T ADD ANY VALUE TO THE PRODUCT IN THE NORMAL SENSE, IT IS AN ESSENTIAL FUNCTION AND JUST CANNOT BE WISHED AWAY. • AT TIMES STORES MAY ADD TIME UTILITY OR VALUE BY PRESERVING SCARCE MATERIAL THAT MAY BE REQUIRED IN FUTURE. • BY PROPER PRESERVATION AND STORAGE, THE STORE DEPARTMENT AVOIDS ANY DEPRICIATION IN THE VALUE OF INVENTORY. • THE FINANCIAL VIEW CONSIDERS STORES AS AN OVERHEAD I.E. A COST WITH NO RETURN. • THIS ALL THE MORE HIGHLIGHTS THE NEED FOR ECONOMIC OPERATION AND EFFICIENT STORES MANAGEMENT.

STATIONARY COST. THE CAPITAL COST CONSIST OF THE SUNK COST IN LAND BUILDING. • BECAUSE OF THE VERY IRREVERSIBLE NATURE OF THIS COST. ROADS. AND INVENTORY CARRYING COST • . MATERIAL HANDLING EQUIPMENT AND RELATED FACILITIES.STORES MANAGEMENT NECESSITY OF STORES • • THE COST OF STORES CAN BE CATEGORIZED INTO A CAPITAL COST COMPONENT AND REVENUE EXPENDITURE COMPONENT. THE REVENUE COMPONENT OF STORES EXPENDITURE CONSISTS OF SALARIES AND WAGES OF STORE PERSONNEL. MAINTENANCE COST. YARDS. COMMUNICATION EXPENSES. PROPER PLANNING OF STORES CAN GO LONG WAY IN REDUCING THIS CAPITAL EXPENDITURE THAT MAY ALSO HAVE A BEARING ON THE REVENUE EXPENDITURE IN THE STORES.

ONE MUST APPRICIATE THE ROLE OF STORES IN MAINTAINING OPTIMUM INVENTORY AND HIGHLIGHTING EXCEPTION CASES THROUGH BUILDING UP OF PROPER MIS BY MAINTAINING ACCURATE RECORDS.STORES MANAGEMENT NECESSITY OF STORES • • • ONE MUST ALWAYS REMEMBER THAT EFFICIENCY IN STORES OPERATIONS CANNOT BE BUILT OVERNIGHT BUT HAS TO BE THOUGHT OF RIGHT FROM THE INITIAL PLANNING STAGE. MANY DECISIONS RELATED TO STORES HAVE A DRAMATIC IMPACT ON THE OPERATIONAL EFFICIENCY OF THE PRODUCTION DEPARTMENT AND PROFITABILITY OF THE ENTIRE ORGANIZATION. SAFETY PRACTICES. BINS. STORES MANAGEMENT IS LOOKED DOWN UPON BY MANY AS AN OPERATIONAL CLERICAL FUNCTION AND FAILS TO ATTRACT APPROPRIATE TALENT BECAUSE OF ITS UNDERDOG NATURE. UNFORTUNATELY. • • • • . ARE REFLECTED IN THE OPERATIONAL EFFICIENCY. EVEN SEEMINGLY ROUTINE DECISIONS SUCH AS SELECTION OF RACKS. SHELLS. INSPECTION PROCEDURES ETC. STORES MUST BE VISUALIZED AS AN INTEGRAL PART OF THE PURCHASING – MANUFACTURING – MARKETING LINK. ONE HAS TO BEAR IN MIND THAT THE STORES MANAGER HEADS THE SINGLE LARGEST GROUP OF CURRENT ASSETS AND HIS PERFORMANCE IS THE KEY TO SMOOTH PRODUCTION AND SUBSEQUENT MARKETING. MATERIAL HANDLING EQUIPMENT.

. ISSUED. 4. EQUIPMENTS AND OTHER ITEMS AND ACCOUNT FOR THEM. MAINTAIN ACCURATE AND UP – TO – DATE RECORDS OF MATERIAL RECEIVED. ENSURE THAT GOODS INWARD NOTES (GIN) ARE RAISED AND DISTRIBUTED WITHOUT DELAY ISSUE MATERIALS TO THE CONSUMING DEPARTMENTS AGAINST AUTHORISED REQUISITIONS AND ACCOUNT FOR THE SAME. REJECTED. 6. AND QUANTITY ON HAND OF ALL THE ITEMS. DISPOSED. TO PROVIDE ADEQUATE. 3. SUPPLIES. PHYSICAL CHECKING OF ALL INCOMING MATERIALS AS PER THE DELIVERY CHALLAN / INVOICE AND PROPER MAINTENANCE OF DAILY GOODS RECEIPT REGISTER OR RECORDS. 7. 5. SPARES. 2. PROPER AND EFFICIENT STORAGE AND PRESERVATION FOR ALL THE ITEMS. TOOLS. COMPONENTS. ARRANGE FOR INSPECTION OF INCOMING MATERIALS. TO RECEIVE RAW MATERIALS. THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE.STORES MANAGEMENT FUNCTIONS OF STORES  1.

THE FOLLOWING ARE THE PRINCIPAL FUNCTIONS OF A STORE. TO MAKE AVAILABLE A BALANCED FLOW OF MATERIALS SO AS TO ECONOMISE ON CAPITAL TIED UP IN INVENTORY. 10. 12. ACCOUNTS AND OTHER CONCERNED DEPARTMENTS. TO ENSURE GOOD HOUSEKEEPING SO AS TO MINIMISE THE NEED FOR MATERIAL HANDLING. 13. UNDERTAKE STOCK VERIFICATION AS PER APPROVED PROCEDURE. TO ACCEPT AND STORE SCRAP AND OTHER DISCARDED MATERIALS. TO HIGHLIGHT STOCK ACCUMULATION.  . 9. ENSURE THAT ALL DOCUMENTS RELATING TO RECEIPTS AND ISSUE ARE SENT TO STOCK CONTROL. PRESERVATION AND HANDLING. ETC.) ONE OR MORE OF THESE FUNCTIONS MAY GAIN PRIMACY OVER THE REST. WHEREVER NECESSARY.STORES MANAGEMENT FUNCTIONS OF STORES  8. 14.E. SURPLUS AND SCRAP THROUGH PROPER CODIFICATION. 11. STANDARDIZATION. TRADING SERVICES. DEPENDING UPON THE NATURE OF BUSINESS (I. DISCREPANCIES AND ABNORMAL CONSUMPTION AND INITIATE APPROPRIATE CONTROL ACTION. MANUFACTURING. TO MINIMISE OBSOLESCENCE.

AUTHORITIES.STORES ORGANIZATION • ORGANIZATION IS A VEHICLE TO ACHIEVE THE PREDETERMINED OBJECTIVES. • THE TYPE OF ORGANIZATION MUST BE GEARED TO ACHIEVE THE DESIRED OBJECTIVES EFFICIENTLY AND ECONOMICALLY. RESPONSIBILITIES. . • ORGANIZATION IS BASED ON COMMONALITY OF CERTAIN TASKS AND SPECIALIZATION OF WORK. • IT IS A FRAMEWORK OF TASKS. • A FAULTY ORGANIZATION STRUCTURE CAN SERIOULY HAMPER ITS PERFORMANCE. • IT IS AN INDISPENSIBLE MEANS TO GOOD MANAGEMENT. AND ASSCIATED PERSONNEL.

ESTABLISH REPORTING AND STRUCTURAL RELATIONSHIPS BETWEEN ALL POSITIONS. 4. 2. 2.CUT RESPONSIBILITIES. 5. 3. DEFINE CLEAR . DEFINE AND DELEGATE RESPONSIBILITY AND COMMENSURATE AUTHORITY. IDENTIFY THE ENTIRE GAMUT OF TASKS TO BE PERFORMED GROUP AND RE – GROUP THE TASKS ACCORDING TO CERTAIN WELL – DEFINED COMMON CHARACTERISTICS. 4. BESTOW APPROPRIATE AUTHORITY AND PRACTICE DELEGATION OF POWER TO ENABLE FULFILLING THE GIVEN RESPONSIBILITIES. THE PRIMARY AND OTHER OBJECTIVES OF THE STORE FUNCTIONS. 3. STORES ORGANIZATION CAN BE DEFINED AS THE SYSTEMATIC COORDINATION AND COMBINATION OF EFFORTS IN A FASHION THAT RESULTS IN AN OPTIMUM EFFICIENCY AND MINIMUM EXPENDITURE. .  1. STEPS IN ORGANIZATION.  STORES ORGANIZATION MUST COMPRISE OF THE FOLLOWING: OUTLINE AND COMMUNICATE TO ALL CONCERNED.STORES ORGANIZATION • 1. IN SHORT. ESTABLISH PROPER COMMUNICATION CHANNELS ALLOCATE TASKS TO QUALIFIED PERSONNEL.

STORES ORGANIZATION • TRADITIONALLY STORES FUNCTION HAS BEEN VISUALISED AS A PART OF PRODUCTION DEPARTMENT AND WAS NEVER GIVEN THE ATTENTION AND IMPORTANCE IT RIGHTFULLY DESERVED. . • THE CONVENTIONAL PRACTICE IS TO LOCATE THE STORES NEAR USER DEPARTMENTS SO AS TO MINIMIZE MATERIAL HANDLING COST AND ENSURE TIMELY SUPPLIES SO AS TO ALLOW SMOOTH PRODUCTION. • THE MATERIALS DEPARTMENT IS SELDOM CONSULTED IN ASPECTS SUCH AS STORES LOCATION AND LAYOUT.

IT IS MORE A MATTER OF CONVENIENCE AND SUITABILITY TO THE OPERATING ENVIRONMENT THAN A QUESTION OF CHOICE OF ONE STRUCTURE OVER ANOTHER.STORES MANAGEMENT CENTRALISED & DECENTRALISED STORES • THERE ARE BOTH ADVANTAGES AND DISADVANTAGES ASSOCIATED WITH A CENTRALIZED OR DECENTRALIZED STORES. ALSO RECEIVING CAN BE DONE CENTRALLY SO AS TO HAVE EFFECTIVE COMMUNICATION LINKS WITH THE PURCHASE DEPARTMENT AND VARIOUS SUPPLIERS. THE PROBLEM OF CENTRALIZATION OR DECENTRALIZATION IS A VEXED ISSUE AND ONE CANNOT LOOK FOR THUMB RULES TO DEAL WITH THE SAME. ALL ITEMS OF COMMON USAGE MAY BE STOCKED IN A CENTRAL STORE TO KEEP THE INVENTORY AT OPTIMUM LEVELS. A VERY BIG ORGANIZATION HAVING A PORTFOLIO OF NUMEROUS PRODUCTS MAY HAVE A HUGE MAIN STORE ALONG WITH NUMBER OF SMALLER DECENTRALIZED STORE SECTIONS. HOWEVER THE GUIDING PRINCIPLE HAS TO BE THAT THE OVERALL STORES CONTROL HAS TO BE UNIFIED IN THE HANDS OF A CHIEF STORES OFFICER FOR EFFECTIVE COORDINATION WITH OTHER INTERFACING DEPARTMENTS AND PROPER INTERNAL CONTROL OF STORES. • • • • • • • . THIS ARRANGEMENT DOES AWAY WITH DUPLICATION OF EFFORTS IN COMMON ACTIVITIES.

8. PROBABILITY OF OBSOLESCENCE IS REDUCED DUE TO HIGHER INVENTORY TURNOVER. 4. SPEEDY COMMUNICATION WITH PURCHASE DEPARTMENT AND VARIOUS SUPPLIERS. 5. 6. ADVANTAGES OF CENTRALIZED STORE : OPTIMUM LEVEL OF SERVICE TO USERS DEPARTMENT. SINGLE POINT DELIVERY AND SINGLE POINT INSPECTION. PROVIDES OPPORTUNITIES FOR STANDARDIZATION. ECONOMY IN STORAGE SPACE AND MATERIAL HANDLING. 9. 2. . BETTER INTERNAL CONTROL. AVOIDS DUPLICATION OF EFFORTS. 7. USERS DEPARTMENTS ARE PROVIDED WITH A WIDE VARIETY OF MATERIALS.STORES MANAGEMENT CENTRALISED & DECENTRALISED STORES  1. 3.

MAY NOT BE LOCATED AT THE OPTIMUM LOCATION AND THUS RESULT IN INCREASED MATERIALS HANDLING AND TRANSPORTATION COSTS. DISADVANTAGES OF CENTRALIZED STORE : MAY CREATE BOTTLE NECKS IN MATERIALS RECEIPT. . 1. 2. IMPROPER MIS AND CONTROL PROCEDURES MAY RESULT INACCURATE SHORTAGES AND UNANTICIPABLE PERFORMANCE. 4. REQUIRES MORE INTERNAL DOCUMENTATION. 3. INCOMING INSPECTION AND ISSUES – THE BASIC FUNCTION OF ANY STORES.STORES MANAGEMENT CENTRALISED & DECENTRALISED STORES  1. RISK IS ACCENTUATED IN CASE OF NATURAL OR MANMADE CALAMITIES SUCH AS FIRES. IT MAY NOT BE SENSITIVE TO THE NEEDS OF INDIVIDUAL USER DEPARTMENTS. 2.

4. . QUANTITY OF MATERIALS TO BE DEALT WITH. 2. 2. 7. 5.STORES LOCATION AND LAYOUT GUIDING PRINCIPLES OF STORES LOCATION  1. 3. 5. PREPLAN ABOUT THE NATURE. INCORPORATE IN – BUILT FLEXIBILITY TO DEAL WITH FUTURISTIC REQUIREMENTS. ADEQUATE SAFETY MEASURES MUST BE AVAILABLE AT HAND. GUIDING PRINCIPLES OF STORE LOCATION : BASIC OBJECTIVE OF STORES IS TO MAXIMISE SERVICE TO USER DEPARTMENTS AT OPTIMUM OVERALL COST. 4. 6. FACTOR IN THE NUMBER OF END USERS AND SUPPLIERS. ADEQUATE COMMUNICATION LINKS MUST BE ARRANGED FOR. THE FOLLOWING DECISIONS ARE A PART OF THE LOCATION DECISION – ONE STORE OR MANY STORES? SHOULD IT REPORT TO THE PRODUCTION DEPARTMENT OR TO THE MATARIALS DEPARTMENT ? WHAT TRANSPORT FACILITIES ARE TO BE USED ? IS THERE A CHANCE OR NEED FOR FUTURE EXPANSION ? WHAT IS THE NUMBER AND VARIETY OF MATERIALS USED IN THE FIRM ?  1. 3. PRIORITY MUST BE GIVEN TO MINIMUM MATERIAL HANDLING AND TRANSPORTATION EXPENDITURE.

 THE OBJECTIVE MUST BE TO ENSURE A CONTINUOUS UNHINDERED WORKFLOW THROUGH THE STORES SO THAT IT CAN OPERATE CONTINUOUSLY AND PROVIDE OPTIMUM SERVICE.STORES LOCATION AND LAYOUT GUIDING PRINCIPLES OF STORES LAYOUT  GUIDING PRINCIPLES OF STORES LAYOUT:  THE DETERMINING FACTORS OF A PROPER STORES LAYOUT ARE ECONOMY AND EFFICIENCY.  AN UNDERUTILIZED WAREHOUSE IS INDICATIVE OF WASTAGE OF CAPITAL AND ONE THAT HOLDS TOO MUCH REPRESENT WASTAGE OF TIME AND LABOUR. .

MATERIAL RECEIVED . AND PROPER COLOUR SCHEMES MUST BE DEVISED.INSPECTED . MAXIMUM STORE SPACE UTILIZATION SUBJECT TO MINIMUM MATERIAL HANDLING AND MAXIMUM SPEED OF MOVEMENT. APRONS. GIVEN BELOW ARE SOME THUMB RULES FOR PROPER STORES LAYOUT. 4. 3. A STRAIGHT FLOW IS THE SIMPLEST AND MUST BE USED IN VARIOUS COMBINATIONS TO FORM ‘U’ . SCRAP AND OBSOLETE MATERIALS ETC. SCREEN THE STORES DEPARTMENT FROM UNAUTHORIZED ACCESS TO OTHER PARTIES. . 7. AIRCONDITIONING. PROVIDE FOR HEATING. ETC. DEMARKATED AREAS FOR INCOMING. HAND GLOVES. KEEP SAFETY APPLIANCES SUCH AS GOGGLES. 6. MATERIALS RECEIVED BUT YET TO BE INSPECTED. AT ACCESSIBLE PLACES. ‘T’ ETC FLOW. AN ITEM MUST BE LOCATABLE WITH MINIMUM EFFORT AND EXPENSE OF TIME. AND OTHER ENVIRONMENTAL REQUIREMENTS AS AND WHEN NECESSARY. COLD STORAGE.AND REJECTED. VENTILATION.STORES LOCATION AND LAYOUT GUIDING PRINCIPLES OF STORES LAYOUT • 1. ‘E’. ARRANGE FOR SEPARATE. OUTGOING MATERIAL. 2. 8. ADEQUATE LIGHTING. 5. TOXIC OR HAZARDOUS MATERIAL.

STORES SYSTEMS & PROCEDURES • THE STORES FUNCTION DEALS WITH THREE MAJOR ACTIVITIES : 1. STOCKING 3. RECEIPT 2. ISSUES .

AND VERIFYING THAT THE DELIVERIES CORRESPOND EXACTLY AS TO THE NATURE AND QUANTITY AS PER SPECIFIED IN PURCHASE ORDER. THIS DEALS WITH THE FUNCTION OF RECEIVING AND PHYSICALLY HANDLING DELIVERED MATERIALS. THIS SECTION IS ALSO CALLED AS GOODS INWARD SECTION. • • • • .STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION • • THE RECEIPT SECTION : THE RECEIPT FUNCTION IS THE LAST STEP IN THE PURCHASING ACTIVITY AND THE FIRST LINK IN THE STORES FUNCTION. INSPECTION OF INCOMING MATERIALS RANGES FROM SIMPLE COUNTING TO ELOBORATE LABORATORY TESTING AND STATISTICAL TESTS. ALL INCOMING SUPPLIES ARE RECEIVED. CHECKED AND DULY INSPECTED BEFORE FURTHER PROCESSING OF STORAGE OR USE.

USER DEPARTMENTS THAT RETURN SURPLUS STOCK.STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION  GENERALLY THE INCOMING GOODS MAY BE FROM ONE OR MORE OF THE FOLLOWING SOURCES : SUPPLIERS THROUGH RECEIVING SECTION ON GOODS INWARD NOTE (GIN). TRANSFER FROM OTHER STORES ON STORE TRANSFER NOTE. EQUIPMENT RECEIVED AFTER MAINTENANCE AND REPAIRS ON STORE CREDIT NOTE OR COMPLETION SLIP. GOODS REJECTED BY CUSTOMERS OUTSIDE PARTIES. OBSOLETE STOCK AND SCRAP ON MATERIAL RETURN NOTE. OF SUB – CONTRACTED GOODS       .

RAISE GOODS INWARD NOTE. INFORM PURCHASE SECTION REGARDING EXCESS SUPPLY. SHORTAGE. PHYSICALLY CHECK RECEIVED MATERIALS ARRANGE FOR SPEEDY AND PROPER INSPECTION.         .STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION  FUNCTIONS OF RECEIVING SECTION : THE BROAD FUNCTIONS OF A RECEIVING SECTION CAN BE OUTLINED AS FOLLOWS : RECEIVE INCOMING MATERIALS. PREPARE RECORD KEEPING. NOTIFY USER DEPARTMENTS ABOUT AVAILABILITY OR NONAVAILABILITY OF MATERIALS REQUISITIONED BY THEM. OR DEFECTIVE SUPPLY. DELIVER MATERIAL TO APPROPRIATE STORES FOR STORAGE.

WHEN A PURCHASE ORDER IS PLACED. DELIVERY DATE ETC. QUALITY / GRADE / TYPE. MAKE ADEQUATE ARRANGEMENTSW FOR SEPARATE SPACE AND INFORM INSPECTION DEPARTMENT ABOUT PROBABLE SCHEDULE OF INSPECTION. IT IS THE TASK OF THE RECEIVING SECTION IN CHARGE TO CLASSIFY SUCH PURCHASE ORDERS AS PER A SUITABLE BASE / BATCH SUCH AS TYPE OF ITEM.STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION    THE TASKS OF GOODS INWARDS SECTION STARTS EVEN BEFORE THE MATERIALS ENTER THE STORES. AND DELIVERY DATE. ONE COPY OF THE SAME IS SENT TO STORES. THE QUANTITY.   . THE COPY INFORMS THE STORES INCHARGE ABOUT THE ITEM DESCRIPTION. THIS COPY OF THE PURCHASE ORDER HELPS TO PREPLAN FOR LABOUR TO RECEIVE AND UNLOAD THE MATERIAL. SUPPLIER. SUPPLIERS NAME ETC.

DESCRIPTION OF CONSIGNMENT. VIZ. CARRIER DETAILS. SENT BY THE SUPPLIER. THOSE ARE PHYSICALLY VERIFIED AND TALLIED WITH THE CONSIGNMENT NOTE SENT BY THE CARRIER. MUST TALLY WITH EACH OTHER AND WITH THE RECEIVED CONSIGNMENT     . ON RECEIPT OF GOODS.STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION  ONCE THE SUPPLIERS DESPATCH THE GOODS THROUGH THEIR CARRIER THEY ARRANGE TO SEND AN ADVICE NOTE TO THE RECEIVING STORES. CONSIGNMENT NOTE SENT BY THE CARRIER. VALUE OF THE CONSIGNMENT. PACKAGING. LABELING. THUS. THE ADVICE NOTE IS SENT IN SUFFICIENT ADVANCE TO HELP MAKE SUITABLE ARRANGEMENTS AND EXPEDITE CLEARANCE OF GOODS AND RELATED DOCUMENTS. SUCH AN ADVICE NOTE PROVIDES INFORMATION ABOUT DATE OF DISPATCH. HANDLING INSTRUCTIONS. ADVICE NOTE. PURCHASE ORDER COPY. THE THREE DOCUMENTS. REFERENCE OF THE CORRESPONDING PURCHASING ORDER ETC.

IT ALSO SAVES ON TRANSPORTATION COSTS FROM CENTRAL STORES TO SUB – STORES AND THEN TO THE USER DEPARTMENTS. PHYSICALLY CHECKED. SEMI – CENTRALIZED RECEIPTS : IN THIS ARRANGEMENT THE RECORD KEEPING PART IS CENTRALIZED AND SPECIAL. HIGH VALUE MATERIALS ARE RECEIVED CENTRALLY. THE PROMINENT TYPE ARE DISCUSSED BELOW: CENTRALIZED RECEIPTS: THIS IS A PART OF A CENTRAIZED STORE SET UP WHERE ALL MATERIALS ARE RECEIVED. . DECENTRLIZED RECEIPTS : THIS ARRANGEMENT ATTACHES A RECEIVING SECTION TO EVERY STORES.STORES SYSTEMS & PROCEDURES THE RECEIPT SECTION  • 1. THIS ARRANGEMENT PRECLUDES THE POSSIBILITY OF BOTTLENECKS DUE TO A HEAVY WORK LOAD ON THE RECEIVING SECTION. THE CENTRAL STORES CARRIES OUT TASK OF PREPARING AND RECORDING GIN. TYPE OF RECEIVING SECTIONS : RECEIVING SECTION CAN BE OF VARIOUS TYPE. MOST OF THE OTHER INCOMING MATERIAL IS DIRECTED TO RESPECTIVE STORES AND IS CHECKED AND VERIFIED AND GOT INSPECTED BY THE RESPECTIVE STORES RECEIVING SECTION STAFF. GINs ARE PREPARED SEPARATELY AT EACH RECEIVING SECTION 2. THIS IS USUALLY USED WHEN THE VOLUMES OF INCOMING MATERIALS IS USUALLY HIGH AND USERS DEPARTMENTS ARE SPREAD OVER A WIDE GEOGRAPHICAL AREA. INSPECTED AND EITHER STORED FOR DISTRIBUTION TO USERS OR ARE DIRECTLY DISPATCHED TO VARIOUS SUB – STORES ALONG WITH THE GOODS INWARD NOTE. 3.

THE RECEIVING INCHARGE MUST COMPLETE ALL DOCUMENTATION AND PAPER WORK AT THE RECEIPT STORES BEFORE THE DISPATCH OR STORAGE OF GOODS.     .STORES SYSTEMS & PROCEDURES THE RECEIPT PROCEDURE  ALL INCOMING MATERIALS MUST NECESSARILY PASS THROUGH THE RECEIPT SECTION AND IN NO CIRCUMSTANCE GO DIRECTLY TO THE USERS DEPARTMENT. APPROPRIATE ENTRIES ARE MADE ON THE DELIVERY NOTE AND A COPY OF THE SAME IS RETURNED TO THE CARRIER. ON RECEIVING THE CHALLAN AND OTHER DOCUMENTS FROM THE CARRIER. WITHOUT ANY QUALIFYING STATEMENTS THEN THE CONSIGNMENT IS DEEMED TO BE IN PROPER CONDITION. IF THE DELIVERY NOTE IS RETURNED SIGNED. THE CONSIGNMENT IS UNLOADED AND IS CHECKED AGAINST THE PACKING LIST.

4. 7. THE CONTENTS OF THE DAILY GOODS RECEIPT REGISTER ALSO CALLED ‘GOODS INWARD REGISTER’ ARE AS FOLLOWS : DATE AND TIME OF RECEIPT NAME OF THE SUPPLIER NAME OF THE CARRIER CHALLAN NUMBER AND DATE ITEM DETAILS AND DESCRIPTION QUANTITY AND VALUE OF ITEMS PURCHASE ORDER REFERENCE CARRIER DETAILS (RR NUMBER. 8. 9. LORRY NUMBER ETC. 6. 12. 11.) GOODS INWARD NOTE REFERENCE REJECTED MEMO REFERENCE RECEIVED BY INSPECTED BY . 2. 5. WHEN MATERIALS ARE RECEIVED FROM SUPPLIERS AN ENTRY IS MADE IN THE ‘DAILY GOODS RECEIPT REGISTER’.STORES SYSTEMS & PROCEDURES THE RECEIPT PROCEDURE   1. 10. 3.

THE SHORTAGES MUST BE CLAIMED IMMEDIATELY AS THEY ARE TIME BARRED AS PER STANDARD PURCHASE CONTRACT. THE TASK OF THE INSPECTION DEPARTMENT IS TO CONDUCT A DETAILED INSPECTION IN RESPECT OF QUALITY AND NATURE / TYPE OF GOODS. NORMALLY RANDOM SAMPLE CHECKING OF PACKAGES IS DONE. ANY DISCREPANCIES PRESENT HAVE TO BE NOTIFIED WITHIN A TIME FRAME SO AS TO INFORM THE SUPPLIERS ABOUT FOLLOW UP ACTION. THE SAME IS ALSO TALLIED WITH THE PURCHASE ORDER. THE TIME ELEMENT IS IMPORTANT IN THE SENSE THAT ANY UNCALLED DELAY AT THIS STAGE LOCKS IN MATERIALS THAT MAY BE OTHERWISE REQUIRED FOR USE BY USER DEPARTMENTS.STORES SYSTEMS & PROCEDURES THE RECEIPT PROCEDURE  ON FILLING UP THESE DETAILS THE NEXT STEP IS PHYSICAL VERIFICATION BY COUNTING. THE RECEIVING SECTION STAFF DOES CHECKING BUT IT MAY BE FOLLOWED UP BY SECOND CHECK CONDUCTED BY THE INSPECTION DEPARTMENT.        . WEIGHING OR MEASURING AND TALLYING THE OUTCOME WITH THE CHALLAN OR DELIVERY NOTE.

STORES SYSTEMS & PROCEDURES GOODS INSPECTION NOTE • GOODS INSPECTION NOTE : • ONCE THE GOODS ARE CERTIFIED AS ACCEPTABLE BY THE INSPECTION STAFF AN INSPECTION REPORT (GIN) IS PREPARED. . • THE GIN IS A CERTIFICATE TO THE ACCOUNTS DEPARTMENT FOR CLEARING PAYMENT OF GOODS WHENEVER DUE AND FOR DEBITING THE STORES WITH THE VALUE OF GOODS RECEIVED. AND AN ADVICE TO THE STORES TO TAKE THE MATERIALS INTO ITS CUSTODY AND RECORD THEM IN THEIR BOOK. • IT IS ALSO AN INFORMATION TO PURCHASE SECTION REGARDING THE RECEIPT OF GOODS. • THIS REPORT FORMS THE BASIS OF GOODS RECEIPT NOTE.

8. ACCEPTED. 15. 7. CONSIGNOR SUPPLIER’S NAME AND CHALLAN NUMBER OR INVOICE NUMBER PURCHASE ORDER REFERENCE MODE OF TRANSPORT STORES TO WHICH MATERIALS ARE TO BE SENT CLASS AND CODE NUMBER. 12. PRE – PRINTED MULTICOLOURED GINS MAY BE USED FOR SPEEDY IDENTIFICATION AND RECORDS . 3.STORES SYSTEMS & PROCEDURES GOODS INSPECTION NOTE  1. RECEIVED. RECORDS OR DISPATCH TO USERS DEPARTMENTS.  GIN TYPICALLY GIVES THE FOLLOWING INFORMATION : DATE OF PREPARATION OF GIN. 2. DATE OF RECEIPT OF MATERIALS. 11. 9. DESCRIPTION OF MATERIALS QUANTITY RECEIVED UNDAMAGED AND NUMBER OF PACKAGES QUANTITY ADVISED. 13. REJECTED ETC. TRANSPORT AND RELATED CHARGES PAID / TO PAY DAMAGE / SHORT / EXCESS REMARKS INSPECTION REPORT OR REJECTION NOTE OR DISCREPANCY REPORT NOTE NUMBER SIGNATURE OF INSPECTOR SIGNATURE OF RECEIPT CLERK THE GIN MUST ACCOMPANY ALL THE MATERIALS SENT FOR STORAGE. 10. 6. 4. 5. 14.

ETC.STORES SYSTEMS & PROCEDURES INSPECTION • INSPECTION : • • PHYSICAL VARIFICATION IS FOLLOWED BY DETAIL INSPECTION. PROPER TESTING FACILITIES AND METHODS. WHILE PHYSICAL. AND ARE IN PROPER CONDITION. OF THE RIGHT QUALITY – DIMENSIONS. THE FIRST TASK IS TO ENSURE THAT THE MATERIAL DELIVERED ARE THE SAME AS THOSE ORDERED. INSPECTION IS A SKILLED OPERATION AND CALLS FOR THE ARRANGEMENT OF SPECIALIZED TRAINING OF PERSONNEL. HOWEVER IT IS DESIRABLE TO HAVE INCOMING INSPECTION DONE BY INDEPENDENT INSPECTORS SO AS TO GIVE AN UNBIASED VIEW ON THE QUALITY OF MATERIAL PURCHASED. THE INSPECTION IS PARTICULARLY NECESSARY IN THE CASE OF RAW MATERIALS AND COMPONENTS THAT GO INTO THE FINAL PRODUCT. • • • • • • . QUANTITATIVE CHECKING IS A SEMI – SKILLED TASK. GOODS MUST BE INSPECTED FOR QUALITY TO ENSURE THAT THEY ADHERE TO SPECIFICATIONS AS DESCRIBED IN THE PURCHASE ORDER. ONE OR MORE INSPECTORS OF THE INSPECTION DEPARTMENT THAT MAY BE A PART OF THE MATERIALS DEPARTMENT GENERALLY CARRY IT OUT. CHEMICAL CHARACTERISTICS. AT TIMES THE USER DEPARTMENT MAY CARRY OUT INSPECTION.

COMPONENTS. ALLOY STEEL MAY BE VERIFIED IN A METALLURGICAL LABORATORY. QUALITY OF RAW MATERIALS SUCH AS IRON. OR IF PAYMENT IS TO BE MADE BEFORE DELIVERY. AND TO AVOID LAST MINUTE REJECTIONS. INSPECTION IS ALSO CARRIED OUT AT SUPPLIERS PREMISES IF SPECIFIED IN THE PURCHASE CLAUSE.STORES SYSTEMS & PROCEDURES INSPECTION • • • INSPECTION : ------------------------------------------------------------------INSPECTION MAY BE PERFORMED IN THE RECEIVING SECTION OR IN A PLACE SPECIFICALLY DEMARCATED FOR INSPECTION. SUB – ASSEMBLIES. IF DURING MANUFACTURE OF OUT SOURCED COMPONENTS QUALITY HAS TO BE ASCERTAINED. • • . SPARES ARE CHECKED WITH RELEVANT DRAWINGS AND INSPECTION EQUIPMENTS.

ARE TESTED BY THIS METHOD.CHEMICALS. 2.A VERY RUDIMENTARY METHOD FOR CHECKING STATIONARY ITEMS. ISI TEST. POWDERS. GROCERIES. STATISTICAL QUALITY CONTROL AND RELATED CONCEPTS SUCH AS ACCEPTABLE QUALITY LEVEL (AQL) MAY BE USED FOR INSPECTION. ETC. 3. 7. OILS. 4. 6. BY SMELL . BY COMPARISON WITH SAMPLES GIVEN BY SUPPLIERS DURING NEGOTIATIONS FOR AWARDING CONTRACTS BY ACTUAL TESTING BY METROLOGICAL EQUIPMENT. . AGRICULTURE PRODUCE ETC. 5.STORES SYSTEMS & PROCEDURES INSPECTION • 1. BY TOUCH – APPLIED IN CASE OF TEXTILES FABRICS. THE USUAL INSPECTION METHODS ARE AS FOLLOWS: VISUAL .

THESE ARE NOTIFIED TO THE SUPPLIERS IN A DISCREPANCY REPORT ALONG WITH A COVERING LETTER. ENDORSEMENT SHOULD BE OBTAINED ON THE RAILWAY RECEIPT AND THE CLAIM SHOULD BE PREFERRED ON THE RAILWAYS. WRONG ITEMS SUPPLIED. IN CASE THE PACKAGE WAS SENT BY RAIL. DAMAGED PACKAGES.STORES SYSTEMS & PROCEDURES DISCREPANCIES • • DISCREPANCIES: VARIOUS DISCREPANCIES SUCH AS . EXCESS SUPPLIES ETC. DAMAGES TO GOODS. • • a) . SHORTAGES.LOSS OF PACKAGE. MAY OCCUR. IF A PACKAGE HAS LANDED BUT IS NOT TRACEABLE. COPIES OF THE REPORT ARE SENT TO PURCHASE SECTION AND ACCOUNTS DEPARTMENT FOR APPROPRIATE ACTION. A “ NOT FOUND “ APPLICATION IS TO BE SUBMITTED TO THE PORT COMMISSIONER WHO WILL INITIATE NECESSARY INVESTIGATIONS. LOSS OF PACKAGES : A SHORT LANDING CERTIFICATE MUST BE OBTAINED FROM THE DOCK AUTHORITIES IN CASE OF CONSIGNMENT SHIPPED BY SEA AND AT THE SAME TIME A CLAIM BILL MUST BE SUBMITTED TO THE STEAMER AGENT WITH ADVICE TO THE INSURANCE COMPANY.

IF SUCH A SURVEY CANNOT BE ARRANGED.STORES SYSTEMS & PROCEDURES DISCREPANCIES • b) DISCREPANCIES .---------------------------------------DAMAGED PACKAGES : IN CASE OF DAMAGED PACKAGES A SURVEY SHOULD BE ARRANGED WITH THE AGENT WITHIN THREE DAYS OF LANDING OF GOODS. ALL ORIGINAL PACKING LISTS MUST BE PRESERVED. THE PACKAGE MUST BE OPENED IN THE PRESENCE OF RAILWAY INSPECTOR AND THE STATION MASTER AND THE LIST OF LOST / DAMAGED ARTICLES MUST BE PREPARED TO CLAIM THE SAME FROM RAILWAYS OR THE INSURANCE COMPANY. IN CASE OF ITEMS DESPATCHED BY RAIL. . AN INSURANCE SURVEY SHOULD BE CONDUCTED BEFORE COLLECTING THE MATERIAL FROM THE DOCK AND A CLAIM FOR ANY LOSS OR DAMAGE TO ARTICLES SHOULD BE LODGED WITH THE INSURANCE COMPANY.

d) . MUST BE PRESERVED AND INSURANCE SURVEY MUST BE IMMEDIATELY ARRANGED.STORES SYSTEMS & PROCEDURES DISCREPANCIES • c) DISCREPANCIES .---------------------------------------MINOR SHORTAGES AND DAMAGES. AS THESE INVOLVE HIGHER VALUES THESE MUST BE DEALT CAREFULLY. THE GIN IN SUCH CASES WILL BE ACCOMPANIED BY A WRITE OFF REQUISITION TO ADJUST THE RECORDS ACCORDINGLY. IF THE CLAIMS ARE NOT MET ONE HAS TO WRITE OFF THE VALUE. MAJOR SHORTAGES AND DAMAGES. SUCH INCIDENTS CAN ONLY BE NOTICED ON OPENING THE PACKAGES. DELIVERY CHALLANS. INCOMING GOODS ARE USUALLY INSURED AND INSURANCE COMPANY OR THE SUPPLIER MEETS THESE CLAIMS. AT TIMES. ALL ORIGINAL PACKAGES. PACKING SLIPS. ANY CLAIMS FOR DAMAGED MATERIALS EXCEPT THOSE DUE TO DEFECTIVE PACKING . AT TIMES IT MAY HAPPEN THAT THE PACKAGE IS INTACT BUT THERE IS A SHORTFALL IN THE QUANTITY OF GOODS. IT HAS TO BE ROUTED THROUGH INSURANCE COMPANY TO SETTLE THE CLAIM. ARE USUALLY MET BY THE INSURANCE COMPANY. SUCH CLAIMS MAY OR MAY NOT BE ACCEPTED BY THE CONSIGNOR. A CLAIM WILL BE PREFERRED ON THE INSURANCE COMPANY AND THE CONSIGNOR WILL BE NOTIFIED OF THE SAME. CLEARLY IMPLYING THAT THE GOODS WERE SHORT SHIPPED BY THE CONSIGNOR IN THE FIRST PLACE.

THIS OCCURRENCE MUST BE IMMEDIATELY NOTIFIED TO THE SUPPLIER AND TO THE PURCHASE DEPARTMENT. EXCESS SUPPLY : AT TIMES SUPPLIERS SEND EXCESS QUANTITY AS AN ALLOWANCE FOR WASTAGE IN TRANSIT THAT IS USUALLY NOT TREATED AS EXCESS SUPPLY. IN CASE OF GENUINE EXCESS SUPPLY THE SUPPLIER AND THE PURCHASE DEPARTMENT MUST BE INFORMED AND THE EXCESS QUANTITY MAY BE ACCEPTED OR RETURNED AS PER THE ADVICE OF THE PURCHASE DEPARTMENT. THE SHIPPED ITEM MUST BE HELD IN A SEPARATE PHYSICAL SPACE UNTIL FURTHER COMMUNICATION FROM THE SUPPLIERS.---------------------------------------SHIPPING WRONG ITEMS. IN CASE OF EXCESS ITEMS ARE RETAINED THE ORIGINAL PURCHASE ORDER MAY BE AMENDED OR THE NEW ONE MAY BE INITIATED. f) .STORES SYSTEMS & PROCEDURES DISCREPANCIES • e) DISCREPANCIES . THIS IS A RESULT OF SHEAR CARELESSNESS OR OVERSIGHT ON THE PART OF THE SUPPLIER.

STORES SYSTEMS & PROCEDURES REJECTION • REJECTION : • IF GOODS ARE REJECTED FULLY OR PARTIALLY A REJECTION NOTE FORM IS RAISED AND A COPY IS CIRCULATED TO THE PURCHASE SECTION AND TO THE SUPPLIER. • SUCH MATERIAL MUST BE MARKED APPROPRIATELY AND STORED IN A SEPARATE AREA TO AVOID MIXING WITH ACCEPTED LOT OR ENTERING THE NORMAL FLOW OF MATERIALS. .

.STORES SYSTEMS & PROCEDURES THE ISSUE SECTION • THE TERM ISSUES IMPLIES THE NORMAL SUPPLY OF MATERIALS FROM STORES TO VARIOUS USER DEPARTMENTS. EFFICIENT ISSUE OF MATERIALS FROM THE STORES IS THE BENCHMARK TO JUDGE THE PERFORMANCE OF STORE FUNCTION. MOST USER DEPARTMENTS JUDGE THE EFFECTIVENESS OF STORES BY THE SERVICE LEVELS OF THE STORES. • • • 1. 2. ITEMS ISSUED ON LOAN AND SCRAPED IN DUE COURSE. FOR THE PURPOSE OF ISSUES THE ITEMS CAN BE CLASSIFIED INTO TWO CATEGORIES : ITEMS ISSUED ON REQUISITIONS FOR DIRECT USE.

AUTHORISATION OF ISSUES REQUISITIONS MATERIAL INDENT FORMS .STORES SYSTEMS & PROCEDURES THE ISSUE SECTION • • • • THE FACTORS TO BE TAKEN CARE OFF .

. • FIRST – IN – FIRST OUT METHOD (FIFO METHOD) • LAST – IN – FIRST – OUT – METHOD (LIFO METHOD) • AVERAGE COST METHOD • REPLACEMENT PRICE METHOD • ACTUAL PRICE METHOD • INFLATED PRICE METHOD.STORES SYSTEMS & PROCEDURES ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS • PRICING RULES GOVERNING ISSUES OF MATERIALS.

• • • • • . THE ISSUES ARE RECORDED IN THE STORE LEDGER AND THE RESPECTIVE JOBS OR PRODUCTION DEPARTMENTS ARE DEBITED WITH THE PRICE OF THE MATERIAL ISSUED. THE VARIOUS METHODS ARE USED FOR PRICING THE MATERIAL ISSUES WHICH ARE BASED ON DIFFERENT PRINCIPLES.STORES SYSTEMS & PROCEDURES ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS • THE MATERIALS STORED IN THE STOCK – ROOM ARE ISSUED TO VARIOUS JOBS OR PRODUCTION DEPARTMENTS AGAINST THE AUTHORISED MATERIALS REQUISITIONS. AS THE TIME OF PURCHASES AND THE TIME OF ISSUES ARE MOSTLY DIFFERENT AND THE MARKET PRICE OF THE MATERIALS TENDS TO VARY. THE FUNDAMENTAL CONSIDERATION IS WHETHER TO PRICE THE ISSUES AT HISTORICAL PRICE I.E. AT THE REPLACEMENT PRICE I. THE ORIGINAL PURCHASE PRICE.. THE PROBLEM OF PRICING THE MATERIALS ISSUED NECESSITATES CERTAIN POLICY FORMULATIONS. IT IS AN IMPORTANT CONSIDERATION NOT ONLY UNDER STORE MANAGEMENT BUT ALSO FOR COSTING AND PRICING POLICIES.E. THE PREVAILING MARKET PRICE AT THE TIME OF ISSUE OR AT SOME OTHER PRICE.

. 1001 THE ISSUE OF 500 UNITS WILL BE PRICED AS UNDER. 10 = 3000 @ Rs. 500 UNITS ISSUED TO JOB NO.ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS FIRST – IN – FIRST – OUT – METHOD (FIFO METHOD) • FIFO METHOD. THE FOLLOWING TRANSACTIONS OCURRED DURING THE FIRST WEEK OF APRIL 2007: APRIL 1. THE ISSUES ARE PRICED AT THE COST PRICE OF THE OLDEST CONSIGNMENTS TILL IT GETS EXHAUSTED. 6000.E.E. 15 = 3000 = 6000 THE VALUE OF THE CLOSING STOCK OF 400 UNITS ( I. AS ITS NAME SUGGESTS. AS SOON AS THE OLDEST LOT IS EXHAUSTED. THE VALUE OF CLOSING STOCK WOULD BE Rs. 15 I.G. 600 UNITS PURCHASED @ Rs. THE ISSUES ARE PRICED AT THE COST PRICE OF THE NEXT OLDEST LOT IN THE SEQUENCE. 10 PER UNIT APRIL 3. IS GOVERNED BY THE PRINCIPLE THAT THE MATERIALS WHICH ARE RECEIVED FIRST ARE ISSUED FIRST. FROM THE FIRST LOT : 300 REMAINING 200 UNITS FROM SECOND LOT = 200 UNITS TOTAL PRICE OF THE ISSUE 500 UNITS • • @ Rs. SECOND LOT 600 UNITS LESS 200 UNITS ISSUED WILL BE COSTED @ Rs. 15 PER UNIT APRIL 5. E. 300 UNITS PURCHASED @ Rs.

ACCOUNTING / PRICING RULES GOVERNING ISSUE OF MATERIALS LAST – IN – FIRST – OUT – METHOD (LIFO METHOD) .

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FOR EXAMPLE. IF THE WEIGHING SCALE INDICATES 1 KG LESS EVERY TIME THEY WEIGH. AND THERE ARE 100 WEIGHING IN A PERIOD. WHICH DIFFER IN ALMOST ALL ORGANISATIONS. • . THE MAGNITUDE OF THIS PROBLEM WILL INCREASE AS THE NUMBER OF TRANSACTIONS INCREASE.STOCK VARIFICATION • • • THE STORES MANAGER HOLDS THE PHYSICAL CUSTODY OF THE MATERIALS AND IS RESPONSIBLE FOR SAFE UPKEEP AS WELL AS FOR ANY MAJOR DISCREPANCY. BECAUSE MISTAKES MAY BE COMMITTED IN TRANSACTIONS AND THIS CAN ACCUMULATE TO MAJOR DISCREPANCIES. HE MUST CONSTANTLY REVIEW THE STOCKS AND RECONCILE THE PHYSICAL AND BOOK STOCKS. THE STORE KEEPER WOULD HAVE ISSUED 100 KG WITHOUT ANY RECORDS AND WILL FIND HIMSELF SHORT WHEN THE PHYSICAL CHECK IS MADE USING THE SAME WEIGH BRIDGE.

LIKE COMPLYING WITH URGENT ISSUES WITHOUT VOUCHERS. SHRINKAGE.IMPROPER CHECK OF RECEIPTS. EVAPORATION.STOCK VARIFICATION • ISSUES WITHOUT INDENTS. THE STORE MANAGER MUST VERIFY THE STOCKS PERIODICALLY. DELAYS IN POSTING THE RECEIPTS AND ISSUES AND ISSUE BY NUMBERS. IN ORDER TO EXERCISE STRICT CONTROL ON THE ABOVE. SPIILAGE. ETC. ARE OTHER FACTORS THAT HAVE TO BE CONSIDERED IN THIS CONTEXT. RECEIPT BY WEIGHT AND ACCOUNTING BY NUMBERS. • • a) b) c) . EXPERIENCE INDICATES THAT MANY DISCREPANCIES IN PRACTICE ARE DUE TO IMPROPER DOCUMENTATION. DETORIORATION AND DAMAGE DUE TO DIFFERENT CAUSES OF IMPROPER STORAGE. ETC. PILFERAGE. OBSOLESCENCE.

MOVEMENT OF MATERIALS.PROCESS OF VERIFICATION • STOCK VERIFICATION CAN BE DEFINED AS THE PROCESS OF PHYSICAL COUNTING. NORMALLY PERSONNEL FROM THE ACCOUNTS DEPARTMENT ARE GIVEN THIS RESPONSIBILITY. WEIGHING OR MEASURING THE STOCK OF MATERIALS THAT IS HELD AND MAKING A RECORD OF THESE FIGURES. HANDLING OF MATERIALS. CAN ALSO PINPOINT ANY DRAWBACKS OR SHORTCOMINGS IN THE METHODS OF STORAGE. ETC. A REGULAR VERIFICATION PROCESS ENSURES THAT THE SYSTEM AND PROCEDURES LAID IN THE MANUAL ARE ADHERED TO. SOMETIMES THE AUDITORS ( OR BANKERS TO WHOM THE STOCK IS HYPOTHETICATED) – ALSO UNDERTAKE THE VERIFICATION OF STOCKS ON A SAMPLE BASIS . OBSOLESCENCE. IN ORDER TO CHECK THE REALITY OF THE PERFORMANCE STATEMENTS. • • • • . A WELL DEFINED VERIFICATION PROCESS.

USUALLY COINCIDING WITH THE ANNUAL ACCOUNT CLOSING. CARE SHOULD BE TAKEN TO AVOID DOUBLE COUNTING. ETC. OR WELL ORGANISED WEIGHING AND THE UNIT OF MEASUREMENTS MUST BE CONSISTENT AND THE MEASURING INSTRUMENTS MUST BE PROPERLY CALIBRATED.PROCESS OF VERIFICATION • • • • • • PHYSICAL VERIFICATION OF STOCKS STARTED OFF AS A PERIODIC EXERCISE. THIS MAY LEAD TO AN INEFFECTIVE VERIFICATION PROCESS. TO OVERCOME THIS DIFFICULTY. IT WILL BE ADVANTAGEOUS TO COVER THE HIGH CONSUMPTION VALUE A ITEMS MORE THAN THE OTHER ITEMS IN THIS PERPETUAL CONTINUOUS SYSTEM. OVERLOOKING ITEMS KEPT AT OLD PLACES. UNDER THE DIRECTION OF ACCOUNTS DEPARTMENT. SINCE THERE IS AN URGENCY FOR QUICK COMPLETION. IF THE NUMBER OF ITEMS ARE LARGE. CAN STOP THE NORMAL FUNCTION OF THE PLANT TOWARDS THE YEAR END. MATERIALS ARE CHECKED THROUGHOUT THE YEAR AND VERIFICATIONS ARE SO STAGGERED. THIS PROCEDURE ACTING AS A POSTMORTEM EXERCISE. WITH ANCILLARIES AND IN TRANSIT. THAT ALL MATERIALS ARE COVERED IN A YEAR. • . THE VERIFICATION PROCESS. SO THAT MEASURING ERRORS ARE MINIMAL. WHETHER PERIODIC OR PERPETUAL SHOULD BE THOROUGH.

TO AVOID RECURRENCE OF THE SAME IN FUTURE.PROCESS OF VERIFICATION • • • • • • • THE PROCESS OF PHYSICAL VERIFICATION CAN BE COMPLETE ONLY IF NECESSARY FOLLOW – UP ACTION IS PLANNED. CULTURE AND VALUE SYSTEMS. INDICATING OPERATING STOCK PLUS RECEIPT MINUS ISSUES. IF THERE ARE MAJOR DIFFERENCES PARTICULARLY IN HIGH VALUE ITEMS. ORGANISATIONS FIX – UP LIMITS FOR DISCREPANCIES AND DISCREPANCY VOUCHERS ARE SIGNED BY THE APPROPRIATE AUTHORITIES. IF THE STORES PERSONNEL ARE MOTIVATED BY A PROPER DEVELOPMENT OF THE ATMOSPHERE. STOCK VERIFICATION SHOULD NOT BE PERCEIVED AS A WITCH HUNTING PROCESS AND STORE PERSONNEL MUST BE INVOLVED IN THE EXERCISE. A DETAILED INVESTIGATION IS CALLED FOR. . HOWEVER. THE ORGANISATIONS WILL GAIN. IT IS VERY COMMON THAT THE TWO SETS OF FIGURES FOR EACH ITEM MAY NOT TALLY AND HENCE THE PROBLEM ARISES IN STORES MANAGEMENT. ATTEMPTS SHOULD BE MADE TO RECONCILE WITH BOOK BALANCE. USUALLY. AFTER TABULATION OF PHYSICAL STOCK.