STANDARD OPERATING PROCEDURES

Inventory Management

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Table of Contents

Table of Contents ............................................................................................................................... 2

1. Acronyms .................................................................................................................................... 4
2. Introduction ................................................................................................................................. 6
3. Detailed Policies & Procedures .................................................................................................. 8
3.1 Material Code Creation ............................................................................................................ 8
3.1.1 Objective ........................................................................................................................ 8
3.1.2 Overview ........................................................................................................................ 8
3.1.3 Key Policies ................................................................................................................... 8
3.1.4 Process Flow (Flow Chart) ............................................................................................ 9
3.1.5 Process Flow (RACI) ................................................................................................... 10
3.2 Receiving of Material ............................................................................................................. 11
3.2.1 Objective ...................................................................................................................... 11
3.2.2 Overview ...................................................................................................................... 11
3.2.3 Key Policies ................................................................................................................. 12
3.2.4 Process Flow (Flow Chart) .......................................................................................... 13
3.2.5 Process Flow (RACI) ................................................................................................... 14
3.3 Issue of material..................................................................................................................... 17
3.3.1 Objective ...................................................................................................................... 17
3.3.2 Overview ...................................................................................................................... 17
3.3.3 Key Policies ................................................................................................................. 17
3.3.4 Process Flow (Flow Chart) .......................................................................................... 18
3.3.5 Process Flow (RACI) ................................................................................................... 19
3.4 Inter – Site transfer ................................................................................................................ 20
3.4.1 Objective ...................................................................................................................... 20
3.4.2 Overview ...................................................................................................................... 20
3.4.3 Key policies.................................................................................................................. 20
3.4.4 Process Flow (Flow Chart) .......................................................................................... 21
3.4.5 Process Flow (RACI) ................................................................................................... 22
3.5 RGP / NRGP .......................................................................................................................... 23
3.5.1.1 Objective ...................................................................................................................... 23
3.5.1.2 Overview ...................................................................................................................... 23
3.5.1.3 Key policies.................................................................................................................. 23
3.5.1.4 Process Flow (Flow Chart) .......................................................................................... 24
3.5.1.5 Process Flow (RACI) ................................................................................................... 25
3.5.2 NRGP .......................................................................................................................... 26
3.5.2.1 Objective ...................................................................................................................... 26
3.5.2.2 Overview ...................................................................................................................... 26
3.5.2.3 Key policies.................................................................................................................. 26
3.5.2.4 Process Flow (Flow Chart) .......................................................................................... 27
3.5.2.5 Process Flow (RACI) ................................................................................................... 28
3.6 Inventory Management and Control ...................................................................................... 29
3.6.1 Physical Verification .................................................................................................... 29
3.6.1.1 Objective ...................................................................................................................... 29
3.6.1.2 Overview ...................................................................................................................... 29
3.6.1.3 Key policies.................................................................................................................. 29
3.6.1.4 Process Flow (Flow Chart) .......................................................................................... 30
3.6.1.5 Process Flow (RACI) ................................................................................................... 31
3.6.2 Inventory Level Maintenance ....................................................................................... 32
3.6.2.1 Objective ...................................................................................................................... 32
3.6.2.2 Overview ...................................................................................................................... 32
3.6.2.3 Key policies.................................................................................................................. 32
3.6.2.4 Process Flow (Flow Chart) .......................................................................................... 33
3.6.2.5 Process Flow (RACI) ................................................................................................... 34
3.6.3 Identification of Non Moving, Slow Moving and Shelf Life Material Expiry.................. 35
3.6.3.1 Objective ...................................................................................................................... 35

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3.6.3.2 Overview ...................................................................................................................... 35

3.6.3.3 Process Flow (Flow Chart) .......................................................................................... 36
3.6.3.4 Process Flow (RACI) ................................................................................................... 37
3.7 Scrap Disposal ....................................................................................................................... 38
3.7.1.1 Objective ...................................................................................................................... 38
3.7.1.2 Overview ...................................................................................................................... 38
3.7.1.3 Key Policies ................................................................................................................. 38
3.7.1.4 Process Flow (Flow Chart) .......................................................................................... 39
3.7.1.5 Process Flow (RACI) ................................................................................................... 40
Inter departmental SLA................................................................................................................. 41
Functional MIS .............................................................................................................................. 43
Reporting Calendar ...................................................................................................................... 44
Glossary........................................................................................................................................ 45

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1. Acronyms

K ey

Decision Box

Activity Box

Reference Box

Format

Requires Approval

Y
Yearly

M Monthly

H Half Yearly

D Daily

F Fortnightly

A As and When
No. of days from
n
previous activity

Key for R-A-C-I

Particulars Abbreviation
Responsible R

Accountable A
Consulted C

Informed I

A RACI Matrix, also known as Responsibility Assignment Matrix or Linear Responsibility Chart
describes the participation by various roles in completing activities or deliverables for a process. It
assists in clarifying roles and responsibilities in cross functional / cross Departmental projects and
processes.

In RACI format, process activities are split down to four participatory which are subsequently
assigned different roles:

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R – Responsible
Those who are responsible for performing the activity. There is always a personnel aligned with
responsible

A – Accountable
Those who are ultimately accountable for the correctness of the activity (in line with the company’s
policies). In other words, an accountable person must sign off (approve) on the work provided by the
concerned responsible person

C - Consulted
Those from whom opinions are sought (Two-way communication)

I - Informed
Those who are kept up-to-date on the progress. This is typically done only on completion of the task
or deliverable (One-way communication)

In case of absence of any RACI owner Designated Personnel to carry out the particular role

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2. Introduction
Purpose
This manual describes Standard Operating Procedures (SOP) for “Inventory Management” and shall
act as an operating guide to all executives for the Inventory Management function.

Definition
Standard Operating Procedures (‘SOP’) define the process objective and the tasks therein,
 by specifying detailed work-steps,
 identifying the personnel responsible for each work-step,
 specifying the point in time, location of and how each work-step is to be performed

Amendments to the SOP Manual

The management recognizes the fact that procedures need to be evolved to address the changes in
nature and scale of operations. The objective of amendment in procedures is to ensure effectiveness
of it according to organization’s environment.

Procedure for amendment:

 Request for amendment in relevant section to be submitted by concerned Departmental
Heads, through a Manual Amendment Form (MAF) mentioning the reason for amendment.
 MAF shall be forwarded to CMD / ED for concurrence.
 Relevant section of the document shall be replaced with approved amendment, which shall
supersede all earlier documentation on the matter.

Annual review of the Manual

The Manual shall be reviewed on Annual basis by respective HOD to incorporate any significant
changes in the process. However, the process for change can also be initiated through 'Manual
Amendment Form' during the year

The entire process has been sub-divided into following key sub-processes:

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Material Code Receiving of Issue of Material Inter-Site transfer RGP / NRGP

Creation Material

1. Material code 1. Material 1. Issue of 1. Transfer – 1. Returnable

availability receipt at Material Material Gate Pass
security Outward (RGP)
2. Generation of 2. Return of
new material 2. Preliminary material 2. Transfer – 2. Non –
code check by issued to Material Returnable
Stores Inward Gate Pass
3. Review
user
(NRGP)
material code 3. Quality
for duplicity Inspection of
Materials
4. Flag material
4. Acceptance of
code for
Quantity &
disabling
preparation of
GRN
5. Quality Test of
Material
6. Acceptance /
Rejection of
Material &
Material
Tagging

Inventory Scrap
Management & Disposal
Control

1. Physical 1. Identificatio
verification n of Scrap

2. Inventory 2. Disposal of
level Scrap
maintenanc
e

3. Identificatio
n of Non
Moving,
Slow
Moving and
Shelf Life
Material
Expiry

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3. Detailed Policies & Procedures

3.1 Material Code Creation

3.1.1 Objective

 To generate material code in system to facilitate raising of Purchase Requisitions by user

department and tracking of inventory levels for item codes generated

 To ensure non duplicity of material codes by establishing a centralized Dept. for material code
creation and facilitate periodic review of material codes for deletion of duplicate/ inactive
material codes.

3.1.2 Overview

This sub – process outlines the process for creation and generation of material codes from the
system and identification of duplicate/ inactive material codes for deletion.

Supplier Input Process Output Customer

UD  Material code  Identify existing code against  ERP Material codes UD
creation code creation request and
request intimate UD  List of Duplicate/
Inactive codes to be
 Update material description in cleaned from the
ERP and generate material system
code.

 Identify duplicate/ inactive

code on system and delete the
same.

3.1.3 Key Policies

 Formalize the policy for deactivation of inactive material codes. For example, if the code has
not been in use for consecutive 2 years and stock level for the code is NIL, the same should
be de activated

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3.1.4 Process Flow (Flow Chart)

Material Code Creation

Start

User department to
check if code exists
while raising PR

Code
exists?

No

Fill material code

creation template

Forward material
code creation
request

Yes
Open new material
Code
No code and obtain
exists?
approval

Yes

Review material
Intimate user
codes for duplicacy
department
and redundancy

Duplicate
code exist?

Yes

Delete duplicate
No
codes and intimate
user department

End

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3.1.5 Process Flow (RACI)

Process Steps R A C I
Fill up the material code creation request sheet after
confirming that the code does not exist in ERP

Material code creation

Material code creation request sheet shall mention the Head –

User
following details: User Manager -
Departmen
Departmen ERP
 Group of material t
t
 Sub Group of material
 Material description
 Whether QC applicable or not
 Shelf life of material
 Material storage conditions etc.

Check the availability of material code on system

User
ERP Manager shall check the availability of material by Manager -
Departmen
searching the material by search term in ERP. If code ERP
t
already exists, inform user about the same

Generate material code and communicate the same to

User

Update the code creation details in ERP, generate the Head –

Manager - User
material code and communicate the same to user. Manager - User
Procureme Departmen
ERP Departmen
nt t
Note: t
User Department to be intimated through system
configured auto-mailers

Review material codes for duplicity / inactivation

User
Departmen
ERP Manager to generate report of material codes and
Manager - t, Manager
review the same for duplicity / inactivation and confirm the
ERP -
same with the User department prior to disabling the same
Procureme
in ERP
nt
Flag material code for disabling
Manager - Director –
ERP Manager shall flag the material code for disabling and
ERP F&A
change the description to “not for use”

Follow up for pending material code creation and

deletion User
Departmen
t

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3.2 Receiving of Material

3.2.1 Objective

 To check the quantity and quality of material received from Supplier

 To accept / reject material received and to account for the same in ERP

3.2.2 Overview

This sub process outlines all activities relating to acceptance/ rejection of material at store. It involves
verifying quantity, preparation of GRN in system, quality check and acceptance / rejection of material
and tagging and storage of material accepted

Supplier Input Process Output Customer

Vendor  Challan /  Conduct preliminary check of  GRN Stores
Copy of Lorry goods received department
Receipt  Quality test report
 Verify quantity of material
 Third party or received  Material segregation
client Quality as accepted /
Test  Prepare GRN rejected
Certificates /
MTCs  Conduct quality test of  Filled up Security
material received Inspection Checklist

 Tag material as accepted /  Filled up Preliminary

rejected Inspection Checklist

 Filled up Weighment
Checklist

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3.2.3 Key Policies

 On updation of GRN in system the GRN should automatically lie pending for approval at QC
department / User depending on the nature of material / goods

 Responsibility of QC Department to conduct independent QC which is to be first verified from

the requirement list floated by the client

 If required to be conducted by client, then ensure receipt of quality test certificates duly signed
by the client

 If required to be conducted jointly, then ensure receipt of call by the vendor as specified in the
contract after due milestones in manufacturing/ production is achieved

 If to be conducted by VIL, then ensure adherence to standard quality procedures depending

on type of material to be tested

 In case of rejection on 1st quality test done, re-test should be performed based only on vendor
request and with the same test steps as performed before

 List of personnel authorized to inspect the material to be provided to Executive - Stores.

 The parameters for inspection to be defined as per user instructions at the time of material
code creation

 Standard suggested tag to be used for tagging of material. Tag with green border to be used
for tagging of accepted goods and tag with red border to be used for tagging of rejected goods

 In case of warranty goods, the warranty card should be scanned and uploaded on ERP and a
copy of the same should be maintained with the stores department.

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3.2.4 Process Flow (Flow Chart)

Material Receipt

Start P

Receive goods
from supplier along Collect sample for
with material quality check
challan

Intimate stores and Conduct quality

obtain confirmation check and prepare
for entry of vehicle test result

Conduct inspection at
Segregate as
gate and preliminary
accepted / rejected
inspection of goods

Goods Intimate purchase Tag goods as

Yes Material accepted and
damaged? department Yes
accepted? allocate to
accepted zone
No
No
Conduct
weighment of End
vehicle alongwith Tag goods as
material rejected and move
to rejected zone

Excess Client
quantity Yes recommend Yes
received? ed vendor ?
Check with purchase
No if excess quantity is No
required and if need, Inform Contracts to
Mention actual amend PO Intimate purchase inform client about
quantity on challan to follow up with possible delay due to
and stamp as vendors receipt of rejected
accepted material

Prepare GRN and End

P
update on system

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3.2.5 Process Flow (RACI)

Process Steps R A C I
Receive material
Security Executive
On receipt, Executive – Stores to check the existence of valid Guard stores
Purchase Order number in system, allow entry of vehicle and
update material inward register

In case PO no. is untraceable, obtain confirmation from

Purchase department prior to entry of vehicle.

Note:
1. Executive - Stores to reconcile the stores inward details
printed from ERP with Security inward register on a
weekly basis and sign off security inward register on
each day end

2. Guard to retain driver’s license

Perform security check
Security
Perform the following activities prior to entry of vehicle: Guard
 Perform check as per the security inspection
checklist
 Make entry in the security inward register – Affix
security inward stamp on the Challan and sign over
the stamp mentioning date and time of entry
Preliminary check of material received Executive
– Stores
Receive material and check for the following:
 Material received against valid PO
 Challan stamped by security
 Packing of the material is intact
 Visually inspect goods
 MTC available as per QAP in Equipment List
Conduct Material Weighment for critical material Security Executive
Guard - Stores
Accompany lorry driver to weigh bridge for material
weighment

Notes:
1. Critical material to be defined as per value or criticality
to business by the management
2. At least monthly surprise weighment checks should be
conducted where Executive - stores to accompany
security guard to weighment bridges. Security Guard
and Executive – Stores to jointly sign on those
weighment slips.
3. Compliance to weighment checklist is to be ensured and
duly filled up and signed sheet to be submitted with the
stores department along with the material
4. Weighment slip to be signed by the guard and the weigh
bridge operator
5. Weighment Report should be reviewed monthly to
ensure completeness and accuracy of weighment being
done,

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Process Steps R A C I
Prepare damage report Executive - Procureme
Stores nt
In case of damage to goods, prepare damage report Departme
nt
Sign challan for material accepted Executive -
Stores
Mention actual quantity of material on challan and stamp and
sign the challan as material accepted

Note:
In case the material requires a quality check then challan to
be stamped as ‘Accepted subject to pending QC’
Prepare GRN in system Executive - Project
Stores Manager
Following to be updated while creating GRN:
 Quantity as per Challan
 Accepted quantity
 Security Inward No.
 Date of receipt
 Posting Date
 Date of manufacture (if a shelf life material), etc.
 QC completed/ pending

Conduct quality inspection AM - Executive

Quality - Stores
If QC to be conducted by VIL as per QAP, inform Quality dept.
about the same

Perform standard tests AM - Head - Head –

Quality Quality Stores /
Perform standard tests to confirm adherence to material Executive
quality standards - Stores

Prepare test results and ascertain usage decision QC

Departmen
Prepare test results against pre-defined parameters and t
update usage decision as accepted/ rejected and sign test
certificates

Tag goods as accepted Executive -

Stores
On acceptance, tag goods as accepted mentioning details
such as GRN No., GRN Date, PO No., Item Code, Item
description, UOM (Unit of Material), Item description, Date of
Manufacture, Expiry Date, etc.

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Process Steps R A C I
Allocate goods to bin locations Executive -
Stores
On acceptance, allocate goods to respective bin locations for
easy identification of storage location

Tag goods as rejected Executive -

Stores
On rejection, tag goods as rejected and shift the material to
rejected zone

Track emergency purchases Executive - Project

Stores Manager
Track emergency purchases on excel and follow up with
Purchase department for pending PO’s.

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3.3 Issue of material

3.3.1 Objective
 To create reservation (issue) of material

 To ensure authorized issue of material and proper accounting in system of material issued to
UD

3.3.2 Overview

This sub-process deals with activities relating to issue of material to UD on the basis of material
issue request raised by the UD.

Supplier Input Process Output Customer

UD  Projected  Reserve material as per  Issue of material in UD
material projected material system
requirement requirement
 Approved Material
 Material issue  Issue material as per material Issue Slip
request issue request

 Check the material condition

for material returned by Users
and update the same in
system

3.3.3 Key Policies

 In case of no system access/emergency issue, a manual issue request may be raised which
needs to be regularized by users in system post issue

 Depending on the nature of material either a count/ dip measurement/ weighment of material
would be done to ensure issue of correct quantity

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3.3.4 Process Flow (Flow Chart)

Issue of Material

Start

Create reservation
in ERP as per
nature of material

Approve
request

Yes

Raise material issue

request

Issue material as No
per material issue
request

Post issue against

reservation on
system

End

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3.3.5 Process Flow (RACI)

Process Steps R A C I
Creation of material issue request called as reservation User
in ERP Department

For projects material, planning team shall create reservation

based on MRP and BOM
For other than projects material, UD shall create reservation
based on projected requirement.

Note:
Check availability of material prior to creation of
reservation. In case material to be reserved is not available
in stock, material requisition is to be raised as per the
reservation requirement

Raise material issue request User Head –

Department User
Departme
nt

Issue material to user Executive - Head -

Stores Stores
Issue is posted on ERP and material is physically issued to
user

Return of material by UD User Executive

Department – Stores
Check condition of material returned

Update material reservation in ERP Executive –

Stores

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3.4 Inter – Site transfer

3.4.1 Objective

 To ensure authorized transfer of material between sites and timely and correct accounting of
the same in the system.

3.4.2 Overview

This sub-process deals with activities relating to transfer of material from one site to another.

Supplier Input Process Output Customer

UD – Material  Prepare material transfer  Updated Stock UD –
Transferee transfer note records Transferor
Site request Site
 Prepare letter of transfer  Acknowledgment
and dispatch material to for transfer of
transferee site material

 Conduct inspection and  NRGP, RGP,

accept material. Inter-Site
Transfer Note

3.4.3 Key policies

 Request for transfer of material is to be approved after considering the urgency of requirement
at transferee site, availability of stock and requirement at transferor site and movement of
material at transferor site (slow / non-moving)

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3.4.4 Process Flow (Flow Chart)

Inter – Site Transfer

Start

Review excess
material lying at
other plant location

Raise material
transfer request on
system

Consider material
requirement at site
and approve
request

Create material
transfer note

Dispatch goods
alongwith transfer
documents

Receive material at
site and inform user
department

Check material and

accept MTN

End

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3.4.5 Process Flow (RACI)

Process Steps R A C I
Material Transfer Outward : Raise material transfer Head – Project
request User Manager
Department (Transfer
Raise material transfer request on ERP mentioning material ee Site)
description, quantity and date of delivery
Receive and approve request for transfer of material Project
Manager
Request for transfer of material shall be approved considering (Transferor
the requirement at site and movement of material lying in stock site)

Prepare material transfer note and letter of transfer Executive Head –

Stores Stores
On approval of request, prepare material transfer note in ERP
and letter of transfer.

Material Transfer Inward Executive User

Stores Departm
The material along with the dispatch documents (MTN, letter
for transfer, etc.) are received at the transferee site and User (Transferee ent
department informed for inspection of material
Site) (Transfe
Note: ree Site)
On acceptance of material by transferee site post quality
inspection, stock shall automatically get updated on ERP at
both sites.

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3.5 RGP / NRGP

3.5.1.1 Objective
 To facilitate authorized movement of goods outside and inside the Project premises for repairs
and job work and to track the return of goods within the defined timeline.

3.5.1.2 Overview

Supplier Input Process Output Customer

UD Request for  Raise returnable gate pass  Returnable UD/ Stores

returnable in ERP and issue to UD gate pass Department
gate pass
 Update security register  Updated
with outward/ inward details Security RGP
in security RGP register register

 Track return of goods  Updated Stock

issued on RGP basis records

3.5.1.3 Key policies

 Stores department to receive a copy of service order for re-work / repair from the User
Department prior to preparation of RGP

 2 copies of gate pass should be prepared (approvals to be pre-printed on RGP as per system
approval) – 1 for security and the other for Vendor

 At the time of bill processing for service / repair, Finance to ensure with reference to copy of
warranty or warranty expiry date in ERP, whether payment is to be made or the service is
covered by warranty

 Pending returnable report should be run on a weekly basis to check for cases that have
exceeded their expected date of return

 Pending returnable report shall be reconciled with security RGP register on a monthly basis

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3.5.1.4Process Flow (Flow Chart)

Returnable Gate Pass

Start

Receive request for

returnable gate
pass, update ERP
and issue RGP

Issue gate pass to

user department

User department
presents gate pass
at security gate

On receipt of
material, affix
inward stamp on
gate pass

Update details of
material sent on
system

Generate pending
returnable report
and follow up with
user

Update details of
material received
on system on
receipt of material

End

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3.5.1.5 Process Flow (RACI)

Process Steps R A C I
Prepare RGP Executive - Head –
Stores Stores
Raise returnable gate pass in ERP against request
mentioning details such as material code, date of RGP (auto
generated), reason for issue, expected date of return, issued
location / party, serial number of material, etc.

Update RGP Register Security

Update Security RGP register Guard

Update RGP register on return of material Security Stores

Guard Departme
Fill inward column in security RGP register and affix RGP nt
inward stamp on the gate pass

Update system Executive - Head –

Stores Stores
Update system with details of material received

Generate and review pending RGP report Executive - Head –

Stores Stores
Generate report for pending RGP and follow up with vendor
for the same

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3.5.2 NRGP

3.5.2.1 Objective
 To facilitate authorized movement of goods outside the Project premises for the purpose of inter
site transfer, rejections to Vendor, etc.

3.5.2.2 Overview

Supplier Input Process Output Customer

Stores Request for  Raise non-returnable gate  Non- UD
Department non- pass in ERP and issue to returnable Stores
returnable UD gate pass Department
gate pass
 Update material details on  Updated
security RGP/ NRGP security
register NRGP register

 Updated
Stock records

3.5.2.3 Key policies

 2 copies of gate pass should be prepared (approvals to be pre-printed on NRGP as per system
approval) – 1 for security and the other for Vendor

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3.5.2.4 Process Flow (Flow Chart)

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3.5.2.5 Process Flow (RACI)

Process Steps R A C I
Generate request for material to be sent on NRGP UD Departme Executive
nt Head – Stores
Raise non-returnable gate pass against request Executive Head –
– Stores Stores
Raise non-returnable gate pass in ERP against request
mentioning details such as material code, date of NRGP (auto
generated), reason for issue, issue location/ party , etc. and
issue to user

Update NRGP register Security

Guard
Update NRGP register with details of gate pass

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3.6 Inventory Management and Control

3.6.1 Physical Verification

3.6.1.1 Objective

 To verify the correctness of inventory records in system on a periodic basis and identifying the
reasons for discrepancies and accounting for the differential quantity in records.

3.6.1.2 Overview

Supplier Input Process Output Customer

Finance Stock as on  Prepare Annual PV Plan  Annual PV Stores
Department date Plan Department
 Conduct PV as per plan
 PV report
 Identify and document
reasons of mismatch/  Variance
discrepancy between stock Report (if any)
as per system and PV

 Update system records as

per the differences
identified.

3.6.1.3 Key policies

 Inventory to be segregated into either A, B & C class items or Vital (V), Essential (E) and
Desirable (D) depending on value and volume by the stores department

 Policy should be formalized on periodicity of PV in order to ensure 100% PV within a specified

no. of years (1 or 3)

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3.6.1.4 Process Flow (Flow Chart)

Physical Verification

Start

Prepare Annual PV
Plan

Conduct PV as per
Annual PV Plan

Reconcile
inventory as per
ERP and PV

Note details of
discrepancy in
Material Variance
report

Account for
material variations
in BoA

End

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3.6.1.5 Process Flow (RACI)

Process Steps R A C I
Prepare Annual Physical Verification Plan Manager - Head - Director –
Accounts Accounts F&A,
Prepare Annual Physical Verification Plan indicating the Head -
category of material to be verified in each quarter Procurem
considering the volume and value of material ent

Conduct PV Executive – Head - Head -

Stores, Accounts Procurem
Count stock as per material mentioned in the Annual PV plan Executive - ent
Accounts
Document reason for mismatch/ discrepancy Head - Finance &
Stores Accounts
Identify reason for mismatch/ discrepancy in stock as per as Departme
on date inventory in ERP and actual stock on counting. nt

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3.6.2 Inventory Level Maintenance

3.6.2.1 Objective

 To identify material requiring inventory levels and defining levels for such material to ensure no
excess / shortage of material at any given point in time and reduce the inventory carrying and
storage cost to the minimum level possible.

3.6.2.2 Overview

Supplier Input Process Output Customer

UD Inventory  Identify material requiring  Updated Stores
consumption inventory levels Inventory Department
pattern and levels
future  Define and update inventory
material level on ERP
requirements
 Review and revise inventory
level as per change in
consumption pattern

3.6.2.3 Key policies

 Inventory levels (minimum level, maximum level, re order level and re order quantity) shall be
defined for material after studying the material consumption pattern, future requirement and
lead procurement time

 The inventory levels defined shall be reviewed and revised as per the changing requirements
and consumption pattern in the project

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3.6.2.4 Process Flow (Flow Chart)

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3.6.2.5 Process Flow (RACI)

Process Steps R A C I
Define inventory levels Head - Head – Manager -
Procurem Project ERP
Define inventory levels and mail the details of the same to ERP ent Planning
Manager for updating the same in system &
Execution
Check inventory level report Executive Head-
- Stores Stores
Check material as per inventory level sheet and physical
material as on date. In case material is reaching re- order level,
raise PR

Review and revise inventory level Head - Head –

Procurem Project
Review inventory level against consumption pattern and revise ent Planning
the same accordingly &
Execution

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3.6.3 Identification of Non Moving, Slow Moving and Shelf Life

Material Expiry

3.6.3.1 Objective

 To identify shelf life material and track expiry of the same.

 To identify slow and non-moving items and take required action for transfer / disposal of such
material

3.6.3.2 Overview

Supplier Input Process Output Customer

Stores  Slow and  Run slow and non moving Slow, non UD
Department non- and shelf life material report moving and shelf
moving life material
material  Take required action identified
report against such material
identified
 Shelf life
material
report

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3.6.3.3 Process Flow (Flow Chart)

Slow, non moving and Shelf Life Material

Start

Generate slow
moving and expiry
report on the
system

Review the report

and follow up with
user department for
action to be taken

Take required
action for usage/
disposal/ transfer of
material

End

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3.6.3.4 Process Flow (RACI)

Process Steps R A C I
Identify slow, non-moving and shelf life material Executiv- Head - User
e Stores Stores Departme
Run slow and non-moving and shelf life material report on nt
system and identify slow, non-moving and shelf life material

Note:
Shelf life period to be defined in ERP at the material code
creation stage and date of manufacture to be recorded in
GRN. Accordingly, the shelf life report to state the material
approaching expiry in the recent future
Take required action Executive Head - User
– Stores Stores Departme
Follow up with UD for action to be taken. nt
Possible actions could be:
 Transfer to other site
 Sales of material
 Disposal of material
 Use for alternate/ petty work, etc.

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3.7 Scrap Disposal

3.7.1.1 Objective

 To ensure timely identification and accounting of scrap material and authorized disposal of the
same at competitive rates.

3.7.1.2 Overview

Supplier Input Process Output Customer

Stores Scrap  Identify scrap generated and Scrap issue note Vendor
Department generated review the same for scrap
not to be disposed and re
used

 Quantify accumulated scrap

and initiate sale / disposal of
scrap

 Issue scrap to vendor and

prepare scrap issue note

3.7.1.3 Key Policies

 A dedicated area has to be identified as scrap yard where all scrap shall be segregated.
In case of TMT steel, it is to be ensured that the scrap of higher diameter is segregated in yard
so as to quantify scrap as per diameter

 In case client material is identified as scrap, a transfer letter is prepared to dispatch scrap to
client

 The process of inviting quotations and finalizing Vendor for sale of scrap shall be executed by
Purchase dept. The process for selection should be same as selection of any other vendor as
specified in ‘Procurement’ SOP’

 Quantification of scrap shall be done as per weighment, counting, etc. as applicable in presence
of Executive – Stores and UD

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3.7.1.4 Process Flow (Flow Chart)

Scrap Disposal

Start

Identify scrap

Review scrap and

identify material
not to be disposed/
re used

Update details of
scrap on system as
saleable/ non
saleable

Review quantity of
scrap accumulated

Intimate purchase
department of
decision to dispose
scrap

Issue scrap to
vendor and create
scrap issue note
against SO

End

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3.7.1.5Process Flow (RACI)

Process Steps R A C I
Identify and dump scrap Head – User
Department
Identify scrap generated and dump the same at identified
location

Note:
1. In case scrap is saleable, a material to material transfer
shall be posted in the system and material shall be
transferred to scrap material code.

2. In case of scrap being non-saleable, the stock shall be

reduced in system by expensing the same to scrapping
of material
Review scrap for material to be reused Head – User Head –
Department Stores
Review scrap and identify material not to be scrapped and
to be re-used
Update system Executive - Head –
Stores Stores
Update details of scrap generated on system
Review quantity of scrap accumulated Executive - Head –
Stores Stores
Identify scrap to be disposed of by reviewing quantity of
scrap accumulated.

Material weighment process stated in section 3.2 to be

referred while reviewing quantity of scrap generated
Intimate Purchase department of scrap disposal Executive - Head –
Stores Stores
On decision of disposal, intimate Purchase department of
scrap disposal for identification of vendor and execution of
sales order
Issue scrap to vendor Head –
Stores
On receiving a copy of sales order and advance payments,
issue scrap to vendor and create scrap issue note in ERP

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Inter departmental SLA

Sub process Function Cross functional interface / support requirement Proposed timeline
Stores Inform procurement department and user Within one hour of
department department if material is received in excess of PO material receipt at site
Procurement Inform stores department if the material in excess Within 8 office hours of
team of PO can be received and accepted information received
from stores department
Manager – Inform stores department if the material is to be Within 1 working day of
Material
Quality accepted / rejected information from stores
Receipt
/ receipt of material
Stores Send material receipt documents to finance Within 24 - 48 working
department department for processing hours of material
receipt
Inform procurement department and project Within 1 working day of
department if the material is rejected material receipt

Material User Provide issue slip to stores department for issue of Within 1 working day of
Issue department material in emergency hours issue of material

RGP / NRGP Stores Issue RGP / NRGP to Project department Within 1 working day of
department receipt of request from
user department
Stores Inform Project department of the material receipt Within 1 working day of
department against RGP receipt of material
against RGP

Inter-site Project Provide request to stores department for inter-site As and when (as per
transfer department transfer the requirement)
Stores Process the request for inter-site transfer and Within 1 working day of
department inform the transferee and transferor receipt of request
Dispatch materials from one site to other Within 1 working day of
receipt of request
Send acknowledgement to transferor site Within 1 working day of
transfer
Send information of inter-site transfers to finance & Within 1 working day of
accounts transfer

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Sub process Function Cross functional interface / support requirement Proposed timeline

Inventory Stores Informing finance & accounts of the deviations in Within 2 working days
Management department physical stock vs book stock of conducting PV
and control Intimate procurement department and user Monthly
departments of the slow-moving and non-moving
material
Intimate finance & accounts department of the near Monthly
expired material for writing off
Provide details of stock in hand and receiving Within 1 working day of
details material receipt and on
a daily basis

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Functional MIS
Distribution
Description Purpose Frequency
List
Slow-moving and non- Identify and report the slow-moving, non- Monthly  Head – All
moving report moving / unused inventory Concerned
Department

Delayed GRN Delay in preparation of goods receipt Monthly  Project

note Manager
 Procurement
Dept.

RGP tracker Details of goods sent outside on Monthly  Project

returnable basis but are pending to be Team &
received after expiry date of RGP concerned

PV report Report of deviations in physical stock vis- Quarterly  MD/ED

à-vis book stock along with reasons and  CFO
action plan  Director –
Finance and
Accounts
 Business
unit Head

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Reporting Calendar
Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7
 PV      Delayed
Report GRN

Day 8 Day 9 Day 10 Day 11 Day 12 Day 13 Day 14

   RGP   
Tracker

Day 15 Day 16 Day 17 Day 18 Day 19 Day 20 Day 21

 Slow      
Moving
and non-
moving
report
Day 22 Day 23 Day 24 Day 25 Day 26 Day 27 Day 28
     

Day 29 Day 30 Day 31

  

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Glossary

Name Acronym

Bill of Material BOM

Books of Accounts BoA

Goods Receipt Note GRN

Head of Department HOD

Head Office HO

Information Technology IT

Material Management MM

Material Test Certificate MTC

Material Requisition Plan MRP

Material Transfer Note MTN

Non -Returnable Gate Pass NRGP

Purchase Order / Sales Order PO /SO

Purchase Requisition PR

Quality Assurance Plan QAP

Quality Check QC

Quality Survey QS

Returnable Gate Pass RGP

Standard Operating Procedures SOP

User Department UD

Unit of Measurement UOM

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