STORES & INVENTORY Approximate quantity on inventory: 20 billion Number of stores: 20 large stores System used: SAP Achievement: were certified with ISO 9001-14001 in year 2009 DEPARTMENT STRUCTURE .PACKAGES DEPARTMENT: SUPPLY CHAIN MANAGEMENT.

Flowcharts .

. In the material master there are all the updates made for the material moving in and out of the stores. In the BOM there is a recipe made in which the method of production and the material needed is stated. After the material is released the store officer updates the Material Master. whether the document is authorized by the right person or not. The BOM is also checked by the Planning manager. The store keeper of the stores first of all checks the document. Based on that job order the Planning division prepares the Bill of Material(BOM).NARRATION First of all the Production and Planning department receives a job order. From the BOM the department makes a Issue Requisite (IR) which is sent to the stores. which is checked by the manager plant whether the order has come into the right plant or not and then it is filed job number wise. Then one copy is saved in the store after the manager of that store approves the release of the material. the accounts department updates the cost centers. In the IR the user department demands for the required quantity of material needed. As the material master is an application of SAP and all the concerned departments have access to it. there is proper check on the level of inventory.


NARRATION The procedure is very similar in case of any department needing miscellaneous items. Attached: copy of GOODS ISSUE BOOK IMPORTANT The above two flow charts are for the Issue Requisites made by hand and are physically delivered to the stores. the store keeper will first of all check the signature of the authorized person. then he would go to the junior executive for approval of good and then if approved the demanded goods will be issued. spare parts and stationary. Attached: copy of computer generated GOOD ISSUE SLIP . In this case the first step would be taken by the user department. That ir will be approved by the head of that department before reaching the store. one kept in the user department and one kept in the store. Then the store officer will update the material master which will be communicated to the accounts where the cost center of the user department will be updated. In most cases there are Good issuance Notes generated on the system (SAP) and communicated to the store and the other departments. There would be two copies of that IR. In the store. First of all the user department will make a IR of whatever goods they need.

Job / Production Orders Cost Centers (Department) Maintenance Orders . ii. Goods will only be issued against the Goods Issue Slip (Issue Requisition). iii. Material Description Issued Quantity Unit of Measure Issue Date Cost Center / Order No. In case additional material is required for an order. Once the Goods Issue is entered in the system the stock quantity as well as value will be updated automatically and relevant accounting entry will be posted in the system. The Goods Issue Slip can be created either automatically through system against job or maintenance orders or manually on ad hoc basis. Goods Issue Slip will contain the following basic information: • • • • • • Material No.SAP Goods Issue Goods Issue (GI) is a document used by the Store to issue the material on the basis of the IR (Issue Requisition) from the concerned user department. the concerned department will fill another material issue slip manually duly approved by the department head and forward it to the Stores Department for issue of materials. Goods can be issued on the following basis: i.

The Store Keeper will record the maintenance order number on the goods issue document and post it in the system. the Store Keeper will over-write the amount mentioned in the Goods Issue Slip and issue the revised standard quantity. The approved IR will be forwarded to the Costing Department for verification of cost center and the Stores Department will then enter the Goods Issue in the system. Maintenance Orders The respective user department will process an Issue Requisition in the system against the maintenance order and a printout will be forwarded to the Stores Department for issuance of stock. The Store Department will issue the materials and record the Goods Issue in the system. In case the goods cannot be issued in the exact quantity as mentioned in the Bill of Material because of the standardized quantities.Against Job Orders The respective user department will process an Issue Requisition in the system against the production order and a printout will be forwarded to the Stores Department. assign the cost center and send it to the department head for approval. . The respective department will fill out the Issue Requisition Slip. Cost Centers The goods that cannot be allocated to a job will be issued against cost centers.

usually from one plant to another. The Stock Transfer document will be created in the system which will contain the following basic information: • • Material number Description .Stock Transfer Transfer posting or Stock Transfer is a process used by the Stores Department to transfer material from one location to another location.

The Store Keeper will enter the GRN in the system with reference to the relevant Stock Transport Order. . The system will only generate a Material Document and no accounting entry will be posted. In case of material transfer from purchasing centers to Packages. Plant to another plant The user will fill out the Stock Transfer Note (STN) and send to Store for transferring the material from one Plant Storage location (issue from store) to another Plant Storage location (receipt in store). If both plants are assigned to different valuation areas.• • • • • • Date Transfer Quantity Issuing Plant Issuing Store Receiving Plant Receiving Store Storage location to another storage location within the same plant The user will fill out the Stock Transfer Note (STN) and send to Store for transferring the material quantity from one Storage location (issue from Store) to another Storage location (receipt in Store). the Commercial Department will create a Stock Transport Order in the system. an accounting document will also be created in addition to materials document. the cost of the freight will be additionally added to the actual cost of the material through appropriate condition type and the same will be paid to the transporter.


Only the Store Incharge will be authorized to cancel a Goods Issue document in the system. there are cameras installed everywhere. armed guards. • • Goods issue document number will be generated by the system automatically. if the stock quantity is less than the quantity required to be issued. • Safe working conditions.all the workers in the plants are suppose to wear the protective measures. All the transactions done in a day are matched against the hard copies so that the any errors made can be omitted. • There is authority given to lower management as well.INTERNAL CONTROLS • Security. for example the store keeper in the stores has the authority to issue goods.all the inventory is insured (with IGI). The system will automatically update the quantity as well as value at the time of Goods Issue. • The system will not allow posting of the document. • • Proper accounting methods are used. . • Physical check.the supply chain department itself does the physical count of the inventory on a regular basis and the internal audit department does surprise visits t the store for the physical count. • • Only the Stores Department will be authorized to enter Goods Issue in the system. FIFO is used for the evaluation of inventory.

• Goods Issue is a single step process. The Accounts Department will need to review the Goods Issue listing daily to identify errors. . there is a risk that the Store personnel entering the Goods Issue may charge off an issue to expense and misappropriate the item. therefore.• Goods will be issued to the user department against an approved auto-generated or manual issue requisition. • The Store Department may charge the incorrect account or cost center with the value of the goods issued. In order to minimize this risk. the Stores Incharge in the Stores Department and the Inventory Section Incharge in the Accounts Department will review the Goods Issue Listing on a regular basis and identify and investigate large and unusual items.

QUESTIONNAIRE  Is too much money tied up in your inventory?  Do frequent shortages in inventory occur?  Does an excessive inventory discrepancy occur?  Is there are a lot of obsolete and/or non-moving items on stock?  Does the company have realistic safety stock levels?  Does the company have realistic reorder point levels?  Does the company have realistic inventory lead times?  Are inventory control policies and procedures documented?  Are inventory records kept up.to-date for all materials?  Are inventory records regularly verified by actual count?  Are incoming and outgoing goods properly checked?  Are surplus and scrap items properly recorded and controlled? .

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