Problems related with store management

In Dire Dawa food complex

Prepared by: - Buzuna Beshada

ID. No R|2249|04

Submission date: - 3/7/2006

DIRE DAWA UNIVERSITY

SCHOOL OF BUSINESS AND ECONOMICS

ADVISOR Abebayehu

March 2006

Dire Dawa Ethiopia

Introduction

1.1Back ground of the study

There are different organizations in our country as well as in the world. Different
organizations have their own store department and store operation system. That
helps them to insure effective use of materials and reduce man power needed.
Within this process some difficulties rise when store department cannot give the
expected service rendered for different groups.

Having well- organized store houses is very essential for an organization. To have an
organized store we have to solve these problems faced during issuing and storing
materials.

The store house has to accommodate the flow chases materials and bought out
component by users of different departments the process inventors and the out the
flow of different goods to the customers. This helps to have accessibility to get more
stores in less space or vice versa.

The primary purpose of store house is avoiding complication so the store

department has particular responsibility of physical store keepings and minimizes
difference between records and actual stock.
 1.2.Objective of the study

1.2.1 The General Objective

The general objective of the study is to asses problems related with store
management.

1.3.2 Specific Objectives

- To identify materials classifications system in the store

- To identify problems related with material handling and equipment use in the
store.

- To identify problems of store department relations with other department.

To identify problems related with documentation

To know employees motivation in regard to store keeping

1.4 Definition of key terms (operational)

Store:-a place where commodities are kept. It is a ware house or store house.

1.3Statements of the problem

The problems related with store operations are very dangerous for the overall
activity of the organization. So this are needs of great focus to solve this problems, it
is import to con duct this study. Therefore this study will intend to answer the
following questions.

- How materials are handing within the store?

- What are the factors affect the store management?
- What method are used by the organization

- Does the worker are familiar with materials exist in the store?
 - What procedure used by organization in order to classify the materials?
- How the organization control materials and protects them from destruction?
- Are there enough material handle equipments within the store?
1.5 Significance of the study

The researcher of the study mainly focuses on the problem of store operation at the
Dire Dawa Food Complex.

- It will indicates the organization determine characteristics of materials and

delegate materials according to the organization need and their
characteristics.
- It will give information for the organization about problem.
- It will give direction about how to the store department can be organized to
be give clear and fast information.
1.6 Research design and methodology
1.6.1 Research design

Method of the search design of the study will be descriptive research because the
research is design to obtain the information concerning the current studs of
phenomena and to draw conclusion from the fact it discovers and obtain complete
and adequate information, the procedure to be used must be carefully and
description of in the state of nature or affairs, as exists as present.

1.6.2 Source of data

1.6.3 Method of data collection

The necessary data collecting by using different methods will use primary and
secondary source of data, for primary data like questionnaire, inter views and
observation will use regarding secondary source of data organizations written
document different books will use.
 1.6.4 Sampling techniques

To get the appropriate information the study sample will be an all store workers as
are salt judgmental sample techniques will be a suitable for the study. So,
judgmental sample techniques are selecting based on same appropriate
characteristics of the sample member

1.6.5 Method of data analysis

After the raw data is collected it will be processed in to meaning full forms. The
processed data will be analyzed using tabular, and percentage computation. Finally
conclusion and recommendation will be for awarded by the student researcher
based on analysis.

1.6.6 Procedure of the study

To carry out the study the researcher will follow the following procedures.

 Selection of respondent
 Formulation of questionnaire and interview
 Distribution questionnaire and inter view
 Collection of the respondents
 Processing of data
 Data analysis
 Conclusion and recommendation

1.7.1 Delimitation of the study

The surveys study is generally will be expected to give abroad but not depth
valuable information (data) on the general agreement of materials use of store
equipment and store operation management especially in general store house of the
organization.

1.7 Time budget and cost budget

This study will end for about 9 months in the year 13|2|2013 starting from October
to June. The table below explain when the study expect to carry out and when each
of the important case will be complete and also show the time requirement along
with size of the researcher face.

S.No Activities Oct Nov Dec Jan Feb. Mar Apr May Jun
1 Select research title 
2 Revising different      
literature
3 Revising various      
website and
different book
4 Preparation of 
questions
5 Conduct various 
data collecting
through question
aired and interview
6 Data analysis 

7 First drafting 
writing
8 Editing and 
publication of the
paper
9 Submission of the 
paper
 1.8.1 Cost budget

To complete the study the resource money will be financed from contribution the
researcher. The money will be collect based on different requirement for the study
to be complete. The detail of all allocation the fund to each of material need for
research is summarize in the following table.

S.No Description quantity Duration in Cost per Total birr

days unit in birr
1 Transportation cost 4 150 600.00
2 Personal cost 14 35 490.00
3 For secretary
4 Equipment and
supplies
5 pen 6 4 24.00
6 pencil 1 2 2.00
7 erased 1 2 2.00
8 paper 2 100 200.00
9 bindery 1 25 25.00
10 Floppy 2 4 8.00
11 Contingency
12 Miscellaneous
13 Consultancies
14 Total 13 18 322 1351

1.9 REFERENCE

1, A.k. Data (2004) management procedures

Text and cases (second edition)

2, D.R.J.P saxena (2003) ware house

 Management and inventory control

3, Donald W.D and David N.Burt(1999)

Purchasing and supply management

4, material management 3rd edition 1992-126

5, Dr. J.P Savanna (2003) ware house management and inventory control

2. LITERATURE YEVIEW
2.1 General store operation and management

Store plays a vita role in the operation of accompanies. It is a direct touch with the
user department in its day to day activities of company. The most important
purpose served by the store is to provide U>N interrupted services to the
manufacturing division further. Stores the function of store classified as follows.

1. To receive raw materials components, tools equipments and other limits and
account for them.
2. To provide adequate and proper storage and presentation to the various item.
3. To meet the demand of the consuming department by repressive and account
for the consumption.
A.K Data (2004) management procedures, text and cases (2nd edition)
2.2 RELATION WITH OTHER FUNCTIONS

The purchasing and stores function provide the essential between suppliers and
users. Stares have a dynamic role to play.

2.3 LOCATION AND LAYOUT

More often than in the matter of locating the stores materials management really
consulted the normal practice is to locate the store near the consuming department
this minimize handling and insure timely dispatch in the store lay out the governing
criteria are easy movement of materials good houses keeping sufficient space for
man and materials handle equipments such as helves rachis pallets and proper
percolation from run right and other such elements.

Were house management inventory control pages 229?

2.4 LAY OUT ROCKS

A uniform role can not applied to the lay out of rocks and bins it well very from
store to store and should taken in to account the following 1.

1. The size and shop of the stores and the position of the man instance door
2. Kind of materials to be stored
3. The type bins and rocks proposed to be used
 4. The type materials handing equipment purposed to be used.

2.5 COST ASPECTS AND PRODUCTIVITY

It is erroneous obverted that every cubic mete for space must be utilized by stock
for high efficiency very often such stoking may drastically cut down the speed of
materials movement and create bottlenecks apart from affecting over all safety.
There for moving leads for handle equipments and for minimizing the time require
for receipt stocking and issue must be baron in minds the planning stage in order to
issue real efficiency cost involves in stores can be analyzed under to fix and variable
fixed cost is to be incurred respective of the utilization of the space of the stores.

(A.K. data (2004) management procedure)

2.6 FOLOW OF MATERIALS

Efficiency of the stores operation is very mach department on the planned in put
and out put follow of materials follow can be considered in terms of volume
direction and speed in that sequence of flow is also dependent on stores lay out
administration and control consideration ideally materials should follow in one
direction with out traversals or intern-crossing but this ideal is not always
achievable.

2.6.1. STORES SYSTEMS AND PROCEDURES

Broadly the systems in stores can be studied under three area manually receipt
stoking and issue it well be seen that at every stagy a great deal of information is
required for checking controlling and feed back purposes.

2.6.2. A RECEIPT SYSTEM

This can be divided in to receipts from out side suppliers and receipt from internal
divisions, systems for receipt start even be fore the time when the material actual
the place when purchase order placed a copy is sent to the stores indicating quality
and delivery date.

This should be arranged chorological sequence so that the store manager can
any time estimate the volume of respite.

2.6.3 PHYSICAL SYSTEMS

When the anticipated day of delivery comes the above documents are failed for
identify of requires with receipt to quality and volume when the consignment
arrives it is identify with the help this documents then it is physically using weight
bridges measuring devices tapes, etc. when the volume of respect of high this
process could widely and may proof to be appoint neck. In such cases arrangements
are made for inscribing the rate weight of the tracks and wagons this reduces
requite weighing when there is sufficient deference between actually amount and
the amount shown in the three document. The condiment is sent for inspections. If
shortage is observed them if cause for additional procedure. The time elements are
very important a shortage claims well not be honored when they are time board.
There fore the documents are prepared and index data wise detailing the quantum
of shortage and value. In this may quire stores personal to take often delivery
presence of transport.

Organization of official and get the stooge indorsed. Simple systems such as those
discourses earlier could result in saving though less demurrage and higher returns
on climes ones the consignments is cleared at this stage then the expansion follows.
it is known that at any time a good amount of material await and for under quakes
inspection and as such is available readily for issue to production in addition the
material manager needs to known the amount of materials existing at the inspection
stage so that he can schedule is expediting of materials keeping in mind resection
percentage. Usually the following system is adapted for is purpose. Provisionally
goods in world not is prepared as soon as the materials are cleared from the
receiving section and sent fro inspection. we can call this document PGI this gives
information`s all materials code.

Material management (page 223-265)

2.6.4. ISSUE CONTROL

We now come to the final stage namely issues can be further divided in to
consuming department and issue to out side supplier for processing or conversion.
In both case there are certain common system requirements. The forest aspect is
issue. Issues are on production programs. Based on this and the bill of materials
work order are printed. Listing for each materials quality to be issued agnates each
components requiring that materials. This automatically controls consumption
because the work order gives details on quantity of materials to be issued and the
corresponding quality of components to be manufactured so any materials
requirements over and above the indicates in the work. Order quantity means
excessive wastage and scrapping.

2.7 STOCK LOCATION SYSTEMS

Materials are stored at fixed or random locations I, e an item is always stored the
one location or it is stored at different location at different items. The choice of
method is dependent ion consideration of many factors such as nature, size and
weight of the item space accessibility handing volume and speed of turn over stock.

Dr S.p Sexual (2003)

2.7.1 FIXED LOCATION

This method has universal applications. It has particular merit where there is rural
and constant flow of materials to support production or users requirements. Also
demand does not change greatly staff becomes familiar with their fixed locations.
Location can be set logically by item classification and coding reference. There are
some disadvantages to the use of this method eg space not be unutilized
economically.

2.7.2 RANDOM LOCATION

This system is the economical in the use it spends up the process of moving items
from receipts bar in to stock as they can be set down in the first suitable available
space how ever advantages is that time could be added at the sub sequent issues
stage.

Where house management edition 6thpage 119

2.8 MATERIALS CODING

A good coding system must be capital of being understood and applied by all staff
required to use it down to the west clerical grades. There should be no possibilities
of misinterpreting ordination.

2.8.1 RANGE OF CODING SYSTEM

A very wide range of items held in stock in some large organization can rage to tens
of thousands. These are broken down into sub groups. Each item, grouping with
future division in to sub groups.

2.8.2 TYPES OF CODS

There are three in general use which are alphabetical alpha numeric and numerical.
The latter coding is the most flexible of the three being ideally suitable to computer
application.

2.8.2.1.1.1 CODING CLASSIFICATION

There are two types of classification in use, i.e. by nature of the item and by and use.
Let us consider these different approaches.

2.8.2.2 NATURE OF THE ITEM

2.8.2.3 The main classification could distinguish between materials for processing
tools cable chemicals, oils and stresses, for example using the numerical code.

11. Mid steel 16. Chemicals

12. High tensile steel 17. Oil and greases

13. Aluminum 18. Tools, Jip & fixture

14. Titanium 19. Mechanical spares

15. Timber 20. Electrical spares

Ak data (2004) management system edition 215 page 183-196

2.8.3 ADVANTAGES OF A GOOD CODING SYSTEM

A coding provides many benefits which will assist all staff

E.g. Materials management requisitioned users and accounts.

Recording: - this is simplified for both mechanical and computerized applications.

 Materials management edition 4th page 272-273

Material handling

Materials handling is the science of moving materials from one place to another
materials include row materials finished components, finished goods packing
materials operational supplies tools sigs and fixtures scrapes etc. materials handling
is closely connected with the storage of materials.

2.9.1 MATERIAL HANDLING EQUIPMENT

In recent years stores have been subjected to technological development on average

scale. This is particularly true of mechanical and electrical equipment. The degree of
sophistication of such equipment previously seen in manufacturing department has
now been extended to store operation resulting from the very wide range of highly
specialized equipment available the market.

2.9.1.1 BENEFITS SOUGHT

Materials handling equipments is introduced in to stores to achieve one or more

objective. These are:-

1. An improved services to users

2. Reduction in costs and
3. Improved control

Benefits gained result from increased handing capacity, speed of movement and
accessibility.

2.9.1.2 EXPENDITURE

With the manufacturing of increasingly specialties mechanical handling equipment,

the cast of this item have stored. The banalities sought from their use mast are
measured in operating economic and in staff terms. Full consideration must be
given to the suitability of equipment should first be viewed under similar working
condition to ensure that it will meat full requirements, with particular emphasis on
safety.

2.9.1.3 INFULENCNING FACTODS AND CONTROL

Material handling can not be viewed in isolation many factors like plant lay out
process; nature row materials and product influence the materials handling system.
There for an iterated approach will have been taken in the case of material handling.
It must be operated that material handling operation encompass suppliers, stores
inspection, manufacturing, packaging, ware housing and transport to consumer. The
objective there fore must be obtaining maximum over all effectives of the materials
handling system we will discusses some of the important decision.

2.10.1 PHYSICAL STORE KEEPING MANAGEMENT

Holding materials in a propitiate manner is important to issued material quickly and

with out disturbance orderly of other materials frequently, quantities of an item are
bought when can not put in to immediate use or processing e.g. bulk buying for
discounts economic manufacturing quantities economics transport leads. Stores are
also the repositories fro items returned to stock or held in safe custody.

Material management edition 3rd page 229

2.10.2 IMPORTANCE OF STORE KEEPING AND INVONTERY CONTROL.

Alert from inventory control, good system of store keepings important any system
of materials management. It has to be realized that only material that are on hand
stocks physical facilities should be employed.

D.R.J.P savena (2003) ware house management and inventory

 2.11 STORE SYSTEM

Two basic systems can be used in physical controlling stores materials

1. A closed store system

2. Up open store system

The application of each depends of the nature and requirements of a specific

production operation. As a general rule mast forms use one system for certain
materials and the second system for certain materials and the second system for
others.

2.11.1 CLOSED SYSTEM

As is name indicates, a closed system is one in which all materials are physical
stored is a closed or controlled are. Where ever possible the general practice is to
maintain physical control by looking the storage area.

Material management inventory control edition 7 th page 193-203

2.12 RECORDS

In year, past each store keeper was responsible fro maintaining an inventory record
fro each of the items under his or her control. A receipts and with dry walls were
posted on a “binate” which eventually become the firms permanents records of
activity fro a given materials.

To day virtually all firms maintain centralized perpetual records in dependant of

store room stock cards. In most firms hose records are posted to the perpetual
records are computerized.

A.K data management producer edition 8th page 203-209

2.13 ABC ANALYSIS

 2.13 WHAT IS ABC ANALYSIS

ABC analysis a basic analysis management tool which enables top management to
place the efforts where the results will greatest. This technique popularly knows as
always better control or the alphabetic approach has universal applications in many
area of human Endeavour’s.

2.13 METHOD (PROCESS) OF VERIFICATION)

Item are verified by different method some by counting in the case of bearing by
weight in the case of sheet by measuring in the case of lubricants and soon. How
ever when large stocks of items such as sand scrap and fuel need to be verified.

2.14 Computers in materials management electronic computer

When the first electronic computer was installed in India in the early 1950 it was
generally believed that is device would replace most to the work of the critical it
staff and management personnel, however to day the since has changed
considerable.

2.15.1 Integrated computer system for materials management

We can sub-divide the materials management function in to forecasting prices

materials planning purchasing and inventory management. These activities are
inter-related and all these activities can be easily computerized.

2.15.1.1 MATERIALS PLANNING

This first activity the saves fore cost. The sales for cost covered into finished the
importance in put the bill of materials is uses for exploding the requirement finished
goods in to requirement materials.

2.15.1.2 Purchasing and inventory management

At the end of materials planning the requirement of all components parts would
have been estimated. At the inventory management stage computers are used to
control the level inventories and to provided materials at the right time

Computers can handle data such various data such s price, lead time cost, of
ordering cost caring historical data an delivery performance and so on ovary easily
various techniques which we discussed in earlier chapters (such as ABC analysis
EOQ etc)can be easily programmed in to the computer so that tedious and time
consuming calculation are avoided. Also movement analysis lead time analysis
vender rating etc, can be computerized in to a short time which permits the
management to carefully evaluate and take specific decisions so that to control the
inventory level. Factor such as reserve stock safety stock and reorder point require
statically and mathematical analysis when thousands of items have to be procured,
it will be impossible to control them manually programmers are a valuable for
performing ABC analysis ECQ calculation, reorder point computations and delivery
schedule printing. This will come as apart of the “soft ware package” in most of cases
a items are normally controlled manually with crucial and timely information
support from computers. Thus may print out the stop stators of items orders
pending expend. Consumption, etc so that follow up will be done on a selective basis
to keep inventory at minimum. B and C items are usually large in number and here
computer may be used to order EQC and recorder point control can be done very
effectively use computers. Receipts and issue documents can be easily
computerized. This keeps in product costing, material accounting and maintaining
perpetual inventory records. This result in better physical verification.

2.15.2 Implementation of computerized store house management

Implement ting a computerized stores house requires the following steps

 1. Develop the necessary design factors for the stores house operation. This
requires the collection of data that will quantity the store house receipts,
issue and internal operation that are required for particular work relation
with other organization different department those are needed documents
from that departments.
2. Determine and evaluate the option open for store workers and other
concerned body (departments head) to improving the store house operations
and service for users.
3. Determine the computer capacities for the computer system and the
necessary number of computers, capacity of the CPU, memory requirements
and the number of prints and other peripheral devices such as modes data
scanning, equipment, and so on.

2.15.2.1 TRAINING

In implementation of store house computer system one of the most important step
that must be taken during the total project is the training of store work force new
method equipments and producers. If the store house personnel are not proficient
in computer equipments and producer. Is the store house personnel are not
proficient in computer equipment and producer they must be trained in advance of
the installation of the equipment.

Dr. J.P savanna (2003) ware house management and inventory control page _ 55

2.15 STOCK TAKING

Store verification means testing or checking the stores record with the actual items
stocked in the store. The records at any should show the exact physical quantity row
materials and parts which are available for use store verification, also refereed to as
stocktaking, is meant to ascertain any discrepancy of actual store when compared
with record.

Material management edition 11th page 65

2.16.1 FACTORS HAVINGF INFULENCE ON STOCKTAKING

The stocktaking approach depends up on various factors which are environmental

condition during stocking.

The process of stacking may the difficult in a very hot or cold climate.