In any organisation, goods are to be stored properly, issued timely and refilled for future issue adequately. This is the function of store department. Inventory could be in many form:

    • Raw materials (RM);
    • Work-in-progress (WIP);
    • Finished goods (FG);
    • Maintenance supplies of plant & machineries;
    • Printing & stationery goods;
    • Electrical & Engineering goods (like tube fittings, motors, electrical wire, etc.);
    • Minimum inventories of the above to hold to take care of delivery time by vendors.

Why Store department critical function?

    • Production department requires raw material so that it can supply the same to customers timely after processing → unless received timely → delays and defaults;
    • Store department decides how much minimum quantity of goods is to be kept in store → if kept more → more carrying cost (interest) and holding cost (space, obsolescence, theft, etc.) → margin reduction;
    • Working Capital Management
        • Purpose of holding Inventory is to get converted into receivables → generate profit + cash flow;
        • If stored more → working capital blockage;
        • Storage of junk / surplus / waste / slow moving goods → working capital blockage.
    • Maintenance goods of plant & machineries → required for latter’s smooth functioning;
    • Goods to be kept in proper condition so that the same are usable when required;
    • To keep the minimum quantity in stock according to delivery time and minimum lot size given by  vendors in consideration → else, supply flow would break;
    • Printing & Stationery items or ink cartridges or electrical items, etc. required for smooth functioning of office.

Deliverables (i.e. expectations from the Department)

    • Production
        • Timely issue of PR (purchase requisitions) on Purchase department so that latter can raise purchase orders timely;
        • Faster issue of goods by keeping the goods in easy reach;
        • Ensuring sufficient goods available for production department during off-office hours for continuity in production;
        • Feedback to Purchase and Accounts departments about quality problems with goods so that the same can be resolved vis-à-vis vendors or debit notes can be raised or ‘vendor verification form’ (as discussed in Purchase department article) can be updated regularly & timely;
    • Risk coverage
        • Securing / covering goods’ risks be taking insurance cover OR by investing in safer storing solutions → ensuring sufficient insurance cover (i.e. insurance value => maximum inventory held by the organisation) to avoid under-insurance clause;
        • Regular physical verification of goods and identifying reasons for mismatch, if any;
    • Storage
        • Safe keeping of goods so that:
            • less wear & tear due to storage;
            • avoidance of theft & mishandling;
            • goods are in working condition when required;
        • Look-out for better storing solutions which can
            • store more goods;
            • occupy less space;
            • reduce mishandling losses;
            • make goods’ access faster.
        • Identifying slow moving or junk or waste goods and disposing off them if not required and make available or clean the space;
    • Records
        • Maintenance of stock registers regularly (manually or electronically);

Important developments in the Store function

    • Store department getting vertical
        • Storage of more goods;
        • Availability of automatic storage and retrieval system (ASRS) where computer-guided storing and retrieval brings efficient storing. Pls. check the youtube link.
        • There are numerous companies providing such solutions. One of the oldest companies is SSI SCHAEFER from Germany since the year 1937.
    • Usage of bar-codes and RFID tags for
        • Faster issue;
        • Easy identification;
        • Faster physical verification.
    • Usage of software for identifying
        • Slow moving stock;
        • Re-order levels;
        • Maintenance of stock registers.
    • Linking with vendors’ computers
        • For automatic order placement when re-order level reaches;
        • Tracking the status of order.
    • Vendors’ managed inventories (VMI)
        • Vendors supplying filled bins OR vendors managing the organisation’s bins / inventory → supply of bins to production department without the need of store department filling → saving of handling time → reduction in inventory stock.
        • Check the concept of VMI and pre-requisites for better VMI

Traditional / Normal ways of working in Store function

    • Manual stock registers;
    • High inventory stock;
    • Inefficient storing practices resulting in:
        • Slow issue of material;
        • Difficultly in identifying slow moving goods;
        • Wastage due to mishandling;
    • Yearly stock verification (difficulty in identifying the differences during the year);
    • Inventory under-insured (i.e. insurance cover taken of less value than the normal book stock of stock)

Conflicts (Inter-departmental) / Challenges with Store function

    • Delay in processing user departments’ material requests. The delay could be due to:
        • Non-investment in better storing solutions restricting easy access of material for retrieval and issue;
        • Poor and laxity in response of Purchase department in ordering the goods;
        • In-efficient vendors supplying the non-matching goods of poor quality in mis-matching quantity with delay.
    • How much inventory to be kept which is optimum and would involve less blockage of working capital? ;
    • Controlling on the stock of goods by
        • Conducting periodic physical verification alongwith issue / receipt of material and identifying the reason for variance;
        • How to maintain stock registers with numerous items?

Some of the Process Implementation for better Store function

    • Physical verification (Phase-wise program)
        • section-wise (weekly) so that entire store physically verified in a given period;
        • Physical verification reports à section verified; Item number / name; book stock; physical stock; variance; reason for variance.
    • List of slow-moving, non-moving, junk goods pending to be reviewed / disposed (Monthly);
    • Pending purchase requisitions for which:
        • Request sent to Purchase department but goods to be received; expected date of receipt (Daily);
        • Request not sent to Purchase department (Daily);
    • Surprise inspection of the store by senior management and report thereon (Monthly);
    • Inventory stock – Book Value; insurance cover taken, expiry date of cover (Monthly);
    • Feedback for improvement, suggestions, complaints (Monthly).

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