1. After the completion of purchase procedure, the next important aspect Of materials management is
storekeeping.
‘Store keeping’ refers to the safe custody of all items of raw materials, supplies, finished parts, purchased parts
etc., in the store-room for which the store-keeper acts as a trustee. It is said to be the process of receiving and
distributing stores or supplies. According to Alford and Beatty, “Store keeping is that aspect of material control
concerned with the physical storage of goods.”
In the words of Weldon, “Store keeping is the physical storage of materials carried into the store-room in a
scientific and systematic manner with a view to…
(i) saving them from all kinds of damages and losses, and
(ii) exercising overall control over their movement.”
It should be remembered that material pilferage, deterioration of materials and careless handling of materials
lead to reduced profits or even losses. As such, it is necessary to maintain a well-equipped stores department to
ensure maximum efficiency.
Types Of Stores :
Stores may be centralised or decentralised.
Centralised Stores
It means a single store for the whole organisation.
A centralized store is that store which receives materials for and issues them to all departments, divisions and
production floors of the company. Such a store is only one in the company which receives materials for and
issues to all who need them. The materials required for all the departments and branches are stored and issued
by only one store.
Advantages Of Central Stores
1. A better supervision of store is possible because the store is located under a single supervision.
2. A better layout of store and its control are possible.
3. Less space is occupied.
4. Investment in stock is minimized.
5. It is economical for storing materials.
6. Safety of materials is possible according to the nature of materials.
7. Trained and specialized persons can be appointed.
8. Wastage of materials can be minimized
Disadvantages Of Decentralized Stores
It leads to higher cost of materials handling,1.
delay in issue of materials to respective departments,2.
exposure of materials to risks of fire and accident losses are practical difficulties in managing big stores.3.
Decentralized Stores
A decentralized store is that type of store which receives materials for and issues them to only one department
and not to the whole company. The decentralized store may be in many numbers in the company, as each
department has its own such store. Purchasing and handling of materials are undertaken by each and every
department separately. If the volume of material activities is large, this type of store is suitable because each and
STORES AND STORE-KEEPING
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2. department separately. If the volume of material activities is large, this type of store is suitable because each and
every branch has their own store for facilitating smooth operations of their production activities.
Advantages Of Decentralized Stores
1. Controlling a and storing function can be accomplished easily.
2. Delay in material handling will be eliminated.
3. Minimizes the chances of loss by fire.
4. No need of internal transportation costs.
5. Specific needs of individual departments can be easily fulfilled.
6. Saving in material handling cost.
Disadvantages Of Decentralized Stores
1. Higher cost of supervision.
2. More space is required for individual departments.
3. Higher amount of investment is required.
4. More time for stock taking and taking.
5. Higher cost of staff and stationary.
6. Improved technique is less possible for controlling of materials.
Objectives Of Store Keeping
An efficient system of store keeping has the following objects:
To ensure uninterrupted supply of materials and stores without delay to various production and service
departments of the organization.
•
To prevent over-stocking and under-stocking of materials.•
To check in all materials as to quality and quantity.•
To minimize storage cost.•
To ensure proper and continuous control over materials.•
To ensure most effective utilization of available storage space and workers engaged in the process of
store-keeping.
•
To protect materials from loss and wastage due to defective storage.•
To identify and locate materials in the store-rooms without delay.•
To protect and safeguard material items against pilferage, theft and fire etc.•
To develop such a system so that fullest information about store items is available in the stores at every
time.
•
Functions of Store Keeping
The principal functions of store-keeping to be performed by the Stores Department in an organization, are as
follows:
Issuing purchase requisitions as and when material is required.•
Receiving purchased stores from the Receiving Department and verifying that every lot of stores is
supported by an indent, a purchase order and an inspection note.
•
Preparing ‘Goods Received Note’ in accordance with the different stores lots received.•
Ensuring that all the Goods Received Notes are regularly posted to the Bin Card.•
Placing and arranging stores received at proper and appropriate places and adhering to the golden
principle of store keeping i.e., ‘A place for everything in its place. ‘
•
Minimizing the storage, handling and maintaining costs by preserving and handling the materials in the
most economical and efficient manner.
•
Issuing stores to various departments of the business and ensuring that all issues are properly authenticated•
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3. Issuing stores to various departments of the business and ensuring that all issues are properly authenticated
and accounted for.
•
Ensuring the adherence to the proper issuing procedure and system followed in the organization.•
Taking a periodical review of inventory by initiating various inventory control systems viz., perpetual
inventory control system and ABC system of inventory control.
•
Disclosing fullest and up-to-date information about the availability of stores whenever required, by
maintaining proper stores records with the help of Bin Cards and Stores Ledger.
•
Ensuring proper safety of materials against theft, pilferage and fire, etc.•
Supervising and coordinating the duties of different types of staff working under the headship of the store-
keeper.
•
Preventing entry of unauthorized persons in the stores.•
Maintaining proper stock-levels fixed in respect of every item of stores and replenishing them as and
when necessary.
•
Store keeper and his duties
As we know that in a manufacturing concern, stores or materials represent an equivalent amount of cash. As
such there should be a proper system of store-keeping which will ensure the safe custody of materials, easy
location of the various items of stores, economic usage of storage space, regular and efficient flow of materials,
maintenance of reliable stores records and an efficient assessment of stock position.
For efficient store-keeping, a separate Stores Department under the headship of a ‘store-keeper’ is set up. The
store-keeper is a man of wide experience in stores routine. He is assisted by a number of store-men in the
performance of his duties. The store-keeper is responsible for the safe performance of his duties.
The main duties and responsibilities of a store-keeper are:
To issue requisition on purchase department for purchasing materials at the right time.•
To accept into stores, materials supplied by suppliers or returned by production departments.•
To check in all materials as to quality and quantity.•
To keep all the materials in safe and convenient manner in appropriate bins and containers.•
To issue materials against proper authorization.•
To maintain proper records of receipts, issues and balance of materials.•
To watch levels of stock and replenish materials when necessary.•
To prevent the entry of unauthorized persons into the stores.•
To advise the management on the day-to-day affairs of the stores department.•
To dispose of scrap or obsolete materials.•
Location Of Stores
‘Location’ means the site for the store. The location of the stores should be carefully planned. An important
factor to be considered when establishing a store set up is the question of locating it in the most appropriate
place. The stores must be set up at a convenient and safe place, near to Receiving Department, easily accessible
from all parts of the factory and by means of transport and free from the risk of fire, theft, etc. The general
principle in determining the location of stores is to minimize the total kg. — km. cost of transportation of
materials.
Factors determining the location of stores
The main factors which determine the location of store in a manufacturing concern may be given as follows:
1. Minimization of Material Handling Efforts:
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4. 1. Minimization of Material Handling Efforts:
Minimization of material handling efforts implies location of raw material store near the production shops and
location of finished goods store and packing materials store near the assembly shop. The stores should be easily
accessible by means of transport.
2. Nature of the Materials:
The nature of the materials to be stored also affects the location of the store. Material that is not damaged by
weather can be stored out of doors in a shed. But materials such as cement, plaster, etc., must not only be
protected from the weather but must also be stored in a dry place.
3. Quantity, Weight, etc., of the Materials:
The quantity of each of the goods to be stored must be taken into account for determining the location. When
the quantities are known, adequate provision may be made for immediate and future storage needs.
4. Flow of Materials:
Location of store should be convenient which allows for steady and regular flow of store items without any
obstruction.
5. Free from Risk of Loss:
Store must be set up at a safe place which is free from the risk of loss due to fire, theft, moisture, etc.
6. Flexibility:
The location of store must be such which provides for its future expansion.
Layout of stores
‘Layout’ of stores refers to the physical arrangement of storage facilities or the internal arrangement or
placement of materials inside the stores.
Layout of stores aims at….
- effective utilization of space available for storage of materials,
- making the receipt and issue of stores convenient,
- giving a better appearance to the store,
- reducing the chances of damage, wastage, pilferage and accidents.
- reducing the operating cost of storage.
The layout of stores should be determined according to the class and quantity of materials to be stored and the
general nature of the business. There should be proper and separate arrangement for different items of materials
from the viewpoint of the economy in space, effective supervision, minimum of wastage and convenience in
issue. The materials should be kept in bins, racks, shelves, drawers, drums, packages and containers.
Factors to be considered for determining stores layout
1. Similarity: Items of similar nature should be stored at one place for the sake of easy identification and
convenient issue.
2. Popularity: The turnover of each item of stores should be considered so that fast moving items should be
stored near the point of issue/usage.
3. Size of Item: Items of store which are large or bulky in nature should be stored near the point of use.
4. Nature of Materials: Nature of materials to be stored is also important in determining the layout of store.
Hazardous, sensitive and perishable goods should be stored separately at safe places.
5. Physical Movement of Materials: The principle of ‘first-in-first-out’ should be strictly adhered to in the
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5. 5. Physical Movement of Materials: The principle of ‘first-in-first-out’ should be strictly adhered to in the
matter of physical movement of the materials.
6. Physical Facilities: Efficient layout should also consider the various physical facilities such as lighting
arrangement, ventilation, wall paints, size of platforms, availability of cranes and handling equipment.
Location Of Stores
‘Location’ means the site for the store. The location of the stores should be carefully planned. An important
factor to be considered when establishing a store set up is the question of locating it in the most appropriate
place. The stores must be set up at a convenient and safe place, near to Receiving Department, easily accessible
from all parts of the factory and by means of transport and free from the risk of fire, theft, etc. The general
principle in determining the location of stores is to minimize the total kg. — km. cost of transportation of
materials.
Factors determining the location of stores
The main factors which determine the location of store in a manufacturing concern may be given as follows:
1. Minimization of Material Handling Efforts: Minimization of material handling efforts implies location of raw
material store near the production shops and location of finished goods store and packing materials store near
the assembly shop. The stores should be easily accessible by means of transport.
2. Nature of the Materials: The nature of the materials to be stored also affects the location of the store. Material
that is not damaged by weather can be stored out of doors in a shed. But materials such as cement, plaster, etc.,
must not only be protected from the weather but must also be stored in a dry place.
3. Quantity, Weight, etc., of the Materials: The quantity of each of the goods to be stored must be taken into
account for determining the location. When the quantities are known, adequate provision may be made for
immediate and future storage needs.
4. Flow of Materials: Location of store should be convenient which allows for steady and regular flow of store
items without any obstruction.
5. Free from Risk of Loss: Store must be set up at a safe place which is free from the risk of loss due to fire,
theft, moisture, etc.
6. Flexibility: The location of store must be such which provides for its future expansion.
Working of the stores:
There are four sections in the process of storekeeping
(a) Receiving section,
(b) Storage section,
(c) Accounting section,
(d) Issue section.
These are explained as under:
(a) Receiving Section:
There are four kinds of inventories received by stores viz.,
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6. There are four kinds of inventories received by stores viz.,
(i) raw materials,
(ii) stores and supplies,
(iii) tools and equipment,
(iv) work-in- progress or semi-finished goods.
Following procedure is followed in receiving these inventories:
(i) Receiving these incoming materials in stores.
(ii) Checking and inspection of these incoming materials and stores etc.
(iii) Recording the incoming materials in goods received book.
(iv) Preparing and forwarding goods inwards note to purchasing section.
(v) Informing the purchase department about damaged and defective goods and surplus or deficit supplies etc.
along with rejection forms and notes.
(vi) Returning damaged or defective goods to the suppliers in accordance with the instructions of the purchase
department.
(vii) Forwarding the materials to respective stores and locations where these are to be stored or preserved.
(b) Storage Section:
The store room should be located at a convenient and appropriate place. It should have ample facilities to store
the materials properly viz. bins, racks and shelves etc. There can be a single store room in case of a small
organisation, but a large scale concern can have different or multiple stock rooms in addition to general or main
store.
The separate stockrooms may be used for different classes of inventories. The material should be stored in such
a manner as to protect it against the risks of damage, destruction and any kind of loss. Each article should have
identifying marks viz., stamping, embossing, color, coding and painting etc. These risks are very useful in
locating or identifying an article in the stores.
(c) Accounting Section:
This section is concerned with keeping proper records with regard to receipt and issue of materials. The primary
task of this section is to undertake the process of inventory control.
(d) Issue Section:
The materials should be issued to respective departments on receiving duly authorized requisition slips. An
entry should be made immediately on the bin card attached with the bin from where the material has been
issued.
Bin cards contain valuable information with regard to receipt and issue of materials, which is greatly helpful in
exercising a system of inventory control. These cards are further helpful in determining various levels of
materials viz., maximum, minimum, and re-ordering level.
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7. Chapter 17 of the WHO Laboratory Biosafety Manual, 3rd edition contains essential background information
on laboratory supply hazards and how to deal with them.
The following actions must be undertaken:
Store supplies under the right conditions as indicated by the supplier (room temperature/5°C/-20°C/-70°
C/etc.)
•
Storage areas should comply with the necessary safety requirements as demanded by the nature of
supplies. This means:
•
Flammable supplies are stored in a fire-resistant cabinet•
Poisonous supplies are stored in a well-ventilated room/cabinet•
Corrosive substances are stored in corrosive resistant cabinets/trays/containers•
Liquid chemicals are stored in the lower part of safety cabinets, solid chemicals in the upper part•
Access to all storage areas must be restricted to authorized personnel only (this was arranged already in
phase 1 in the activity where Stock Cards were prepared)
•
Hazard symbols must be placed visibly on each storage area. Use the United Nations Globally
Harmonized System of Classification and Labeling of Chemicals (GHS) system.(link is external)
•
Provide Material Safety Data Sheets (MSDS Sheets) for all the materials stored in each area. Keep these
near the location where the items described in the MSDS Sheets are stored so that they are easily
accessible for staff members
•
When supplies are received record the following information:•
Name of the supply•
Preparation date/date of receipt•
Whether or not acceptance criteria were met and any follow-up actions•
Opening date (to be filled out when first opened)•
Expiry date (can often be found on internet if not visible on supply package)•
Possible safety warnings (Risk (R-) and Safety (S-) phrases; see reference document provided in the right-
hand column of this page if not indicated already on the supply package
•
It is recommended to store the order form with the packing slip and record the above information on these
records. This is because most of the above information is already indicated on these records. Store all the
order forms and packing slips in the same folder.
•
Store all supplies according to the FEFO system: First Expiry-First out. This means that the lots of a supply that
are nearest the expiration date or are the oldest are stored at the front of the shelf (so that they are taken first)
and the newest lots are stored at the back of the shelf.
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8. Assignment 1
Read and make notes on the following
Minimum Level/safety stock•
Maximum Level•
Re-order level•
Normal consumption rate•
Normal Re-order Point•
Re-order Period•
Daily consumption•
Stock level•
Click this link to facilitate you in doing the above assignment
https://accountlearning.blogspot.com/
Assignment 2
Read and make notes on the following store documents
Credit note•
Debit note•
Delivery note•
Invoice•
Inventory•
Order form•
Click these links to facilitate you in doing your assingments
https://www.accountingnotes.net/cost-accounting/materials/documents-required-for-purchasing-
stores-routine-cost-accounting/10228
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