store keeping

STORE KEEPINGSTORE KEEPING

2/27

STORE KEEPINGSTORE KEEPING

• Receive, store, and issue materials, parts, factory supplies at minimum cost

• It is serving facility, inside an org., responsible for proper storage of the material and then issuing it to respective departments on proper requisition

• Protect the goods stored • Store room, storekeeper

3/27

OBJECTIVES OF STORE-KEEPINGOBJECTIVES OF STORE-KEEPING

• Easy location of the items in store.

• Proper identification of items.• Speedy issue of material.• Efficient utilization of space.• Reduction in need of material

handling equipment.

4/27

DUTIES OF STOREKEEPINGDUTIES OF STOREKEEPING “As per Maynard” “The duty of store keeping are • To receive materials

• To protect them while in storage from damage and unauthorized removal

• To issue the materials in the right qualities, at right time, to the right place and

• To provide these services promptly and at least cost.

5/27

TYPES OF STOREKEEPINGTYPES OF STOREKEEPING

StorekeepingStorekeeping

Centralized storekeeping

Decentralized storekeeping

6/27

CENTRALIZED STOREKEEPINGCENTRALIZED STOREKEEPING

• Central storekeeping means the spatial summary of all storekeeping functions and all stored materials under uniform line.

Advantages- an easement of the goods received, care, preservation, inventory determination and - examination.

7/27

DECENTRALIZED STOREKEEPINGDECENTRALIZED STOREKEEPING During the decentralized

storekeeping the materials used at the place of the user are stored in the form of temporary storage facilities (buffer camp).

Advantages are the higher flexibility, the more exact arrangement of the individual materials in the production areas and the shorter routes of transportation.

8/27

FUNCTIONS OF STOREKEEPINGFUNCTIONS OF STOREKEEPING

Balance function

Improving function

speculation function

Security function

Assortment function

Functions of storekeeping

9/27

FUNCTIONS OF STORE-KEEPINGFUNCTIONS OF STORE-KEEPING

• Balance function:

If the procurement quantity is larger than the output, then by the balance function the material redundant for production is stored.

• Assortment function

With the supply or assortment function the storekeeping contributes to a continuity in the assortment. To that extent the supply function supplements the balance function, since thereby the parts of the assortment, where discrepancy between procurement and paragraph exists, are bridged.

10/27

• Security function

This can be the case, if products, which are coined/shaped by delivery bottlenecks and/or seasonal fluctuations, must be procured.

• Improving function

The improving function is called also production function of the camp, which makes possible only a following processing. An improving function develops, if the storage causes a change of the product and part of the production process.

• Speculation function

Reasons for the speculation function of the storage can be foreseeable extreme price fluctuations on the procurement market or particularly low cost prices. In addition can be speculated to the discounts received thereby by the order of large quantities and in camp commodity.

Receiving, handling and speedy issue of material.

Custodian of goods I store against damage and pilferage.

To ensure regular supply of materials .

Effective utilization of store space.

To provide service to the organization in most economical way.

To keep the details of the items available in store up to date.

Proper identification and easy location of items.

Physical checking of stocks.11/27

Why storekeeping?

STORES SYSTEMSTORES SYSTEM

CLOSED1. All materials are stored in a

closed/controlled area.2. No other person than the

stores personnel is permitted in the area.

3. Materials can leave or enter the storage area only by authorized documents.

4. Maximum physical security.

5. Tight accounting control of inventory material

OPEN1. There is no specific area.

Stores are maintained in the form of suitable/ convenient locations.

2. Every individual has access to any storage facility.

3. After the receipt of the material it is delivered to respective department to expedite the production activity.

4. Chances of pilferage high.5. Less emphasis on

accounting control of the material.

12/27

VARIOUS SECTIONS IN STOREKEEPINGVARIOUS SECTIONS IN STOREKEEPING

Receiving section

Stores section

Issue section

Accounting section

Stock taking checking

Location Working procedures

Layout of storesStores equipment

Material handling facilityIdentification of materials

13/27

Receiving

1. RECEIVING SECTION1. RECEIVING SECTION

INTERNAL SUPPLIERS

OUTSIDE SUPPLIERS

14/27

• Dispatching items- date of dispatch, carrier details, description of the consignment and the value of items.

• Ensures quick and easy clearance of bills etc.

• Purchase copy, suppliers note and transporter information/ consignment note- enables to organize and plan for expeditious clearance of materials and minimize cost

15/27

OUTSIDE SUPPLIERSOUTSIDE SUPPLIERS

1. RECEIVING SECTION1. RECEIVING SECTION

INTERNAL SUPPLIERSINTERNAL SUPPLIERS• Whenever materials are received from internal

divisions or returned from user departments transfer notes and returns to stores documents are usually used for this purpose.

16/27

2. STORES SECTION2. STORES SECTION

• This is a place where all materials received by stores department are kept with protection against deterioration.

• Various stores operation are:- Location, Procedure Layout Equipment and Identification of stores section.

17/27

Location of stores• to provide space to the materials till these are issued to

the, respective departments of the enterprise.

Working Procedure • receives the materials from receiving sections.• material is classified and coded according to their nature

and use.• bin card is tagged.

18/27

Stores Bin Card• Card No. Part No.

• Description Location

• Date

The bin card contains up to date information about the receipt, issue and balance of the respective item in the stock.

19/27

1. Flexible in arrangement

2. Convenience in physical counting of materials.

3. Efficient use of floor space and height.

4. Minimum handling and transportation of materials .

5. Items used sparingly shed. Be easy to locate.

20/27

Layout of stores section

Stores equipment• A good store is equipped for handling, measuring and

weighing the materials. • The equipment should be such that stores investment

and operating expenses are reduced.

Materials handling Facilities There should be proper weighing and measuring

instruments at the time of receiving and issuing the materials

21/27

• Bins: Bins are expensive & as Many item as possible should be put into them, refilling being done on a regular basis.

• Racks: Racks can be used either as the picking face for items which are too big or heavy fir bin accommodation, or else for keeping reserve stocks for replenishing bins.

Static racking Live racking

Drive through racking

Pallets: pallets are specially designed platforms for the stacking of goods, with view to the whole load being moved, wherever it is required, by a fork-lift.

Identification of materials in stores

• Tagging some piece of paper or cloth with the items.• Labels may be fixed on the items.• The coded number or any other identification mark

may be embossed on the items.• Painting or color coding of items.

22/27

METHODS OF CODINGMETHODS OF CODING

1. Mnemonic Method:- Here alphabets closely associated with name of the item are used e.g. MT can be used for some metallic item. This is useful when few type of items are to be stored.

2. Random Method:- Here both alphabets or numerals can be used randomly. But the method is rather arbitrary.

3. Scientific Method:- The items are divided into number of groups and each group is given some code. Then further sub-grouping is done on the basis of classification of item in any group, its shape, function etc.

23/27

LOCATION CODINGLOCATION CODING• The location can be identified in terms of the number of the

warehouse , row number, column number, rack number, shelf or bin number etc.

Location of any item inside the stock can also be decided in three ways:-

• Fixed Location:- Here some fixed place is designated to each class of item. The basis can be like Supplier wise, item wise, utility of the item etc.

• Random Location :- Items are placed according to the availability space in store at the time of receiving the items.

• Zonal Location:- like Bulk Zone, Reserve stock, indirect material like spares and consumable items .

24/27

3. ISSUE SECTION3. ISSUE SECTION

• It handles the issue of materials when required by some department of the enterprise.

• Materials carry some money value and in order to avoid malpractices and to curb the tendency of waste, the items should be issued against proper requisition.

• The material requisition is a request to the stockroom to issue materials.

25/27

4. ACCOUNTING SECTION4. ACCOUNTING SECTION

• The accounts section exercises financial control over stores. The goods receipt book is maintained for all arrivals, making the receipt in triplicate, a copy of which is sent to accounts section and other to the store section.

26/27

5. STOCK TAKING CHECKING5. STOCK TAKING CHECKING• This implies physical checking of items in store to see that

these are in accordance with the entries of stores ledger. METHODS OF STOCK CHECKING ARE• FIXED ANNUAL INVENTORY:- A special team is deputed

to check and count the material inside the stores at the end of each financial year.

• PERPETUAL INVENTORY:- In this system the stock control department maintain up to date and systematic records of each and every transaction. There is a system of continuous verification of stock. The entries on bin card and stores ledger should tally with each other. In case of discrepancies thorough investment is made.

27/27

““Cost Control &Cost Control &

Cost Reduction” Cost Reduction”

1/21

Cost ControlCost Control

3/21

•keeping the expenditure within acceptable limits.

•costs are in control unless costs exceed budget or standard

Cost Control ProcessCost Control Process

Steps involved in designing process of cost control system:

• Establishing norms• Appraisal • Corrective measures

13/21

Cost Control in Individual Cost Cost Control in Individual Cost ElementsElements

• Raw material• Wages• Power & fuel• Stores & spare parts• Overheads

15/21

Advantages of Cost ControlAdvantages of Cost Control

• Achieving the expected return of capital• Increase in productivity of the available resources• Economic use of limited resources of production

6/21

Tools of cost controlTools of cost control

• Standard cost and budgets.

• Ratio analysis.

• Value analysis.

7/21

Cost ReductionCost Reduction

Definition:

Cost reduction has been defined as: “The achievement of real and permanent reductions in the unit cost of goods manufacturing or services rendered without impairing their suitability for the use intended .”

8/21

Cost reduction can be effected by either of the following ways:

By reduction in unit cost of production

By increasing productivity

Areas of reduction

• Design

• Factory organization and method

• Production planning

• Layout and equipment

• Utility services

• Marketing

• Finance

Techniques in cost reduction• Economic batch quantity(EBQ)

It is that point where carrying costs equals set up cost approximately. At this point the total cost will also be minimum.

• Economic order quantity(EOQ)

It is the quantity fixed at a point where total cost of ordering and the cost of carrying the inventory will be minimum.

Illustration of problem

• A purchasing house purchase 2000 units of a particular item per year at a unit cost of Rs 20/-. The ordering cost per order is Rs 50/- and the inventory carrying cost is rs 25/-. Find the EOQ and minimum total cost including purchase cost.

• If 3% discount is offered by the suppliers for purchase in lots of 1000 or more should the publishing house accept the offer?

Solution

• EOQ=

=

= 200 units

Calculating TC (no discount)

No. of orders to be placed by getting 200 units = 10

Average inventory = 100

Purchase price of 200 units @ Rs 20/unit = 40000

Ordering cost (10 orders @ Rs 50/order) = 500

Carrying cost (Rs20 * 0.25) = 500

Total Cost = 41000

Calculating TC (3% discount)

Unit cost after 3% discount = 19.40

Lot size = 1000

No. of orders for 2000 units = 2

Average inventory = 500

Purchase price of 2000 units @ Rs 19.40/unit = 38800

Ordering cost (2 orders @ Rs 50/order) = 100

Carrying cost (Rs500*19.40*0.25) = 2425

Total Cost = 41325

Non conventional approach :

• Material cost

• Man power cost

• Cost management inititates-selling /distribution

• Funding cost

Material cost :

• e-sourcing

discovery of new sources

competitive pressures

Rationalization of suppliers

• Thrust on value engineering

• Re-visiting designs

• Application oriented engineering

• Product life cycle management

Manpower cost

• Right sizing of employees-VRS,CRS

• Optimum utilization of manpower

• Transition from machine engagement time to man engagement time.

• Productivity linked wage settlement

• Adopting new concepts

Importance of Cost control and cost reduction

Reduction for corporate turnaround

• 2 drivers:

• To stay profitable

• Offering quality product at cheaper price- eliminate unproduction expenditure

Cost + margin = selling price

Margin = selling price – cost

• Margin is a function of how efficient the company is in controlling costs.

Changing perspective of profits:

• Cost + profit = sales

In a sellers market cost and profit are reimbursed by customers.

• Sales – cost = profit

With more player in the market place, selling price is determined by the market forces; having locked to a level of cost, focus is on cost control and cost reduction. Cost information is for tactical decision making

• sales - profit = cost

selling price is determined by market forces. Profit is determined by the risk or return profit of business with a focus on cost management to achieve the targeted results..

Sequence of Steps in Cost Reduction Sequence of Steps in Cost Reduction ProcessProcess

1.Analysis

2. Examination -

a) Vital activities

b) Secondary activities

3. Developing solutions

4. Selecting a Solution

5. Obtaining Agreement

17/21

Precautions in Implementing Cost Precautions in Implementing Cost Reduction ProgramsReduction Programs

• appropriate to the organization.• introduction and implementation - planned • Resistance by employees to reduce costs• No overlap - cost reduction / double counting of

reductions / savings.• Effect of success in one area not affect the other• should not have any undesirable effects on external

parties

18/21

Planning for Cost ReductionPlanning for Cost Reduction

1. Crash programmes

2. Planned programmes

3. Short range programmes

4. Long range programmes

20/21

Importance of Cost Control& Cost Reduction Importance of Cost Control& Cost Reduction

• Better utilization of resources

• To prepare for meeting a future competitive position.

• Reasonable price for the customers

• Firm standing in domestic and export markets.

• Improved methods of production and use of latest manufacturing techniques

• By a continuous search for improvement creates proper climate for the increase efficiency.

• Improves the image of company for long-term benefits.

• Improve the rate of return on investment.

10/21

Cost Control v/s Cost ReductionCost Control v/s Cost ReductionCost Control Cost Reduction

1. It is the competitive analysis of actual results with established norms.

This process finds out the substitute by finding new ways or methods.

2. The variances are appraised and reported and necessary course of action will be taken to revise norms, standards etc.

The necessary steps are taken for further modification in the method.

3. It starts from established cost standards and attempts to keep the cost of operations of a process in line with those standards.

It challenges the standards forth-with and attempts to reduce cost on continuous basis.

4. The emphasis is on the present and past behavior of costs.

The emphasis is partly on the present costs and largely on future costs.

5. It attempts to achieve the best possible results at the least cost under given conditions.

Under this no conditions are considered to be permanent where a change will secure a lowest cost figure.

6. Cost control is a preventive function. Cost reduction is a corrective function.

12/21

store keeping

Documents

production function

store balance function

improving function

supply function

issue materials

stored materials

checking1327 page

storekeeping functions