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EFFECTIVE STORE MANAGEMENT

Collins Nweke

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TRAINING OBJECTIVES• Understand the principles of storekeeping and inventory

management• Know the basic responsibilities of storekeepers• Know the basic operational rules and activities in warehousing• Know and understand the importance of record keeping in

warehousing• Know and understand the difference between bin-card and

stock record card• Assess stock status at any given point to determine how long

supplies will last and also maintain inventory control system

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STOREKEEPING

• Store is a secured or safe place where all kinds of materials/products needed for production, packaging, distribution, maintenance are received, stored and issued to users as their need arises. Store/Warehouse can be centralized or decentralized.

• Storekeeping is the process of handling and maintaining materials/products in the store and in good condition.

• Stock is referred to as the materials/products kept in the store to facilitate smooth running of the business. It is also referred to as inventory.

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OBJECTIVES OF EFFICIENT WAREHOUSE/STORE OPERATIONS

• Provides timely and accurate customer services.

• Keeps track of items so that they can be correctly found ready at any time.

• Minimize the total physical effort.• Provides communication link with customers.• Always provides place to store and protect

inventories.

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COST OF OPERATING WAREHOUSE

• Capital costs: This includes cost of space and materials handling equipment.

• Operating cost: This includes labor cost, and it’s productivity is measured as the number of units an operator can move in a day.

• Warehouse must operate to maximize use of space, and effectively use labor and equipment. Space is the largest capital cost followed by materials handling equipment.

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WAREHOUSE ACTIVITIES

• Stock receipt• Stock storage• Stock issuance• Stock record• Stock control• Stock taking• Stock checking• Stock identification and location• Stock security and protection

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STOCK RECEIPT• Receiving documents like waybill/delivery note, invoice are necessary

for the receipt of any stock into the warehouse.• The receiving quantity on the waybill has to correspond with the

quantity on the invoice and also with physical receipt.• The receiving stock has to be visually inspected and examined to ensure

the quality and integrity of the stock.• Record the received stock on the stock card and also on the stock

inward register.• Maintain and update the stock record card each time transaction

happens in the store, i.e. issuance and receipt.• The stock card serves as a guide to inform you at any particular point in

time the quantity of different stocks (materials/products) in your store without physically counting the stocks.

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STOCK STORAGE• Stocks are expected to be stored in a tidy store under ideal temperature and

humidity conditions to prevent chemical damage such as change in color or texture of the stocks.

• Stocks of lighter weight such as the sachet tomato brands are not to be stacked above 5ft to prevent mechanical damage such as crushing and squeezing of the stocks.

• Stocks are to be stacked one particular stock specification on pallets and not on the floor to prevent contact with water and dirt.

• Stocks are to be stacked about 1ft away from the wall and also from each of the stacks to offer cross ventilation and easy walk-around access in the store.

• Stocks should be arranged in such a way that new stocks are moved behind in the store and old stocks positioned to the front.

• Store has to be periodically fumigated to protect the stocks against pests and rodents.

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STOCK ISSUANCE• Stocks are to be issued on time and in full based on a duly signed

requisition note by authorized person.• The issuing quantity should correspond with the requested quantity on the

requisition note/order, and should not in any way exceed for any reason(s).• Invoice and waybill have to be prepared for the issuing stock and original

copy of these documents have to be handed over to the person requesting for the stock (customers).

• The issuing stock has to be issued based on first in first out (FIFO) or first to expire first out (FEFO) basis as applicable at any given point in time.

• The issuing stock has to be moved out with the aid of material handling equipment and carefully stacked in a vehicle.

• The issuing stocks’ detailed information has to be updated on the stock record cards (inventory control cards)

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STOCK RECORDS

• Proper stock keeping records for all stock transactions must be maintained for each item in stock showing the quantity on hand, quantity received, quantity issued and location in the warehouse.

• Stock keeping records include bin cards, inventory control cards and stock ledgers.

• Actions are carried out on the afore-mentioned documents each time transaction takes place within the warehouse.

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BIN CARD AND STOCK CARD• Bin card is similar to stock card but do not contain the

same information with that on the stock card.• Bin card is a stock keeping record that contains detailed

information about a single product specification of the same batch number (lot number), and it is usually attached to the bin, pallet or stack of where the product is located.

• Stock card (inventory control card) is a stock keeping record that contains detailed information about a single product specification of different batch number (lot number), and it is usually maintained in a file.

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STOCK TAKE• Stock take is physical counting of stocks to confirm that the physical quantity

of stock on hand correspond to the available quantity on the stock cards, and it is called physical inventory count.

• Stock take also aimed at identifying obsolete and non-moving stocks in the store, and to reveal any weakness within the system.

• Stock take can be classified into three; Periodic stock take: This is performed at regular intervals either quarterly,

half yearly or yearly, and the store have to be close for business during the exercise.

Continuous stock take (cycle count): This is counting fraction of the whole stock every week or month and this action would be able to count the entire stock within the year without disrupting the usual business.

Spot-check: This involves walk-around inspection to glance at some stocks to ascertain their quantities and physical conditions.

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ASSESSING STOCK STATUS• It is necessary for store personnel to assess stock status at given point in time to

determine how long supplies will last.• Proper consumption/sales record which is use to determine average monthly

consumption (AMC) of particular stock and it’s respective stock on hand (SOH) are used to assess stock status and determine how long particular supplies will last.

• Consumption/sales record for particular stock are computed monthly, and average of immediate three (3) previous consecutive months are calculated to determine the AMC.

• Stock on hand (SOH) is divided by the average monthly consumption (AMC) to determine how long supplies will last in months. Mathematically, SOH ÷ AMC = Months of stock on hand.

• It is ideal to assess the stock status monthly as long as there are no huge changes in demand and supply of the products, and the months of stock are expected to be raised to like 3 to 6 months.

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INVENTORY CONTROL SYSTEM• Inventory control system informs the store personnel at both ends of the

warehouse (centralized and decentralized) on how to order or issue, how much to order or issue, and how to maintain appropriate stock level of all products to avoid stock-out and over-stock.

• Max-Min Inventory Control System : This is a system designed to ensure that the quantities in stock fall within an established range.

• Max Stock Level/Max Quantity : This is the level of stock above which inventory levels should not rise under normal conditions.

• Min Stock Level/Min Quantity : This is the level of stock at which actions to replenish inventory should occur under normal conditions.

• Review Period : This is the routine interval of time between assessment of stock levels to determine if additional stock is needed.

• Emergency Order Point (EOP) : This is the level of stock that triggers emergency order, which can occur at any time within the review period. EOP must be lower than the set minimum stock level.

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THREE TYPES OF MAX-MIN INVENTORY CONTROL SYSTEM

• Forced-Ordering Max-Min System : This method is used in either a pull (requisition) or a push (allocation) system to forcefully raise inventory to maximum level at the end of review period. This method does not necessarily has a minimum stock level.

• Continuous Review Max-Min System : This method is used in a pull system to continuously review the stock level each time issue is made to check if the stock level is at minimum or below minimum, and raise the stock level to maximum.

• Standard Max-Min System : This method is ideally used in a pull system to raise inventory to maximum level at the end of review period for inventory that are at minimum or below minimum level. This system is always conscious of emergency order point (EOP) to avoid sudden stock-outs.

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ADVANTAGES AND DISADVANTAGES OF FORCED-ORDERING MAX-MIN SYSTEM

• Advantages The storekeeper’s decision rule is simple: order/issue every item at the end of

the period. Because orders are placed at regular intervals (i.e., the end of each review

period), transportation can be scheduled for specific times, making it easier to ensure the availability of transport resources.

Because all items are ordered/issued at the end of every review period, storekeepers do not need to constantly assess stock status, unless they think a potential stock-out is possible.

• Disadvantages Orders for some items may be for small quantities, because all items are

ordered regardless of stock on hand. The system gives room for accumulation of obsolete stocks if not well

managed.

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ADVANTAGES AND DISADVANTAGES OF CONTINUOUS REVIEW MAX-MIN SYSTEM• Advantages The storekeeper’s decision rule is simple. The system is more responsive and flexible because orders can be

placed at any time. Small orders are eliminated because stock levels are at the min

when an order is placed. • Disadvantages Transportation resources are harder to schedule because orders can

be placed at any time. In facilities with a large number of products, or a great deal of

activity, the storekeeper’s job is harder because the stock status must be assessed every time stock is issued.

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ADVANTAGES AND DISADVANTAGES OF STANDARD MAX-MIN SYSTEM

• Advantages Small orders are eliminated because an order is placed only when stock levels are at or

below the min. In programs with many products, standard systems eliminate the need to assess stock

status continually (as in continuous review) and to reduce the number of calculations that must be made because fewer products will be ordered or issued than in forced-ordering.

Because orders are placed at regular intervals (i.e., at the end of each review period), transportation can be scheduled for specific times, making it easier to ensure the availability of transport resources.

• Disadvantages The min stock level is higher, increasing the likelihood of expiry and requiring more

storage capacity, both of which mean increased costs. Storekeepers must learn the max, min, and EOP; know how to assess stock status; and be

able to calculate the order or issue quantity. More training for the storekeepers may be required because their decision rules are more

complex.

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STOCK LOCATION

• Objectives

To provide the required customer service

To keep track of where items are stored

To minimize effort to receive, put away, and retrieve items

• Basic Stock Locating Systems

Group functionally related items together

Group fast-moving items together

Group physically similar items together

Locate working stock and reserve stock separately

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FIXED AND FLOATING LOCATIONS

• Fixed location involves assigning permanent location to particular SKUs and no other items are to be stored in the location, and it is usually employed in small warehouses where there are few SKUs and small throughputs.

• Floating (Random) location involves storing goods where there is appropriate space, and it requires accurate and up-to-date information. Warehouse using this kind of location are usually computer-based for easy tracking.

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MATERIALS HANDLING• Material handling is the techniques employed to store, move, transport

or distribute materials to their point of storage, usage or sale with or without the aid of mechanical appliances.

• Material handling processes should be efficiently and effectively performed to add value to our business and customer, and if not efficiently and effectively handled, damages will occur that would result to losses in the business.

• Material handling system can be manual, mechanized or automated.• Mechanized handling is necessary for safety reasons when; Lifting loads are in excess of 50kg Travel time is greater than lifting and placing time Handling required many persons Dealing with height above 7ft

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CARE OF THE STORE• Effective care has to be taken to maintain the store and stocks in good manner

and shape and these includes; Good housekeeping and cleaning Locking of the store with strong key when not in operation, and keeping the

key(s) under the custody of authorized individual(s) Restricting access into the store especially to non-store personnel. Close monitoring of the hired/casual labor (loaders) while working inside the

warehouse Temperature and humidity regulation of the store Proper arrangement and stacking of stocks on pallets Periodic fumigation of the store to protect the stocks from pests and rodents

attack Stacking of the stocks 1ft away from the wall and each of the stacks to give

room for free flow of air, clear aisle and easy handling.

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WAREHOUSE OPERATION CHECK-LISTS/N TASK DAILY WEEKLY MONTHLY

1 Cleaning х

2 Stock Take х х

3 Stock Check/Spot Checking х

4 Stock Record maintenance х

5 Stock Report х х х

6 Assessing stock status x

7 Re-arrangement of empty pallets

х

8 Fumigation/Pest Control х

9 Servicing/Maintenance of pallet trucks and fork-lifts

х

10 Age analysis of products х

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