Store-Keeping: Meaning, Types, Objectives Functions and Working of the Stores

Meaning:

After the completion of purchase procedure, the next important aspect of materials management is storekeeping.
A storehouse is a building provided for preserving materials, stores and finished goods. The in-charge of store is
called storekeeper or stores manager. The organization of the stores department depends upon the size and
layout of the factory, nature of the materials stored and frequency of purchases and issue of materials.

According to Alford and Beatty “Storekeeping is that aspect of material control concerned with the physical
storage of goods.” In other words, storekeeping relates to art of preserving raw materials, work-in-progress and
finished goods in the stores.

Types:
Stores may be centralised or decentralised.

Centralised storage means a single store for the whole organization, whereas decentralized storage means
independent small stores attached to various departments.

Centralised storekeeping :- Merits

● ensures better layout and control of stores,

● economical use of storage space,

● lesser staff,

● saving in storage costs and appointment of experts for handling storage problems.

● ensures continuous stock checking.

Drawbacks

● It leads to higher cost of materials handling,

● Delay in issue of materials to respective departments,

● Exposure of materials to risks of fire and accident losses are practical difficulties in managing big stores.

Decentralised stores Merits:-

● Involve lesser costs and time in moving bulky materials to distant departments
 ● Helpful in avoiding overcrowding in central store.

Drawbacks

● Uniformity in storage policy of goods cannot be achieved under decentralized storekeeping,

● More staff is needed and experts may not be appointed.

Objectives of storekeeping:
Objectives of an efficient system of storekeeping

1. To ensure uninterrupted supply of materials and stores without delay to various production and service
departments of the organisation.

2. To prevent overstocking and understocking of materials,

3. To protect materials from pilferage, theft fire and other risks.

4. To minimise the storage costs.

5. To ensure proper and continuous control over materials.

6. To ensure most effective utilisation of available storage space and workers engaged in the process of
storekeeping.

Functions of Storekeeping:
1. Issuing purchase requisitions to Purchase Department as and when necessity for materials in stores arises.

2. Receiving purchased materials from the purchase department and to confirm their quality and quantity with
the purchase order.

3. Storing and preserving materials at proper and convenient places so that items could be easily located.

4. Storing the materials in such a manner so as to minimize the occurrence of risks and to prevent losses due to
defective storage handling.

5. Issuing materials to various departments against material requisition slips duly authorized by the respective
departmental heads.

6. Undertaking a proper system of inventory control, taking up physical inventory of all stores at periodical
intervals and also to maintain proper records of inventory.

7. Providing full information about the availability of materials and goods etc., whenever so necessary by
maintaining proper stores records with the help of bin cards and stores ledger etc.
Working of the stores:
There are four sections in the process of storekeeping viz.

(a) Receiving section,

(b) Storage section,

(c) Accounting section, and

(d) Issue section.

(a) Receiving Section:

inventories received by stores are raw materials, tools and equipments, 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
organization, 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.

Functions of a Purchase Office

Receiving indents:
The first and foremost function of purchasing is receiving demand/requisition of material from different
departments of the organisation, such as from production, stores, maintenance, administrative, drawing office,
planning, tool room, packing, painting, heat treatment etc.

After receiving the indent from users’ departments it examines in details and takes action according to the
need and urgency of any item. This is called ‘recognition of need’. Sometimes, needs can be met by transfer of
a stock of one department to another department. In other cases, the reserve stock or the stocks kept in bank
can be utilized i.e., pledged stock with bank.

Assessment of demand or description of need:

After recognizing the need with appropriate description, i.e., qualitative as well as quantitative, is necessary for
the sound and successful purchasing. An improperly described demand can cost heavily money-wise as well
as time-wise.

Selection of sources of supply:

Most important function of a purchasing department or officer is the selection of the sources for the
requisitioned items of stores.

Receiving of quotation:
As soon as the purchase requisition is received in the purchase division, sources of supply will be located; a
decision is then taken in respect of the method of tendering/limitation of quotations from prospective suppliers.

Placing order:Placing a purchase order is the next function of purchasing officer. Since purchase order is a
legal binding between the two parties, it should always be accurate, clear and acceptable to both. The
purchase order should contain the following particulars:

(a) Description and specifications of the material.

(b) Quantity order.

(c) Transport and packing charges and shipping instructions.

(d) Name and address of the supplier.

(e) Date, time and place of delivery.

(f) Price, discount and terms of payment.

(g) Signature of the purchase manager.

(h) The name and address of the buyer.

Making delivery at the proper time by following up the orders:

Purchasing department has the responsibility for follow-up of the orders it places on different suppliers. All
items do not require extensive follow-up. For some less important and low value items follow-up would be
costly and wastage of money and time only.

Verification of invoices:
In normal course, it is also the responsibility of purchase department to check the invoices and accordingly
advise the accounts department for clearing the payment to the parties concerned. Contradictory statements
have been given as to who should be assigned this function.

Inspection of incoming materials:

The purchasing department should have a close contact with inspection department. On receipt of the
materials from different suppliers, they are to be inspected as per specifications indicated in the purchase order
to verify their quality and quantity.

Meeting transport requirements of incoming and outgoing materials:

The purchasing officer must make goods/materials available at the right time they are required, at the place
they are needed, and at the lowest possible cost. It is a big responsibility, and even a slight error amounts to
delay in consignment required at a particular time.

Maintaining purchasing records and files:

Purchasing involves a lot of paper work. Daily a number of letters, bills, quotations, notes, challans, railway
receipts, parcel, way bills, bills of ladings, goods received notes, lorry receipt, goods receipt (transport delivery
notes), inspection notes have to be dealt with. It involves a lot of clerical work.

Reporting to top management:

It is also an important function of the purchasing department to prepare weekly, monthly, quarterly, bi-annually
and yearly reports regarding expenditures of this department and send the same to top management along
with details of purchases made and suggestions or improvements, if any.

Developing coordination among departments:

A purchasing department has to fulfill the needs of other departments in the organisation. It is the function of
purchasing department to work in close coordination and cooperation with other departments of the company

Creating goodwill of the organisation in the eyes of the suppliers:

Good vendor relationship has to be maintained and developed to reflect enterprise’s image and goodwill.
Maintaining such relations requires mutual trust and confidence which grows out of dealings between the two
parties over a period of time. Worth of a purchasing department can be measured by the amount of goodwill it
has with its vendors.