IMTS Production Management (Store keeping management) by IMTS INSTITUTE

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IMTS (ISO 9001-2008 Internationally Certified)

STORE KEEPING MANAGEMENT

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STORE KEEPING MANAGEMENT

CONTENTS:

UNIT 窶的

01-24

INTRODUCTION TO STORES MANAGEMENT Structure,Introduction,Objectives,Planning of Storage Buildings,Size of Stores Site Selection,Construction,Fire Precautions,Security,Safety / Health,classification of Store,Varieties of Stores,Central or Main Store,Location of Stores,Layout of Store,Materials at,Risk in Storage,Conditions Affecting Life of Goods,Store for Special Type of Materials,Storage of Explosives,Storage of Chemicals,Store Efficiency,Summary,Key Words Answers to SAQs

UNIT 窶的I

25-36

STORES ACCOUNTING PROCEDURE,Introduction,Objectives,Classification Codification,Classification,Codification,Priced

and

Vocabulary

Stores,Stores

Accounting Objectives,Account Records,Receipt,Suspense Account,Monthly Summary of Stock Receipt and Issues,Priced Stores Ledger,Transfer Entry,Stock Taking,Summary,Key Words,Answers to SAQs

UNIT-III

37-59

QUALITY IN STORES Structure,Introduction,Objectives,Types of Inspection,Methods for Selection of Samples,Simple

Random

Sampling,Systematic

Sampling,Stratified

Sampling,Sampling in Stages,Sampling of Bulk Materials,Inspection Levels,Normal, Tightened and Reduced Inspection,Sampling Plans,Inspection, Measuring and Test Equipment,Identification

Inspection

and

Test

Status,Qualification

Suppliers,Third Pvty Certification,Receiving Inspection and Testing,Quality during Storage,Pre-despatch Inspection before Delivery to the,User,Summary,Key Words ,Answers to SAQs FOR MORE DETAILS VISIT US ON WWW.IMTSINSTITUTE.COM OR CALL ON +91-9999554621

STORE KEEPING MANAGEMENT

UNIT -I INTRODUCTION TO STORES MANAGEMENT Structure Introduction Objectives Planning of Storage Buildings Size of Stores Site Selection Construction Fire Precautions Security Safety / Health classification of Store Varieties of Stores Central or Main Store Location of Stores Layout of Store Materials at Risk in Storage Conditions Affecting Life of Goods Store for Special Type of Materials Storage of Explosives Storage of Chemicals Store Efficiency Summary Key Words Answers to SAQs

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INTRODUCTION In the earlier units, you were told about the Inventory Control of Stock, and EconomicOrder Quantities etc. These were based on financial considerations. By now you wouldbe in a position to plan the quantum of your purchases at any given time.The next question which comes to your mind is where and how to store these materialsfor issue to user departments. In this unit, we will see the various aspects of storageplanning and store buildings to ensure smooth stores operations.

Objectives After studying this unit, you should be able toprepare the plans of storage buildings, monitor the functions of storage building,classify various storages,arrange for the security and safety of stores, andtake steps for the storage of hazardous materials.Store keeping aims basically at achieving a balance between supply and demand. Storesshould ensure availability of correct quantity of materials when needed. Store buildingsare not to be regarded as dumping grounds for materials of various units.

Stores Management Basic Functions of Stores Houses - To receive raw materials, components, equipments, finished goods, arrangefor their inspection and provide adequate and proper storage for them. - To issue these items to indentors as and when demand arises from user unitsand keep account of the same. - To ensure proper preservation and maintenance of stock. - Carry out verification of go~dasn d assist in effective purchasing. - To adopt inventory (or stock) cont~oml easures for reduction in costs. - To carry out environmental functions like collection of scraps and waste andsalvage, recovery and recycling of materials which cannot be used straightway.In order to properly discharge the above functions, storage buildings and stockyards haveto be planned in a proper way.Since various organisations have different needs under different situations, it is difficultto generalise siting and construction of storage buildings. Based on problems commonlyencountered with the existing store buildings some guidelines can be drawn.

Size of Stores In order to determine the volume of the stores building and the storage space therein needed in an organisation many factors have to be considered. (1) Storage Activities Involved -Receipt, sorting, storage, handling and issue. (2) Volume of Stock Transaction -Type of stock, volume of stocks handled at a given time and handling methods adopted. (3) Handling Methods - Manual / mechanical power handling and whether in storage area or away from it.

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(4) Materials to be stored (a) Type of item (raw materials for use in production line, finished items). (b) Physical characteristics of items (size, weight, volume, shape, nature whether perishable / hazardous or not) (c) Location of storage (whether in the manufacturing area or away from it). (5) Storage Methods -whether in bulk or in shelves, racks, bins etc. Special storages open stockyard required or not? (6) Physical characteristics of space available (a) Floors - whether single storey or multi-storey. (b) Column spacing (c) Clear height (d) Aisles (e) Doors (f) Light (g) If materials are received by road, number of vehicles to be loaded unloaded and at what time. (h) If receipt is through rail transport, number of wagons required inwards/outwards and at what time. (i) Number of staff to be employed and space for their working, recreation and other amenities. From the above data, the site and building details can be worked out.

Site Selection Introduction to Stores Management While selecting the site of the stores building, the following points are to be considered : - The storage house should be as near as possible to the geographical centre of the area to be served by it. - If road transport is to be a major feature, the proposed site needs a good access road, is to be away (preferably) from a traffic congested area and be as near as possible to some highway. - If rail traffic is to be handled, it should be near a railway line, must be sufficiently extensive, and level enough to allow construction of railway sidings. - Site should be fairly level, having proper drainage facilities and close to the essential services like electricity and water supply etc. - Site should have space for movement of vehicles, area available for outside stockyard in the open and provision for future expansion, if required. - Land cost should be reasonable. Besides the above there may be restrictions imposed by bye-laws of certain local bodies, pollution control boards or fire departments etc.

Construction After selecting a suitable site, you have to plan the size, shape and the type of construction of the storehouse. This is to be done carefully because the building would be in use for a long time and any mistake made at this stage may cause day to day problems in running the stores affecting its efficiency.

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As regard the storehouse buildings, they can be either single-storeyed or multi-storeyed. Singlestoreyed Buildings Where extensive land is available in proper location without any restriction; single storeyed building is the best proposition. It is difficult to make cost comparison with multi-storey constructions. But you should bear in mind that land cost may be the highest single cost and an overriding one for a proper site. Normally, clear spans between columns can be about 20 m for steel framed construction and about 12 m for concrete construction. In case of single storeyed construction, storage modules can be conveniently fixed for standard bins etc. for storage. This would not be easily possible in multi-storey construction where clear spans may be limited. Advantages of single storeyed construction for storehouses are as under : In a single storey construction, smaller structural members can be used resulting in a shell of lighter construction than that for a building having upper floors. Hence, cost per cubic metre of storage space would be less. Since there are no upper floors, weight carrying capacity is not normally limited by structural considerations.

- Natural day light can be better utilised. - Natural ventilation will be more easily ensured. - Greater flexibility of layout is possible. - Fire risk can be reduced as fire-fighting is much easier in single storeyed building. However, special care is needed to ensure dimensional compatibility of binning, racking and handling arrangements. Multi-storeyed Buildings Where land cost of a suitable site is prohibitive or the site is small, multi-storeyed store construction would be preferred. qowever, handling appliances used would need heavier supporting members or supports at closer spacings, restricting the freedom to plan for convenient storage modules.

Stores Management The factors in favour of multi-storeyed constructions are : - More space is available for stores for storage in a small area. - If stores that is to serve production / process plants already operating in the upper floors of a multistoreyed building, a multi-storeyed stores building connected therewith would be better. - Better natural lighting for work and cleaner air for the storage of delicate materials at the top floor. - Use of gravity for delivery to lower levels from the floors above. Prefabricated buildings may normally be considered. Standard modular units can be used to save time, money and maintenance cost.

Foundation / Floors Floor is an important feature of any storehouse because not only does it have to carry the weight of all stock held but also provide a suitable surface for the operation of wheeled vehicles, whether manually or mechanically operated. Floor must therefore be of adequate strength and have a good, hard, smooth finish with a minimum of obstructions. First of all you have to decide whether the floor would be at ground level or not. This would depend on handling methods employed. Where overhead cranes etc.

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are used, the floor should preferably be at the ground level. In case lift / trucks / conveyors are used, the floor can be raised to the height of the platforms of road truck I railway wagon bed levels to enable loading I unloading with minimum lifting. In that case, ramps may be provided from ground to floor with suitable _ slope and widths to allow access for vehicles. Accordingly, the anticipated floor loading can be calculated and design of the foundations and floor may be done. The following points are to be considered while designing the foundations / floors : - When power driven vehicles stop and start frequently, floor should be reinford as loads created by such vehicles exceed those by normal rolling motion. - Normal factor of safety for floor strength for rolling loads is more than that for static uniformly distributed load. In addition, dynamic load imposed by a moving truck is about 25% above its static weight. Speed, accuracy and safety in handling depend on the condition of the floors. Floor should be such that it offers the least "tractive resistance" (force required to Movercome resistance to movement). More tractive resistance in floors would result in the increase in fuel consumption. At the same time, floor should be hard enough, skid proof and dust proof. The best type of flooring is concrete flooring which provides a hard surface and reasonable grip to vehicles to avoid slippage. Floors have to be of even level to reduce tractive resistance and to lessen wear and tear of the equipment used. This is more important where high rise racks are used for keeping the stocks.

Floor Maintenance Proper floor treatment and maintenance are very important in storehouses for the following reasons : - To avoid accidents and to protect the goods stored on the floor from water seepage. - Prevention of dust raised by the movement of handling vehicles. - Reduction of skidding of vehicles. - Avoidance of slippage of stock. Cracks occur due to the movement of mechanical and manual handling equipments and immediate repairs should be undertaken for rectification. Concrete floors can be kept clean by mapping it with a damp cloth. Lines painted on the floor indicating lanes for pallet trucks, etc. become indistinct over time and need to be repainted. Flammable liquids and hazardous goods are to be stored in a separate godown as per government rules.

Multiple Flooring Building storage factor (ratio of usable storage space to total area of floor) can be increased by the use of pallets and block stacking. In the case of bins, double tier bins can be used. In double tier bins, since tops of lower bins support the next, higher ones, layout of lower bins is somewhat in flexible and they cannot be moved at will. Where, flexibility of layout of lower bins is essential, mezannine floors are constructed. A mezannine floor effectively improves the available floor

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space but the disadvantages would be that reduction of the natural lighting in the area below the mezannine floor. Steel platform construction for mezannine floor would be better as the same can be easily erected or dismantled.

Structure Design of the framework for storehouse depends on whether it is to carry the weight of the building only or to carry also overhead cranes, conveyors etc., al~ng a minimum height of about 8 m to the eaves is therefore necessary. Where power handling is employed, e.g., cranes and such, the supporting structure should be able to cany both the crane and its maximum load. For storehouses not employing overhead lifting equipment, minimum height of the building can be about 4.5 m to the eaves. Greater height may allow the flexibility for extension in terms of mezannine flooring at a later date. This aspect can be carefully thought as the height of the building can be increased by a few metres without a proportionate increase in overall cost. However, this may involve additional expense for extra lighting. The choice of building material to be used in construction is governed not purely by economic consideration but also by the safety provisions, especially against fire hazard. It is usual to construct lower walls of storehouses in brick I concrete blocks niasonry, with supports for attachments. This is better than asbestos which is ragile and may get damaged due to accidental impact by transport vehicles and other handling equipment. Roof can be clad with corrugated steel or other sheeting materials. Where overhead gantry cranes are employed, the structure should have an independent steel framework designed for this purpose. Steel frame construction can be more readily modified than brick and concrete construction. But in the case of standard concrete construction units, fixing facilities to house canopies, doorways and openings etc. can be more easily provided. Fire resistance is quite a difficult problem for which special provisions are to be made. Necessary statutory provisions with regard to fire have to be made. Doorways and Openings Security is very essential in stores. Doorways and openings shall be suitably secured against unauthorized entry. Positioning of doors is very important. A common arrangement is the provision of doors at the opposite ends of the stores. Rolling shutters are preferred for despatch and receiving bays which can be locked and are therefore more secure. Normal single I double leaf shutteis are satisfactory for heavy traffic. Where, heavy mechanical transport traffic is envisaged, provision of 'in' and 'out' doors side by side could be considered. They should be easily operatable. Doors should be of sufficient width so that vehicles can easily pass through without causing damage to the sides of the door. Small doors could be provided at sides so that staff has easy access during times when it is not necessary to have the main doors open. But with large doors, rain water may pass underneath during rainy season. The floor below may be raised with slopes on both sides. Sliding doors can be used for access stores from outside. Folding doors are expensive, but the width of the door opening can be controlIed at will, thereby restricting the entry of outside elements. They are easy to handle and speedy in operation. Where, security is important, automatic sliding doors can be used with

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an electronic sensing device.

Introduction to Stores Management Stores Msasgement Height of the doorway is important and carefully considered at the initial stage. Future requirements regarding the headroom etc. has to be thought of in detail as the cost of modification for extra door height along with the take into consideration cost of increasing the lintel height at a later stage after occupation can be too high. Design of doors should also the possible fire hazards and provisions may be made for the same. Lighting Construction should be such that natural lighting is used as much as possible. Hokever, while making use of natural light, the following points are to be kept in mind : - AnpoWce other than direct sunlight may be diffused and tends to be cut off by storage equipment. - The angle of direct light (and thus degree of obstruction) is lower during morning and evening periods. - Natural lighting is not contant through different weather conditions and in different seasons. Dircc t (dl lc) 1. Height of light source I. Lighting by tube lights 3 L4. Lighting for lower bins.

In most storehouses, shelves or racks are placed along the walls, and hence side windows should be at such a height that the day light through them is not obstructed by these fixtures. Lighting through roofs is a necessity in large storehouses and the best use can be made of a roof space by installing continuous glazing (refer sketch above). They should preferably be with wired glass. As far as practicable passages should get the full benefit of natural light. Sufficient opening panels must be installed to provide adequate ventilation and they should be capable of being securely fastened. As regards artiicial lighting, installation should be planned depending on the layout of bins and racks so that maximum amount of light shines into storage compartments. Lighting fittings should not come in the way of any cranes or other handling equipment. Fluorescent tubes are more efficient than bulbs but may involve larger investment. For lighting in areas prone to fire hazards, flameproof equipments are to be used.

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General illumination for traffic areas and stockyards can be with standard Sodium vapour / Mercury vapour lamps with fittings mounted at about 6 m height on wooden 1 concrete poles or columns. For larger stockyards having widely dispersed goods, light source must be at a still greater height and with rotation / swivelling attachment to give proper lighting effects and distribution. Ventilation Normal ventilation should be sufficient in most stores. Control is needed if goods stored mygive off toxic gases or noxious fumes. Ventilation in stores should meet the fire safety requirements. Roof ventilators when backed by automatic sprinklers on segregating curtains play a major role to help extinguish fire in case of fire accident. If automatic ventilators are provided provision for manual operation also should be available to open them in case of fire. Roofs The cost due to increase in ceiling height is less in comparison with the cost of other building materials. This is more so in case of storehouses with large floor areas where ratio of wall to foundations and floor area is low. It is normally observed that additional cost due to increase in height from 3 m to 6 m is about 5% of total cost and from 3 m to 10 m it is about 7%. Shape of roof and disposition of roof lights as also the materials used for roof insulation influence fire safety. Clear roof height should at least be one metre . above the top of racks and bins to enable access to fire-fighting. Roof costs go up if spacing between columns are very large, but more space would be available for proper storage. If the roof has to carry over head conveyors etc., roof members should be designed as load bearing structures. So far we have discussed the various aspects to be considered while planning for new store buildings. However, due to financial constraints or otherwise, it may not always be possible to build a new stores building, and the alternative is to go for an available existing stores building to be used for stores operation. Normally such buildings are old store buildings. It is also possible that these buildings may have been originally constructed for other purposes and later taken over as storehouse with a minimum of adaptation. In any case, such buildings need improvements before they can be used as a store building. There are some general points needing consideration in such instances. Access Happens to be the most common unsatisfactory feature. It should be ensured that access roads are properly made up, doors are relocated and height of doors modified if necessary. Structure

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Roofs may be too high. This may be taken advantage of by putting in another storage floor and availing thereby more usable space. - Access to upper floors if existing may be poor. This can be rectified by improving the access but if not permitted, then by the installation of a new one. - Floors of existing building may be bad or not have been properly maintained. It would be preferable to provide a new and correctly levelled concrete floor. - Natural lighting inadequate. There may not be natural ligthing in the roof. Windows may be less in ndmber and the existing windows may be smaller and too far apart. This can be improved by putting continuous glazing on the roof and existing structure permitting, side windows can be raised or extended. - In case any unnecessary internal structures are there they can bC removed without any problem provided they do not support the main structure.

Fire Precautions Fires in storehouses would result in damages to storage areas and materials housed therein. In addition to hazards of the inflammable materials and liquids, problems arise due to loose packing materials, lying in unpacking areas and despatch bays. You should take the following precautions against fire hazards. - Restrict the access to store area. - Provide fire-fighting equipment with audible warning systems. - There should be provision for fire escape. Where the materials in store present an exceptional risk, avoid timber in construction as much as possible and cladding which has been treated with a bituminous compound or other inflammable mixture. Water mains providing adequate supply should be suitably located and equipped with sufficient hydrants. Fire safety in stores and storage areas depends on a number of factors from which some ' general observations can be made. Fires spread by conduction, convection and radiation and its growth in a building can be controlled by imparting to it the properties of integrity stability and insulation. Then there is the method of extinguishing fires by water, the cheaped and most commonly available fire-fighting medium. Introduction to Store Management I Stores Management As fire needs fuel (materials) to bum, the first step to control it is to limit the fuel (materials) present, and in a stores this can be achieved by dividing very large spaces into smaller compartments. Reasonably well-constructed brick / r.c.c. walls and roofs have the required measure of integrity, stability and insulation thus providing a certain degree of fire resistance. Separating the store from, say, the timber yard in the open by about 100 m would protect it from the rediated heat from an accidental fire in the yard. Then, a source of ignition is needed to start a fire. Defective electrical installations (sparks) and

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undetected smoking (glowing butts) are two common enough sources to which we can add, for instance, welding carried out in manufacturing. It should be prossible to eliminate the first two by exercising control and the third by maintaining a minimum separation between production and storage. As regards provision of water, there can be automatic sprinklers, manually operated hydrants, or buckets and extinguishers which the personnel can (and should be trained to) use, coupled with all this is a measure of watchfulness like a fire check before closing time and during week ends and holidays when the premises is unoccupied for long periods. 4.2.5 Security Security of the storage area and materials stored are important in any stores. Direct access to stores must be limited to authorised staff only. If due to necessity other staff need to enter and withdraw materials, they should do so only after due verification except for access by fire and security officers. Doors provided should be restricted to the minimum number necessary for efficient operation. They should be fitted with adequate locks. All windows, and sky lights must be capable of being securely fastened and preferably protected with wire mesh and bars. It would be best if issue area is segregated from storage area. Store staff have the responsibility for the care and custody of all materials from the time of receipt to the time of issue. For security outside normal hours, access to storehouses and stockyards may be allowed to only store staff and fire officers. Vigilance / security should be provided round the clock for the stores area / stockyard area. It is said that if an intruder is resisted from gaining unauthorised entry for the first five minutes, then he is usually discouraged and apprehensive of being seen by the patrolling staff goes away. So, the fencing, the locks, the doors and such other security measures have to be sufficiently robust and strong to withstand the assaults by the intruder for those crucial minutes and the system of patrolling is to be such that all areas are visited a number of times during security rounds. 4.2.6 Safety 1 Health In store-keeping, safety is a very important matter and the materials have to be so stored that damage to goods, equipment and injuries to staff are kept at a minimum. It should be the responsibility of each store staff to ensure his own safety and the safety of others around him. The following points are important : - Training : Those employed in stores should be made aware of the risks faced in the locations they are working. They should be informed about safety, law, incidence of accidents and their prevention. - Stores to be kept neat and tidy. - Storage and handling equipment to be properly maintained.

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- Working conditions of staff have to be improved. Safety kits, hats, gloves, protective foot wear etc. have to be provided. - Safety signs are to be used. Signs indicating particular risks associated with individual items should be marked. - First aid kit has to be provided. Equipment for use in an accident should be kept closer to stocks of materials prone to hazards. I 1 Activity 1 Examine whether the store buildings constructed in your organisation conform to the norms described above. If not, suggest measures for improvement. SAQ 1 Introduction to S'gres Management 1 (a) What are the facts to be considered in deciding the size of store? (b) What are the points to be considered while deciding the site of the store'! (c) What is the importance of floor area in stores'? What would be the desired requirements? (d) What precautions would you adopt for fire prevention in the store?

CLASSIFICATION OF STORE Stores generally fall into two broad categories : Functional and Physical. Functional classification relates to the function because as the firm grows and production is increased, special decentralised stores may be separated out of the main stores. (a) Functional Classification : Functional stores are normally stores which are attached to various units in a production complex. These stores serve the concerned unit in order to fulfil the purpose for which the unit is meant. Example for such stores are Raw material store, procured material store, general store, jig and tool store, piece parts store, finished parts stores etc. They are usually located within or near the units they serve. (b) Physical Classification : Such stores are based on physical consideration like the bulk or volume of materials and the distances they are to be carrieabefore they are used. Examples of this category are : Central Store Concentration Store Substore Group Store Open Access Store Transit Store Site Store etc. In large factories, the stores are usually decentralised storing only the items (and not everything) needed in the units they serve, thus displaying a high degree of specialisation.

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The variety of such stores is many, any it is difficult to classify them under set rules. Also, there are instances when the stores may belong to either of the classification or both. For example, a departmental store of a big manufacturing department of a large complex displays the characteristics of both. The descriptions which follow are of stores which show a mixed degree of centralisation and decentralisation. Stores ~ana~ement \ Varieties of Stores Departmental Store These stores are set-up to serve a particular department. The range of goods kept in such stores would be exclusively for that department. Such goods may be delivered directly there instead of through the main I central stores thereby avoiding double handling and reducing associated costs. Usually departmental stores are controlled by the department they serve. A departmental store may also contain goods received from the main I central stores through centralised coptrol.

\ Raw Material Store This is provided usually with its own intake bay depending on the mode of transportation (rail or road) for receipt because a common intake may delay the receipt, especially in case of delivery by road. In the intake bay for materials delivered by road, a large delivery truck may have to wait for its turn while smaller vehicles ahead of it are unloaded. Such large carriers are usually operated under a penalty clause for waiting. Raw materials prone for contamination or of poisonous nature should be kept separate from other incoming goods.

Production Store Houses materials consumed during production such as oils, abrasives, eyeshields etc. In case there is no separate jig and tool store, production store may also include small tools and equipment.

General Store Contains goods consumed throughout the factory for general use like paints 1 brushes, cleaning materials etc.

Jigs and Tools Store Normally located away from the main store and closer to the tool room. This can be included in the plant engineering section also.

Lifting and Handling Store This could be located either in the main store complex or separately. It would be

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preferably adjacent to the location of the lifting equipment store or near the issue section of lifting tackles which are to be tested periodically.

Salvage Store Normally located near the exit so as to (i) ensure segregation of rejected materials from the production area, thereby saving valuable production space and (ii) for easy disposal.

Packing Store Contains packing materials and preferably is to be under direct control of the packing section.

Piece Parts Store Contains small, fast moving components and reqdre special binning arrangements for easy storage and issue.

Plant Engineering Store Normally keep materials which are needed by the plant engineer and the machines maintained by him and is better located near his work centre.

Quarantine Store Store for finished I raw materials received and the inspection I test results of which are awaited. The materials there are not for issue. This is essentially a transit store and preferably be located near receipt area to reduce handling. If inspection is carried out in the store itself, necessary equipments to be kept there and the area is to be large enough for inspection purposes.

Bonded Store

This is for customer's materials ready for inspection and certification by Inspection I Excise officials. It should be located outside the main building to reduce unauthorised entry there. Such stores are also used for explosives and other hazardous materials and are to be located at a distance from other buildings. Finished Parts Store (Spare Parts Store) There would be no need for this store if production flow could be perfect and spares were never needed for maintenance for plants already sold. If finished parts remain in store unsold it may result in lower profits. This store is difficult to

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control economically due to different needs for various parts. Such a store may also contain spares which are exclusively meant for sale outside. In that event, some pre-packing may be carried out to facilitate quick release of a consignment. Work in Progress Store This represents 'idle stock' and such stores may not be necessary in small production units. In bigger units, where goods pass from one process to another, and a completely balanced flow of production is not possible, these stores are used. The physical existence of the store depends on volume of movement, flow rate, degree of security needed to ensure that only approved items get into the production lines after inspection. The time of waiting and the nature of goods produced are also factors to consider. These are located at appropriate places along production lines. Semi-finished Store These are essentially a form of work-in-prpgress stores. Components may be made in bulk and part finished for used in production later. Their equipment and control would be based on the needs of the production department. They are used where considerable quantities of semi-finished parts are required in addition to work-in-progress stocks. Transit Store Some authors define Transit Store as a separate store. But every store is a transit store, where goods to support the work at a distant place can be stored ready with the main items. This, therefore, comes under both classifications.

Central or Main Store Central or Main Store is a store which would contain mo$t of the materials serving all the needs of the users. Two forms of centralization are to be considered. (i) Single Central Store to cater for all the needs of units within a single complex. (ii) A store to cater for units that are geographically separated. A central store for a small factory appears to be a straightforward issue, but this is not so if there are functional, considerations, especially where user points are dispersed and the consumptioil is heavy. Anyway, a central store in a small factory ensures better control, efficient record keepjng and quick communication. If, however, it is within the production area the advantages thereof will be gone when the demands of production will push the store into a continuously shrinking area leading to not increased efficiency but chaos and muddle. It would be better to consider a store outside the production area with facility for future expansion and power handling.

There are advantages / disadvantages in having a single central stores.

Stores Management Advantages of a Single Cenral Store House - More material can be stored than that in a smaller storehouse. - Better stock control can be exercised. - Use of modern handling methods is possible. 1 - Goods in bulk occupying lesser space can be stored. - Purchases in bulk can be had at better price.

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- Testing and Inspection can be done in a better way with more area at disposed for ,such purposes. Disadvantages of a Centralised Stores - Cost of land / construction of a centralised storehouse may be very expensive. - This would involve extra transport cost if user points are far away. - More staff would be required since the quantity handled is more. - Unless the organizational planning is good, there would be recurrent shortages as direct control over complete stock is exercised. - Fire accidents may cause more damages and greater loss of stock and hence fire precautions needed to be taken more carefully.

LOCATION OF STORES Location of Main Stores Following points and questions need to be considered while deciding on the location of main stores or main departmental stores in large production units. In Case of Centralized Production - Whether materials are collected at the central stores and later delivered at their usdr points. - Are the works furnished with open access storage? - Is there any risk in bulk storage of materials inside the factory? - Is the handling of materials manual / powered? - Does the stores area remain open during night shifts and overtime? - Are the materials difficult to handle and transport (hazardous, fragile materials, etc.)?

In the Case of Scattered / Dispersed Production - The extent of geographical dispersion of the factories. - Do they differ considerably in size? - Are their products similar? - The volume and value of stock throughout the year. - Are the materials handled hazardous / fragile? - What is the mode of communication between various user points. - What is the staff life of the materials? - Are supervisor / operational labour available locally? - What are the costs of transportation? - . What are the off loading / loading facilities available? - Is there a need for inspection / testing of materials. Many mathematical methods are there to determine the optimal location of a central store in a large manufacturing organisation by considering the points and such other details we

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discussed earlier. The simplest is to find out the centre of gravity of the system by including the frequency of vehicle movement per unit period, the tonnage moved during that time and the distance over which it was moved in a mathematical formula. This is done in the same way as in determining the centre of gravity of a loaded beam or shaft. The difference is that the beam or the shelf would usually be straight while the production units and the stores would be rarely aligned that way. As regards the various stores described under functional classification, their location depend on the locations of the units they are to serve, which have been explained in brief in section 4.3.1. It is necessary, however, to take into account the practical difficulties encountered while deciding on the location of a new storehouse or stockyard. Some of these problems are listed as follows : - Heavy capital investment may have already been made in existing storehouses / stock yards. - Location of supply sources may be unsuitable for the site envisaged. - Lines of communications in a physical sense'as also by written words may be too long difficult. - Seasonal demands are different for each of the constituents. - Material availability may not be consistent throughout the year. Stockyards and its Location It would be extremely costly and unnecessary to house all materials in a covered store building. Stores buildings involve construction costs and they are to take only those materials which must not be stored in the open. There are many, heavy, large, ackward shaped itqms which do not deteriorate under weather conditions. These can be stored in open stockyards subject to security conditions. Surfaces normally used in stockyards are : (a) A bed of consolidated cinders and ashes finished off with fine ashes and then rolled. (b) A bed of suitable hard core, materials rolled and consolidated, covered with a layer of tarmac, finished off with a cost of fine tarmac and then rolled. (c) A bed of hard core rolled and consolidated, topped by a layer of concrete reinforced by steel mesh. Access roads occupy considerable areas of stockyards. It is economical to make concrete / tarmac access roads and to surface the stacking areas with ashes. Usually, a store or a stockyard should be as near as possible to the geographical centre of the area to be served. Mechanical handling becomes necessary in the stockyard if the goods are in bulk. For transportation later to work centresdirectly from the stockyards also such appliances are useful. It is better to locate the stockyards away from the production centre for securing reasons and fence them properly with minimum number of

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gates. Stockyards may not always be a cheaper alternative to storehouses. If bulk materials in large sizes are kept in stockyards to save space, they require stronger foundations costing more than that of a normal building; they also need costly mechanical handling methods. Fencing and gates and other security arrangements may involve heavy eipense. Since stockyards are in open, expenditure is involved in providing proper drainage. Protection against spread of fire (in case of inflammable goods) is provided by constructing barrier walls, trenches, drainage channels, etc.

LAYOUT OF STORE Layout planning of stores is influenced by : - Nature of goods to be handled. - Methods of handling : Manual or Power.

., - Weight and volume per unit.

- Issue point for goods : at the main stores or at the work centres. - Provision for future expansion / extension. - Site constraints /building regulations, if any. - Transport used and type of security and supervision needed. The layout and location of stock in stores should ensure that the flow of materials therein are smooth. Flow of materials has the following main characteristics. - Speed of flow depends on the demand. - Direction of flow depends on the layout and in turn influences the layout. So, provision is to be made for any future change in the direction of flow. - Frequency of movement : This would involve movement of personnel at intake and issue. good layout is essential for efficiency in flow. However, in very efficient layouts supervision tends to be difficult because of bottle necking or bunching of items at some points in the line of flow. The length of communication should be simple and as short as possible. A good layout of stores with adequate provision of marshalling areas would minimise the length to be travelled for material picking operations. The following points are to be kept in mind for proper layout planning of stockyards : - Supervision in storehouses is much easier than in the stockyards, which are to be manned continuously. Good housekeeping of stockyards is more difficult than that of stores. - Travelling distances are to be reduced between the stores and other units as well as that between inter-sections. Clear indiction of traffic lanes are necessary. So is the provision for future expansions.

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- Where risks of fire are present, the store needs to be divided into fire-resisting compartments.

While planning the layout of stores to be adapted from an existing building, it would be better to prepare a complete drawing of the existing store building incorporating modifications of access, structure and services duly approved. Logical sequence of activities from receipt to issue through various areas and the handling methods proposed should be incorporated. Outdated and old bins / racks may be removed along with old handling equipment and, accordingly, a new layout may be worked out. Office area can be modified based on the staff proposed to be employed and may be sited to give good visibility of stores activities, providing easy access to people witho~tth e need to walk through the stores area.

Stock Location Alternatives The various alternatives for stock locations are : (a) Frequency Location , An 'ABC' analysis (as id inventory control) on the basis of frequency of daily movement of all fast moving items may be conducted. The items are to be located in the descending order of frequency of movement. However, in this analysis value of material, space occupied and weights moved are not directly related. The fastest moving items can be located nearest to the issue point.

(b) Commodity Classification Location It would be logical to arrange stores strictly i time with the commodity catalogue and coding but it is very difficult to achieve and t"q\, ,a intain the same. This is possiHe if (i) commodity groups are well-defilied; (ii) range of commodities is stable; and (iii) supplies need special storage.

(c) Sequential Location to Match the Supply Schedule This method aims to minimize movement of materials and is dependent on the production schedule.

(d) Job Allocation and Reservation Sequence It is useful in situations where availability of all materials is required for a project at any time is stipulated. But this may result in idle stock and losses to stores. It may also result in wastage of space. (e) Free Space Location Also known as 'Random location' : Instead of areas based on the type of materials,

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stock on arrival is placed in to the first available empty bin, rack or stack. Though this ensures that storage portion is fully occupied, there is no difference between the fast and slow moving items. This may result in long distances for picking supplies where manual handling is employed.

Practical Problems in Location of Stock However, there are some practical difficulties in following any of the methods described above :

(a) Near Identical Items of Supply It is possible that items similar and difficult to distinguish may be in adjacent bins in stores, like G. I. fittings, gas jets with difference of bores not noticeable to the naked eye etc. One way can be to arrange them diameter or borewise of different lengths in one row and different bores 1 diameters can be kept in other rows. A better way would be to introduce a totally different class of goods in between such bins to avoid confusion.

(b) Bulky Goods of Low Specific Gravity Materials like 'glass fibre insulation boards' can be stored at a height above the bins. It, however, should be remembered that insulating materials are inflammable as also susceptible to moisture. Price / unit volume would be low for such goods but the cost of storage may become appreciable especially if the materials are retained for a long time. Anyway, glass fibre is not combustible.

(c) Exceptionally Heavy Goods Presence of exceptionally heavy goods along with the normal goods in storages area may create problems /while the latter is issued out. It would, therefore, be advantageous to take the heavies out of normal system of storage. Activity 2 List out all the materials housed in your stores. Do you feel that all these materials have been located and classified properly? Suggest ways to improve the system if necessary.

SAQ 2 (a) List out all the materials kept in the store handled by you. How the materials are located in the store'! Can you suggest any improvement? (b) What are the advantages and disadvantages of Central Store? (c) What are the points to be considered in deciding the layout of Stores'? (d) Prepare a schematic layout plan of a cement and steel stores where the suppliers

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2re delivered by railway wagons and road trucks. MATERIALS AT RISK IN STORAGE Conditions Affecting Life of Goods All materials stored for a considerable time are susceptible to damage of some nature or the other. Types of Damage Qpes of damage encountered in storage are broadly classified as biological damage I non-biological damage.

Biological Damage , Damages occurring in organic substances and materials such as the 'rot' in timber, 'cloth moths' infecting woollen cloths, white ants, etc. Non-biological Damage These are in processed materials like rust and corrosion in metals, aging I expiry of shell life in dry batteries, mechanical wear and tear, etc. Moisture Moisture is the main reason for most of the damages, both biological and non-biological. The presence of moisture leads to corrosion of metal, films and fungus formation in optical instrument, setting of cement etc. Rubber is one material which is not affected by moisture but, in fact, is better preserved. Temperature 1 I Increased temperature ?f;-ects materials like rubber, chemicals, plastics, electronic goods, etc. Exposure to Light and Air It affects rubber, plastics, chemicals, rubber products, etc. Contact with Corrosive Substances Acids and alkalies affect metal, plastics, leather, textile, etc.

Store for Special Type of Materials Some items require specially designed storage facilities like cement in bulk, grain, flour, fuel, oil, petroleum, explosives and so on. Petroleum and explosives storages are subject to government regulations with regard to their mode of transport, design of buildings and safety precautions. For other materials, protective measures are necessary during storage. Cement Cement sets and solidifies if it gets damp. It must be stored in a dry building and should be kept off the floor because of condensation at times on concrete floors. The cement bags are ensured therefore stored on wooden planks I platforms. Proper air circulation should be around the stacks of cement bags. Vertical stacking

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of bags should be limited to 10 to 15 bags only. Length of stacks should not be more than 15 bags. Stocks can be placed back to back with nominal space in between. Between the stacks, there should be a gap of at-least 0.6 m to ensure not only air circulation but also for purpose of issue I verification of bags. Timber Timber is susceptible to rot if it is wet when it is attacked by fungi. Sawn timber is best stored inside or in sheds with sides open. Boards if stacked should be stacked interleaved with scantlings so that air circulation is ensured throughout the stack. Metal All metals are liable to corrosion, especially iron and steel, if kept for long periods. It is necessary to protect them with a coat of oil, grease (for steel bars kept in open), but in the case of iron castings corrosion is not of significance. '0-s Tyres if stored in piles one on top of another may damage the internal fabric which is to be avoided. They should be kept upright on their treads. Since it is made of rubber, too much heat may be harmful and hence is to be kept away from heat sources.

Agricultural Produce Crops if kept in store for long periods are liable to germinate or are likely to be attacked by pests. The grain bags should be kept dry and at intervals may require dusting with rot prevention compounds or insecticides.

Machinery and Equipment If they have to be kept for years, they are to be completely enveloped in an airtight covering of a suitable such as plastics material.

Storage of Explosives Sale, storage and transportation of explosives are governed by statutory regulations, depending on the quantity stored. But in general points to be considered are : - The storehouse must be licensed by the Competent Authority after due verification 1 inspection. - The store building housing should be located at least at a distande of 100 to 200 m from the stores housing other materials or work sites. - A strong building is to be constructed with provision of a lighting conductor. Dampness should be avoided as also the presence of iron, steel or grit. Entry is . to be restricted to authorised staff only. - Safety precautions have to be followed strictly. Warning signs are to be displayed along with notices prohibiting making anywhere in the vicinity.

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- Rigid security, constant supervision and controlfed storage conditions are to be maintained.

Storage of Chemicals Petroleum 1 spirit is to be stored after obtaining license from the concerned authority and such premises are subject to inspection by its personnel. Conditions to be followed during filling 1 emptying. - Vehicle 1 tanker engine must not be running vehicle earthed and hose must be sopnd. - Storage tanks must be clearly numbered, tank's delivery and dip stick readings should be against that number. - Before delivery from tanker commences, it should be ensured that there is sufficient room I space in the tank to receive the same as no escape I ovefflow of the liquid should be allowed during delivery. This should be done by a competent person only. - The location for the store should be accessible to delivery vehicles and tankers. In case of underground storage, it should not interfere with sewerage services of the area. - It should be away from likely sources of explosion for which constant supervision is to be maintained. It should also be away from sources of ignition. Stores Management - Provision for fire-fighting is to be made with proper equipment. Drainage away from the site with provision of sumps is to be ensured. - Location should be nearer to fire-fighting unit of the undertaking concerned.

STORE EFFICIENCY Stores efficiency can be measured in a number of ways such as, (a) Financial, (b) Seivice Consideration, (c) Control Consideration, and (d) Warehouse / Storekeeping methods. Financial goals would be minimum capital blocked, high stock turn, low operating costs, minimum overheads etc. Services considerations would be prompt response to requests, issue of fresh materials, avoiding stock-outs, issue with least formality etc. Control considerations would demand proper upkeeping of records, proper auditing, accurate maintenance of records, proper documentation of returns, etc. The considerations described above are based on what you have learnt from other units. From stores buildings point of view, the stores efficiency should aim at the following :

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- Efficient use of storage space. - Minimum handling and employment of effective handling aids and methods. - Avoidance of accidents. - Adequate staffing and their personnel training. - Centralisation where it is possible and appropriate. It is likely that the goals of efficient warehousing may not be the same as the goals of other departments. For assessing stores efficiency, these overall objectives have to be carefully considered. An overall statement of aim of stores and stock control activity would be difficult to enumerate. The basic objective should be to perform the stores operation with efficiency so as to get things in an economical way and to achieve the desired result. SAQ 3 (a) What are the main factors that causes damages to stored materials? (b) List the precautions to be taken in the storage of explosives.

SUMMARY This unit has attempted to describe the various factors to be considered while planning stores buildings. It has tried to explain the classification of the stores along with their locations and layouts. It has also attempted to familiarise you with the factors affecting security and safety of stores and has briefly outlined the method of storing hazardous materials. KEY WORDS I Receipts Issue Store Stockyards Bins Racks Mechanical Handling Mezzanine Floor Flow of Goods Process of accepting from sources, all materials, equipment etc. including supplies for manufacturing processes and finished products. Process of receiving demands, selecting items and handing them over to users. Represent both the materials as well as the buildings to house the materials. Uncovered storage area. A horizontal divider in a shelf. A kind of storage fixture to accommodate tubes, bars, sheets, tyres etc. Handling / transport of materials with mechanical equipments. A floor constructed at any intermediate height between two normal floors.

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Physical movement'of goods from one point to the other. 4.10 ANSWERS TO SAQs SAQ 1 (a) See Section 4.1 (b) See Sub-section 4.2.2 (c) Consult Sub-section 4.2.3 (d) Consult Sub-section 4.2.5 SAQ 2 (a) Try yourself. (b) See Section 4.3 (c) See Section 4.5 (d) Do it yourself. SAQ 3 (a) See Sub-section 4.6.2 (b) See Sub-section 4.6.4

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UNIT 窶的I STORES ACCOUNTING PROCEDURE Introduction Objectives Classification and Codification Classification Codification Priced Vocabulary of Stores Stores Accounting Objectives Account Records Receipt Suspense Account Monthly Summary of Stock Receipt and Issues Priced Stores Ledger Transfer Entry Stock Taking Summary Key Words Answers to SAQs

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INTRODUCTION The store plays a vital role in the functioning of a company. The main function of a store is to provide uninterrupted supply to the manufacturing departments. Stores Accounting Stores accounting is the process of recording details of stock movements and balance in value. It is sometimes undertaken by the finance department, but there is much to be said for it being handled by the store functionaries. For smooth execution of works or manufacturing of products 'receiving, storing and issue of material' are important as the quality of finished product depends on the materials used. Also smooth and efficient work or production depends on timely supply of materials. A properly stocked containing store materials including tools and plants is absolutely necessary for successful operation of a manufacturing organisation. For effective maintenance of stores proper accounts are to be maintained. The stores account should give sufficient information regarding the different types of materials stocked, quantity and value of each material, their receiving time and quantity as well as cost of maintenance of stores. Store account thus indicates the value of stock held, providing a basis for issue rates and convenient means of stock control by value. By analysing the inventory record and stock items, where the usage during a number of past recorder period has been noted, one can decide the safety stock limits. Poor management of stores may create serious problems even leading to business failures. A stock out creates a serious problem for the organisation. Efficient stores management is thus essential for efficient functioning of any organisation. After studying this unit, you should be able to understand how to maintain stores account, obtain information about the status of all the materials in stores regarding their receipt, issue and stock value so as to exercise better inventory control, and Stores Management know the procedure of stock verification.

CLASSIFICATION AND CODIFICATION Receiving material is an important control point. As soon as materials are received they should be checked with the packaging slips and the purchase order. The details particularly the discrepancies are recorded in a separate report generally known as Goods Received note (GR note). This is used for invoice payment, for further purchase negotiation and for closing the order. The materials are then inspected for acceptance 1 rejection. The accepted materials are sent to store for recording and storing. Concerned departments are informed about the receipt of the materials.

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Classification In stores the inventories are generally classified as raw materials, work in progress, finished goods, ready made or bought out components, consumable stores, spares and scraps. The materials are stored separately for easy retrieval. Classification is bringing together under a common designation items having similarities of specification, usage, kind, qualities, relationships and so on. It is complementary to standardization, although standardization is possible without classification. In that event, there would be too many standards for the same item, which classification reduces through the process of variety reduction. In stores operation also, classification brings about variety reduction thereby increasing profitability.

Codification The usual way of identifying an article in stock is by its simple description. In order to identify exactly and accurately a store item a very long description is necessary at times. Whell a number of items are stocked in stores it becomes convenient to codify them for their quick identification. It should have some logical basis of identification which is precise, exact and less cumbersome. For example MSO 20 indicates Mild Steel round bar of 20 mm diameter. Sometimes alphabets / numericals are used at random, particularly when the items are not many. Things described in everyday life, the nomenclature of items is a product of inconsistent methods in which subjective thought or personal preference is very much present. For this reason it is not common for the same subject to be called by numerous names. Such a situation in the stores would lead to understand perfectly what the user wants. By codification, all the relevant information on Yhe iten1 are accommodated, however, is not to be regarded as short hand. A short hand symbol may represent more than one word, while codification is a translation of the description into digits, letters and symbols which identifies the item uniquely. A 'Stores Code' identifies all store items exactly. Depending upon the needs, a code is specifically designed to serve the specific need of an organization.

Priced Vocabulary of Stores In order to ehsure accuracy of posting of all transactions and facilitate the preparation and valuation of indents, a list of materials in stock, showing their correct description and identifying number (code) commonly known as 'Priced Vocabulary' of stores should be prepared on the basis of an up-to-date classification of stores, which should be adopted throughout the organisation. It should be kept up-to-date by issue of correction slips, as and when necessary.

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SAQ 1 (a) What are the advantages of a good coding system? (b) What is Priced Vocabulary of Store?

STORES ACCOUNTING

Objectives The objectives of maintaining stores account is (a) to keep record of different materials received in store. (b) to keep record of all issues of materids. (c) to indicate the values of stocks held. (d) to provide a basis for determining Issue Rates. (e) to debit the cost of acquisition of all materials to the final head of accounts concerned or the particular work for which they are required. (0 to help provide adequate storage of materials to meet the demands of the consuming departments. (g) to help minimize obsolescence, spplus and scrap through proper codification, preservation and handling. (h) to highlight stock accumulation, discrepancies and abnormal consumption and effect control measures. (i) to help good housekeeping so that material handling, preservation, stocking, receipt and issue can be done efficiently. (j) I to assist in verification and provide supporting information for effective purchase action.

Account Records The main account records of stores are : (1) Bin Cards /Register of Bin Cards. (2) Goods received sheets I Register of GRS. (3) Indent / Summary of Indent. (4) Summary of Stock Receipts / Issues. (5) Priced Stores Ledger. (6) Transfer Entries. (7) Suspense Account.

Receipt Bin Cards Any material received or issued from store is immediately recorded in the Bin

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Card which always shows the quantity of materials available in the store. It also gives information regarding date, code of department, serial number, description, specification, unit, quantity, location, and maximum - rninumum records. When a purchase order is placed, a copy is sent to the stores indicating quantity and delivery date. The stores receiving section receives the materials, checks them against consignment documents, checks quantity and then submits the materials for inspection to the quality control section where required. A proforma of Bin Card as used in CPWD is given at the end (Annexure I).

Goods Received Sheet After receipt of materials, and its scrutiny, a Goods Received Sheet is prepared recording any discrepancies, surpluses or shortages or rejections and which is then forwarded to purchase and inventory control sections. The store-keeper forwards invoices, bills, GRS and other documents to the Accounts Section for clearing bills after inspection of materials. Usually receipt of materials received from internal divisions or returned from user departments are acknowledged by preparing transfer entries. A proforma of Goods received sheet as used in CPWD is given at the end. (Annexure 2) Stores Management Materials received in the goods receipt section, until they are identified and all paperwork connected therewith are completed, are some what defenceless in the sense that the user may remove them without bothering to inform the stores. It is possible that this was done to some urgency felt by the user. Anyway, this underscores the importance of security in the s. r. section as also the need for clear-cut instructions that materials removed before completion of paperwork are the responsibility of the user who has to sign an undertaking in this respect.

Issues Indentation Procedure i Stores in stock represent money. Any indiscriminate issue system can result in misappropriation, waste, improper use etc. It is, therefore, desirable to have a proper indentation procedure so that issues are made under proper authority to users. Store-keepers should have complete details of the names, designation and specimen signatures of all authorised officials to approve the indents. Various types of documents are in use when stocks are issued against a valid requisition. Some of the names commonly used are (i) Stores Indent (ii) Stores Requisition

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(iii) Stores Order (iv) Stores Schedule (v) Issue Voucher / Note (vi) Demand Note etc. Indents or Requisition Vouchers are prepared by user departments or production shops drawing materials from stores. Usually four or six copies are prepared by carbon process on the basis of one item one indent. However, more than one smaller items could be included in the same indent. It is filled in with reference to the priced stores vocabulary. All the indents are to be signed by Competent Authorities. A record of the store indented should be simultaneously kept in the Register of Indents. Indents should be filled up carefully as all subsequent accounting depends upon it. In order to facilitate the preparation of the Summary of Indents separate indents should be prepared for items failing under each sub-head of stocks as far as possible. Indents, on receipt, are scrutinized, registered and then passed on to the concerned store for issue of materials. In case sufficient stock is not available the purchase office is informed for necessary action. The indenting division is also suitably intimated and the requisition is kept pending till adequate supply is received. Such stock out situations affect production and should be avoided. A proforma of Stores Indent as used in CPWD is given at the end (Annexure 3).

Issue Rate For finding out the cost of finished items it is essential that the cost of all component materials should be considered. For this an Issue Rate is assigned to each article as it is brought on stock. The rate is fixed, on the principle that the cost to be charged to works on which the materials are to be used. It includes the following costs wherever and whichever is applicable. (i) Ordering Cost (ii) Invoice Cost (iii) Freights (iv) Transport (v) Insurance (vi) Packaging (vii) Inspection (viii) Storage Charges Of the various costing methods the most commonly employed is weighted average method.

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Procedure This would be clear from the following example : Receipts Issues Balance , 1 Ir~voice Value Qty. Averg. Value Qty. Averg. Value Cost / (Rs.) Price (Rs.) Unit 1 Qty' (Rs.) , (h.1 Storage charges include expenditure incurred after the acquisition of stock. It includes expenses in handling,'keeping initial accounts, the security of: the stocks, maintenance of store godowns and other incidental expenses. It is added on a fixed percentage basis of the basic issue rates so as to form the Issue rate of the article in question.

Suspense Account The accounts of stores are based on the principle that the cost of acquisition of any material should be debited to the final head of account concerned or the particular work for which it is required, if either of those can be determined at once. Otherwise a Suspense Account pending clearance, till the materials are actually issued, by debit to the specific heads of accounts or works, is operated. Stocks kept under Suspense symbolize a centralized store of inventories to be requisitioned by other departments 1 divisions, etc. Stocks under Suspense do not end with the stock-keeping department but issues of such stocks are charged as expenses of the user departments etc. which place requisition for such stocks and get them accordingly. Receipts are treated as debit entries and issues as credits. The value of stock on hand istherefore a debit balance. To control stock balance it is usual to lay down a financial limit or stock. In the Public works system of account such a financial limit is known as Reserve Stock limit. It has to be carefully decided as it means blockage of funds.

Monthly Summary of Stock Receipts and Issues The receipt and issue transactions of the entire stores should be abstracted in the "Summary of Stock Receipts" and the 'Summary of Indents'. These forms should be posted daily from the copies of Goods Received Sheets, and the Indents, the entries being made only in respect of values. The total value of receipts and issues as brought out in these 'summaries should be reconciled with the corresponding monthly totals of the Priced Stores Ledger (Item 7.3.7). To reconcile quantity with accounts, receipts and issues, the value of which cannot be adjusted in the accounts of the month in which the actual transactions took place, should

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be accounted for in the summaries under the suspense heads "Purchase" and "Miscellaneous Works Advances" respectively. A Proforma of Monthly Summary of Stock Receipts as used in CPWD is given at the end (Annexure 4). A Proforma of Monthly Summay of Indents are used in CPWD is given at the end (Annexure 5).

Priced Stores Ledger An account is maintained to record the transactions relating to each item of stock day to day. This is called Priced Stores Ledger having different sections of sets of pages for

Stores Management different articles of stock with columns for receipts, issues and balances for both quantities and values. Separate Ledgers should be maintained for articles falling under each sub-head of Stock. All items of receipts and issues are entered in the Ledger from the copies of Goods Received Sheets and the Indents which are received daily. At the end of the day's posting, the balance under each article is worked out in respect of quantities as well as values. The Ledger is closed in both quantities and values at the end of each month. A few pages is reserved at the end of each Ledger for abstracting the transactions (Values only) pertaining to each article of stock. The monthly total of receipts, issues and balances is then worked out for each sub-head and a consolidated abstract prepared for all the sub-heads which should agree with the Summary of Stock Receipts and the Summary of Indents. A proforma of Priced Stores Ledger as used in CPWD is given at the end (Annexure 6).

Transfer Entry Transfer entries are entries intended to transfer an item of receipt or charge from the account of a work in progress or of a regular head of account of another work. They become necessary. (a) In order to correct an error of classification in the original accounts. Sometimes it is more convenient to classify items pertaining to several heads (or works), under the single head in first instance and then classify them separately by making transfer entries. (b) In order to adjust, by debit or credit to the proper head of account (or work), an item outstanding in suspense account or under a debit or deposit work. (c) . In order to bring to account certain classes of transactions which do not pass through the cash or stock account e.g., (i) for credit to 'Purchases' on account of materials received for works from sources other than stock. (ii) for credit to 'Deposits' on account of balances due to contractors on closed account.

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(iii) for credit to Revenue heads on account of revenue not received in cash. (iv) for original debits or credits to Remittance heads based on transactions not in cash or stock accounts e.g. transfer of tool and plant to another division / department when the value is recoverable for this. (d) In order to relieve the account of a work-in-progress of (i) items which have ceased to be debitable to the estimate for the work. (ii) suspense charges which can no longer be kept within the accounts of the work. For every transfer entry there must be a proper order by the Competent Authority. A proforma of Transfer entry order of CPWD is given at the end. (Annexure 7) SAQ 2 (a) What is the utility of maintaining Stores Ac~ount'? (b) What is the utility of Bin Cards? (c) What is the significance of Issue Rate'? (d) Find the cost of balance materials by the Weighted Average Method from the following data. Quantity 2500 10.11.99 ( 40 2600

STOCK TAKING Stock-taking represents complete process of verifying the quantity balances of the entire range of items held in stock. Measures to periodically count the stock is essential to check against discrepancies, deficiencies, shortages, surpluses, manipulations, mal-practice, etc. Normal periodical stock-taking is a basic requirement of stores accounting. In addition stock-taking by independent offices at irregular intervals and the counting of stores is items carried out so as to provide a built in safeguard against any tendency to pilfer, steal and take the advantage of fictitious issue, overloading, obsolescence etc. of stores. Objectives of stock-taking are : ji) Verification of accuracy of stock records. (ii) K-conciliation of value accounts with the actuals (ground realities) (iii) Unearthing the possibility of fraud, loss, theft, pilferage or fictitious issues. There are two methods of stock-taking - periodic and continuous.

Periodic Stock-taking or Annual Physical Verification - covers the whole of stock at the same time at the end of a given period, usually the end of the Financial year. In this, a responsible high ranked person verifies the stock lying in store once in a year, with the store records. He has to submit report about shcrtages, excesses or damages, surpluses, obsolete and unserviceable material. The advantages of this method is that thorough

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checking of all the items is performed at a time and all the discrepancies are known collectively. This operation causes complete stoppages of intake 1 outflow of materials during the counting process. Continuous stock-taking or Perpetual Veriiiration - ensures physical verification of stocks at least once in every year. It is not necessary that all the stock should be checked I and counted at the same time, but the date on which articles are taken on stock should be i entered in the Store returns. Verification is not carried out by the person, who is the custodian or the Accounts Keeper of the Store to be verified. Persons who are conversant with the Classifications, Nomenclatures and Technique of the Stores to be verified and arc working in sufficiently senior positions, are entrusted with the Stores Verification task. Verification is made in the presence of the Authority responsible for the custody of the stores or his nominee. The result of all verifications of stock should is reported to the authority. The book balance is to be set right by the verifying officer, who treats a surplus as a receipt and a deficit as an issue with a suitable remark. The value of stores found surplus is credited at once to receipt. The value of a deficit is / debited to the suspense account pending recovery or adjustment under orders of Competent Authority. SAQ 3 Br.irtly describe your expeiirnce and the difficultizs jcu hced In Stock-taking in which you had participated.

SUMMARY In store proper account is maintained for accepted materials. The account of stores is maintained by the store-keeper in the same way as that of cash by the cashier. It is desirable to know at all times as to how much working capital is represented by stores in stock. The value of stock is also needed to be shown in balance sheet as an asset. Value of the stock at the start and at the end of the accounting year is used in preparing profit and loss account. Store thus plays an important role in smooth functioning of an industry. The proper store account consists of information regarding different types of materials stocked, quantity and vlaue of each material, their recording time and quantity as well as cost of maintenance of stores. All materials received in the stores are recorded by the Railway Receipt (RIR) or Lorry Receipt (LIR) or Good Receipt(G1R). Materials in the stores are classified as raw materials, work in progress, finished goods, ready made components, consumables and scraps. Materials are coded for their quick identification. Priced vocabulary of stores consists of up-to-date records of materials available in the store as per their classification. The main account records of stores are Bin Cards, R/R or UR or G/R, Indent, summary of stock receiptlissue, Priced Stores Ledger, transfer entries

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and suspense accounts. Stock-taking is complete verification of stock entry in the store. In this unit you have learnt the importance and the objectives of stores accounting. After going through this unit, now you are able to understand the various terms used in store account. You are also now familiar with main records of the stores. With growth of technology, use of computer software to maintain store account can be of great help. Use of computer makes the store accounting job much simpler and quicker. KEY WORDS : Goods, items and materials kept in stores. : The note prepared after scrutiny of material received. : A document showing the current status of the item in the stores. Indent : Requisition for material by the user. Materials at Site (MAS) Account : When the materials are directly purchased or issued direct to the work, their costs are either changed direct to work or debited to the suspense head "Materials", when the cost is debited direct to suspense head "Materials its account is known as "Materials at Site (MAS) Account". This account is maintained only for major works, where large quantity of materials are used. : For avoiding delay in the manufacturing and procuring various materials, items may be collected and kept in reserve. As these items of stores can not be debited at once to any specific work they may be used, they are accounted for in a suspense account of stock.

Reserve of Stock Material Cost : Includes material price, freight charges insurance, and taxes.

Stock Taking : The complete process of verifying the quantity balances of the entire range of items held in stock.

ANSWERS TO SAQs SAQ 1 (a) The advantages of good coding system are (i) avoid use of long description of items, (ii) prevent duplication of items, (iii) forms a basis for exact documentation, and (iv) serves better stock control account.

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(b) Refer to 5.2.3. SAQ 2 (a) Refer 5.3.1. (b) (i) At any time it indicates the stock balance of any material in store. (ii) It indicates the receipts and issues already done. (iii) It helps in stock-taking. (iv) It helps to control to stock limit and re-ordering. (c) It indicates the total cost of procurement and storage of materials soihat the cost of finished product could be correctly ascertained. (d) Balance

Note : The average price for any issue would be the last / prevalent average price. For finding the average issue price, the quantity and value columns are first filled in the balance statement and from this the issue price is calculated. SAQ 3 Briefly describe the difficulty, including the non-cooperation of store people, if any, in counting due to haphazard stocking, incomplete Bin Cards, etc

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UNIT-III QUALITY IN STORES Structure Introduction Objectives Types of Inspection Methods for Selection of Samples Simple Random Sampling Systematic Sampling Stratified Sampling Sampling in Stages Sampling of Bulk Materials Inspection Levels Normal, Tightened and Reduced Inspection Sampling Plans Inspection, Measuring and Test Equipment Identification of Inspection and Test Status Qualification of Suppliers Third Pvty Certification Receiving Inspection and Testing Quality during Storage Pre-despatch Inspection before Delivery to the User Summary Key Words Answers to SAQs

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6.1 INTRODUCTION Materials management comprises planning, scheduling, procurement and controlling of materials from raw to the finished state in a manner consistent with quality, cost and utilisation of facilities. Stores function addresses all the above activities except that / procurement is done by an independent purchase function drawing inputs from stores relating to the actual requirement.

The activities involved in the control of quality in stores are : Qualification of Suppliers, Receiving inspection and testing, Ensuring quality during storage, and Pre-despatch inspection before delivery to the user. Aspects to be considered in performing the inspection and testing include the following : Extent and nature of inspection and testing to be performed on the product, Number of samples to be selected for the inspection and testing and the acceptance criteria, Selection of inspection measuring and test equipment, Identification of inspectionand test status Inspection and testing either before accepting the materials into the store or before delivery to the user assumes significant part of quality control exercised by the stores. Economic aspects are to be considered in deciding the nature and extent of inspection and testing. In the case of receiving inspection and testing before acceptapce of the material into the store due consideration is given to the aspects like the risks involved in accepting

Stores Management non-conforming products, quality control exercised by the supplier and the recorded evidence provided on the same and the cost of inspection and testing. It is quite customary that the suppliers provide a test certificate indicating the results obtained during the inspection and testing carried out in their premises as evidence. Reduced inspection is camed out in such cases while accepting the materials. Objectives After reading this unit you will be able to appreciate various activities involved in ensuring quality during receipt, storage and delivery of items stocked in stores, receiving inspection and testing, controls to he exercised during the storage of items and the inspection and testing before delivery of the items, the techniques of sampling inspection, qualification of suppliers, control of inspection, measuring and testing equipment, and qualification of suppliers, third party certification and quality during storage.

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TYPES OF INSPECTION Sampling inspection is employed universally to determine the quality and acceptability of the stores. 100% inspection is considered as an alternative to sampling inspection. The relative merits of both these inspections are explained in the table given below : In sampling inspection, the required number of samples selected from the lot are inspected and a decision regarding the acceptance or rejection of the lot is taken based on the number of non-conforming items found in the sample. The acceptance number is dependent on the Acceptable Quality Level (AQL). AQL indicates that the sampling scheme will accept the great majority of the lots submitted, provided the quality level (percent non-conforming or the non-conformities per 100 units) in these lots is not more than the designated value of AQL. Thus, the AQL is a designated value of percent non-conforming (or non-conformities per 100 units) that will be accepted most of the times by the designpted sampling scheme. The designated AQL shall not imply that the supplier has the ri$ht, knowingly, to supply any non-conforming unit of product.

Hundred Percent Inspection Cost of Inspection is high due to the increase in the volume of activity involved. More time consuming More chance for damage to the items during inspection due to handling. Less accurate due to high inspection errors. The reasons could be fatigue, monotonous nahlre of 100% inspection, negligence on the part of inspectors, high cost of employing qualified inspectors due to the large volume of activity involved. Not feasible when destructive testing is required Less incentive to the supplier for impmving the quality since all the good items are accepted and only the defective items are rejected. Essential for controlling the critical items where the risk of failure is quite high. Sampling Inspection Cost of inspection is low. Less time consuming Less chance for damage since only a small number of samples are handled. More accurate since specialist personnel could be employed for canying out the inspection and testing. Feasible to employ destructive testing and also for carrying out specialised testing. Due to the risk of rejection of the entire lot when the defectives are observed, the supplier takes effective measures to impmve the quality. Some risk is involved due to sampling errors resulting in - The acceptance of 'bad' lots and A good sampling plan protects the supplier from rejection of his 'good lots' and the user from acceptance of 'bad lots'. The reliability of sampling inspection depends on the sample size, representativeness of the sample in relation to the lot beingexamined and j the method of selection of the sample. Homogeneity of the lot also plays an important 1 part in ensuring the reliability. Due consideration should be given to the formation of homogeneous lots from which samples are drawn. Mixing of lots from different sources should be avoided. Products received from the same source but at different times should also be treated as separate lots to maintain homageneity. Larger the size of the lot, less is

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the inspection cost per item. The samples should be selected randomly thereby meaning that every item in the lot had an equal chance of being included into the sample. I LC hat dre the ndvaniagzs of sampling inspection over 100% inspection?

METHODS FOR SELECTION OF SAMPLES Simple Random Sampling In this method, all the items in the lot are serially numbered and random numbers are generated, using the random number tables or using scientific calculators which have the facility to generate such numbers, to select the samples. Other simple methods include use of a wheel of chance, or by shuffling of cards containing the numbers to pick up the required number of samples.

Systematic Sampling When the items are presented in a sequential manner, samples are selected systematically at regular intervals of position or time so that the total number of samples required are selected from the entire lot commencing from the start of the lot till the end. For example, if the lot size is 'N' and the sample size is 'n', then the integral part of Nln (say 'r') I provides the interval for selecting the sample. That is starting from around the beginning every 'ah' sample is picked up till the requisite number of samples has been selected. I

Stratified Sampling When a lot can be divided into certain number of more homogeneous groups or strata, each stratum is sampled separately to obtain the required number of samples and which is representative of the entire lot.

Sampling in Stages When the lot is presented in a large number of packages with each package containing a certain number of items, first the random samples of packages are chosen and then from each of the packages so selected the random samples are picked up to make up the required sample size.

Sampling of Bulk Materials While sdmpling of bulk materials like cement, it may be necessary to prepare a composite sample of the number of samples drawn from different bags. In such cases, the samples collected :.andomly from different bags are mixed together and required quantity is taken for carrying out the inspection and testing. Coning and quartering is an appropriate method adopted for reducing the quantity of sample without sacrificing the homogeneity.

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INSPECTION LEVELS " For general inspection, there are three inspection levels designated as Genera1 Inspection Levels I, I1 and 111. The three levels involve numbers of inspections roughly in the ratio of 1 to 2.5 to 4. The responsible authority depending on the discrimination needed, prescribes the inspection levels. Unless otherwise specified, Inspection Level I1 is used generally. Level I may be used when less discrimination is needed and Level I11 when greater discrimination is required. Four additional special levels designated as S-1, S-2, S-3 and S-4 have been specified for use when relatively small sample sizes are necessary and large sampling risks can not be tolerated. These inspection levels prescribe the size of the sample to be selected in relation to the lot size for performing the inspection and testing. The AQL and the inspection level selected should be compatible since the minimum sample size is different for different AQL.

NORMAL, TIGHTENED AND REDUCED INSPECTION While normal inspection is carried out initially, depending on the results obtained during successive inspections came out on the lots supplied by the same supplier, the subsequent inspections may be tightened or reduced. Sample sizes and acceptance criteria have been specified for normal, tightened and reduced inspections for each level of inspection. Criteria for switching among normal, reduced and tightened inspection is given below : * Preceding 10 lots accepted with total number of non-conforming units (or non-conformities) equal to or less than the acceptance number, and

Type of Switch Normal to reduced inspection Normal to tightened inspection

Criteria * Preceding 10 lots inspected under normal inspection, * Approved by the responsible authority. 2 out of 5 or less consecutive lots not acceuted. Reduced to normal inspection * Lot not accepted, or * Lot accepted but the number of non-conforming units (or , non-conformities) lies between acceptance number and rejection number of the plan, or

* Production irregular, or I I * Other conditions warrant switch. Tightened to normal Inspection Discontinued inspection to tightened inspection (Resumption of inspection after the supplier has investigated the root causes for poor quality and taken appropriate corrective actions to

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eliminate them) consecutive lots accepted Tightened inspection to discontinue inspection (when further supplies from the same supplier are not accepted),Supplier improves quality and provides evidence of the improvement actions taken end the responsible authority agrees that the action is likely to be effective. lots not accepted while on tightened inspection

$AQ 2 How do you switch from ncl 11 insp.. :tion to tightened inspection? --

SAMPLING PLANS Before discussing sampling plans, let us undersfand some of its fundamental principles. The first point is that a small sample in isolation gives us no idea of the quality of the batch from which it is taken. From a fairly large batch containing defective units in considerable number, it is quite possible to draw at random samples which are without defects. So, if we say out of batches of B, take samples S, allowable defect = 0, then the plan is unworkable. If, however, we gather the results over more time, then by using statistical quality control charts we can get an idea whether the apparent sample differences are due to random sampling fluctuations or whether those are real variations in quality between samples. But in industry, as also in stores operation, inspection is regarded as a non-productive activity. And rightly so, because it does not increase production, nor does it add any vlaue to the product. The technique we are using, alas, require a large number of samples to the inspected 1 tested to reach a meaningful estimate. This problem was carefully worked out by Dodge and Roming of the Bell Telephone Laboratories, U. S. A. when they devised the Single andDouble Sampling Tables. They provided for 100% inspection of all batches not accepted as a result of the drawing of a satisfactory sample. That screening inspection plays a vital role in bringing down the total number of inspections. As the 100% inspection ensure more quality (protection) to the user, he has to initially spend more (which is the principle of insurance, you pay more for increased protection). At the same time, alarm bells start ringing in the suppliers who are now facing increased rejections. So, corrective measures are taken for the with for improving the quality of the supplied items. In the double sampling method, the idea is further refined. The basic principles behind the double sampling are just the same as those of the single sampling method. The process, however, is a little more elaborate as would be evident from the following flowchart :

There is yet another sampling plan known as sequential sampling where the inspection is

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started as 100% inspection and later on sampling at reducing frequencies is carried out depending on the satisfactory results obtained during the inspection of successive samples. This inspection is not normally used in the stores inspection where lots as offered are inspected and acceptance decision is made based on the results obtained. In single sampling plan, a decision regarding the acceptance or rejection of the lot is taken based on the evidence gathered on the inspection and testing carried out on the one time sample selected from the lot. While specifying this type of plan for a given lot, the number of samples to be inspected (n) and the acceptance number (a) are specified. The required number of samples are drawn and inspected and if the number of non-conforming items is equal to or less than the acceptance number, the lot is accdpted. Otherwise the lot is rejected. Size of the sample inspected is largest in this case. In double sampling plan, first sample taken from every lot is inspected and the results obtained are used to accept the lot or to reject the lot or to reserve the decision until further information from the inspection of the second sample is obtained. That is if the number of non-conforming units found in the first sample is equal to or less than the first acceptance number, the lot is accepted. If the number of non-conforming units is equal to or more than the first rejection number, the lot is rejected. If the number of non-conforming units is between the first acceptance and rejection numbers, a second sample of the specified size is inspected. If the cumulative number of the non-conforming units from both the first and second samples is equal to or less than the second acceptance number, the lot is accepted. If the cumulative number of the non-conforming units is equal to or more than the second rejection number, the lot is rejected. In majority of the cases, the first sample provides evidence for making the acceptance or rejection decision and only in few cases; the need for inspection of the second sample is felt. The number of samples inspected in double sampling plan is usually 10% to 50% less than the single sampling plan. In multiple sampling, the procedure is similar to the double sampling, but there are seven stages. The decision will be reached by the seventh stage or earlier. The number of samples inspected in multiple sampling plan is usually about 30% less than the double sampling plan. When do you select a cloilblz sampling pit,'.'

INSPECTION, MEASURING AND TEST EOUIPMENT Inspection, measuring and test equipment (IMTE) contributes significantly to the reliability of the inspection and test results. IMTE include both test hardware and test software used for testing as well as sampling. It also includes jigs and fixtures used in inspection and testing and comparative references and certified reference materials (CRM). Depending on the measurements to be made and the accuracy required, appropriate IMTE is selected. The error attributable to the measurement is to as small as possible. In most areas of measurement, the permissible error attributable to the

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measurement is to be not more than one third and preferably one tenth of the permissible tolerance specified for the measurement or the value assigned to the characteristic. Controls to be exercised to ensure that the IMTE is capable of verifying the acceptability of the product are as follows : Calibration of IMTE before it is put to use and later at defined intervals against certified equipment having known and valid relationship with nationally recognised standards. In the absence of such standards, the basis used for calibration should be documented. Unique identification of all IMTE including the details like the type of equipment, accuracy, ranges of measurement, date of last calibration, frequency of calibration, etc.. should be on reach. Identification of calibration status of the IMTE or through suitable records. Maintaining calibration records indicating the calibration results. Assessment and validation of previous inspection and test results, whenever any IMTE is found to be out of calibration. Ensuring suitable environmental conditions for carrying out inspection and testing. Proper handling, preservation and storage of IMTE. Safeguarding IMTE from unauthorised adjustments that would invalidate the calibration settings.

IDENTIFICATION OF INSPECTION AND TEST STATUS Inspection and test status should be identified to ensure that the required inspection and tests are performed on the product and onlpthe accepted product is used or taken into the store. Status may be indicated by any suitable means such as marking, keeping the material in identified locations, tagging or signing either physically or by electronic 'means. The status should indicate the following as appropriate: Whether or not the product has been inspected and tested, Accepted as fully meeting the requirements, Accepted with identified non-conformities under concession, Put on hold awaiting further analysis / decision, Rejected as unsatisfactory. Separate physical location of these categories of product are the best method of assuring bothlhe status and accurate disposition. .

QUALIFICATION OF SUPPLIERS Qualification of Suppliers depends on the nature and amount of purchased product, the importance of its quality in the overall quality of the organisation's product and the feasibility and cost involved in evaluating and qualifying of the Suppliers. Many original equipment manufacturers purchase a substantial amount of materials, components, subassemblies or assemblies from the Suppliers. To ensure the suitability of the purchased product, before initiating the procurement action, Suppliers are evaluated and qualified. The evaluation process involves onsite verification of the Suppliers' capability to continuously supply products conforming to the specified requirements both in terms of quality and dependability. Simultaneously, the quality contrbl exercised by the Supplier is evaluated and a joint quality control programme established. Supplier implements the agreed quality control programme and provides evidence by way of test

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certificates or inspection and test results along with each consignment based on which the supplies are accepted with reduced receiving inspections. Purchase orders in such cases specify the type and extent of controls to be exercised and the recorded evidence to be provided. Typical Supplier qualification systems use objective measures such as : Evaluation of relevant experience, History of Product and / or Service Quality, price, timeliness of delivery and responsiveness to problems, Audit of Suppliers' quality management systems and evaluation of their capability to provide the required products and / or services efficiently and within schedule, -Checking references for customer satisfaction, a financial assessment to assure tht: economic viability of the Supplier throughout the intended period of supply. Confidence needs to be gained in the Supplier's ability to provide consistent quality, thereby allowing organisation to reduce or eliminate receiving inspection and testing.

This could be achieved by validating the Supplier's processes and control systems and , establishing methods to collect relevant information such as reporting systems for problems occurring throughout the life cycle of a product and 1 or service. The Supplier qualification system ensures consistent quality of the purchased product and I or service while keeping the inspection costs low. In order to achieve the same, depending on the type and extent of control exercised at the supplier's premises, and the impact of the purchased product on the ultimate quality of the company's product, alternate plans are developed specific to the supplier. THIRD PARTY CERTIFICATION Third party product certification schemes are operated by several organisations predominantly the National Standards bodies. Under the scheme, the certifying organisation provides an assurance about the conformance of the certified product (identified by the certification mark appearing either on the product or on its packaging) to the requirements of the specified standard. The certification body specifies an effective system for control of quality during the realisation of product and exercises supervisory controls to ensure its implementation. When the receiving product is certified by a third party, they can be accepted without any receiving inspection or with reduced inspection.

RECEIVING INSPECTION AND TESTING To facilitate efficient product and / or service acceptance, especially for manufactured components, verification resources should be applied selectively rather than relying on inspection and testing. The level of verification required may vary according to the nature or the type of product and 1 or service. An evaluation of a sample from the first

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production lot at the Supplier's premises before despatch would ensure the conformance of the design to the specified requirements. Thereafter the lots could be inspected on receipt at the stores. This process would reduce the risk of large rejection of the product due to basic design non-conformance. Verification process includes activities such as : Comparing purchasing data with the received product and 1 or service. This is the simplest form of receiving inspection where the product is compared with the specification contained in the purchase orders from appearance, nameplate or other markings on the product. For example, the nameplate details of the electric motors received are compared with reference to the rating of the motors specified in the purchase order before accepting the product. Evaluation of conformance of the product with the specification. Evaluation could be done by inspecting and testing the received product as per a defined inspection plan or by viewing the inspection ,and test results provided by the supplier for the inspection and tests canied out by him at his own premises or by a combination of both. Release of approved product and 1 or service for further processing without any inspection and testing. When it is proposed to verify the purchased product at the Supplier's premises, the purchase order sho~~slpde cify the veriffcatinn arrangements required and the method of product and I or service release. Receiving inspection and testing is one of the important activities used for controlling the quality of the incoming product. While deciding the nature and extent of receiving inspection and testing, it is essential that due consideration is given to the quality control exercised by the Supplier and the recorded evidence provided on the same. The inspection should be aimed at verifying the conformailce of the product to specified requirements. More important are the requirements that are essential for ensuring satisfactory performance of the product. The receiving inspection and testing inay assupe several forms such as : 100% inspection Sampling inspection Identity check No inspection Use of Supplier data It is quite customary that the Suppliers provide a test certificate to provide evidence of the results obtained during the inspection and testing carried out in their premises. In such cases the receiving inspection and testing may take the form of reviewing the test certificates to decide the conformance of the product with occasional verification of the characteristics independently. While inspection and testing does not add value to the

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product, it provides an assurance about the quality. Appropriate sampling inspection methods are required to be selected for this purpose. The sampling inspection schemes that provide desired confidence of the quality of the lot are standardised the world over and we could adopt them suitably for controlling the incoming quality. The details of inspection and testing to be carried out before acceptance of the product are specified in either the procedures or quality plans. Inspection requirements could be conveniently specified in a table form giving the following information :

and testing1 equipment Sample Acceptance Remarks frequency l criteria lot size Any item is defined in terms of different characteristics. For example: in the case of cement the characteristics could be the compressive strength of cement after one day, three days and twenty eight days, setting time, fineness, chemical composition etc. Requirement represents the values assigned to each of the characteristics or defining the presence or satisfactoriness of the characteristic. For example, the compressive strength characteristic of cement at 28 days, the requirement is expressed in terms of minimum so many Newtons per square rnillimetre. The method of test is defined in the Inspection plan by making reference to a standard method of test or in the case of simple measurements, by specifying the instrument used in the measurement. In the case of the measurement of compressive strength of cement, making appropriate reference to the Indian Standards on the subject specifies the test method. For measuring the diameter of the steel bars, specification of the measuring instrument used like micrometer with defined accuracy should be sufficient and it may not be necessary to explain the method of measurement. Sample size is specified as the number of samples to be selected from the lot for carrying out the inspection and testing. In the case of bulk materials, it is also necessary to specify the quantity of sample required for carrying out the test. Too small a quantity would not be enough to perform the required tests, while too large a quantity results in waste of material. Consideration should also be given to the need for retesting (when provided for in the inspection plan), in deciding the quantity of sample to be collected. In the case of bulk materials, sometimes it may be necessary to prepare a composite sample out of the number of samples collected from the lot. Composite sample is the sample arrived at after mixing all the samples collected from different sources as specified in the sampling plan. While preparing the composite sample, care should be @ke to ensure that it represents the entire lot sampled. For this purpose the samples coll~cte !I from different sources are mixed together and is divided to reduce the size of the sample to desired quantity. For example, when samples from 20 different bags of cement from a lot are collected, the entire quantity of cement thus collected is mixed together and by coning and quartering successively, the quantity of the sample is reduced to the desired level.

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All these aspects are mentioned while specifying the sample size. Lot size in the case of material offered in lots, and frequency, in case of material offered in continuous form (for example through a conveyor) are also specified. Acceptance criteria include the acceptance number or rejection number and actions to be taken when a failure is noticed in theqnspection and testing. Normally the inspection plans also specify the person 1 agency responsible for inspection and testing and the authority for acceptance or otherwise disposition of the lots based on the results of inspection and testing. inspection and test records are maintained to provide evidence of inspection and testing performed as per the inspection plan, the results obtained and acceptance or rejection based on the defined acceptance criteria. While one purpose of maintaining the records is to know the acceptability or otherwise of the lot inspected, the other more important purpose is to know the variability observed in the lot. The variability data could be

interpreted to understand the capability of the Supplier or the process. Many a times, when the volume of testing is quite large, recording the results of all measurements made would be time consuming. In such cases, the measurement results are grouped in defined ranges and the number of samples whose measurement data falls in each group is recorded. For example: the diameter of the pipe with specified value of 100 + 3 mrn is grouped into the categories less than 97; 97 to 99; 99 to 101; 101 to 103; and more than 103 mm and using a simple check sheet and using the technique of tally marking the number of measurements falling in each range are recorded. While this form of recording retains maximum information obtained by measurement, it is less time consuming and provides a graphical representation of the spread of the characteristic from the nominal value. Some of the basic issues to be considered in maintaining the inspection and test records are : Records should be legible, readily retrievable, and protected from damage or deterioration, Retention periods for the records to be specified, Protected from unauthorised access and amendment of data. All observations and calculations should be clearly and permanently recorded at the time they are made. When mistakes occur in records, each mistake should be crossed out and not erased and correct value entered along side. The person making the correction signs all such alterations to the records. With the concept of "Just in Time" (JIT) catching up, pany Original Equipment Manufacturers (OEMs) are relying on the quality contkol exercised by the self-certified Suppliers. Products received from self-certified Suppliers are directly sent to the processing line or stores without any inspection. The Supplier provides copy of the inspection and test results obtained during the inspection and tests camed out by him during the production process and / or before despatch. In such cases, the on-line rejections are monitored and the lots are also subjected to receiving inspection at reduced

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frequency, e.g. 1 in 20 lots. Whenever a failure is noticed during such inspections, the Supplier is removed from the self-certified category, and the Supplies are subjected to normal inspection and testing. The Supplier is to investigate the reasons for non-conformance and take appropriate corrective actions and communicate the same. The effectiveness of the corrective actions is verified by subsequent inspections and when next, say, 10 lots consistently conforming to the specified requirements, the Supplier is put back to the self-certified category.

Improvement of Supplier Quality Feedback of the results of inspection and testing is provided to the Supplier so that he is able to use @e data for analysis and investigation of the root cause of any non-conformance observed. The approach should be to stimulate the Supplier to take improvement actions rather than to penalise him for the poor quality.

SAQ 4 What are inspection plans? How do you decide the nature and amount of inspection in respect of a received item?

QUAL-IT Y DURING STORAGE -----

To prevent any damage, deterioration or misuse of the product during storage, the following aspects are to be considered : Correct identification of the items and designated storage areas to prevent unintentional mix-up and associated misuse, Proper handling of the items in the stores (use of pallets, conveyors, containers, vehicles etc.) Protective covers and coatings, Maintaining suitable environmental conditions such as temperature, humidity, clean atmosphere, Ensuring that the items with limited shelf life are not used after the expiry of the time period; for this purpose, use of First in First out,(FIFO) system for issue needs to be implemented. Secured storage areas or stock rooms to prevent unauthorised issue or use of items from stores. Especially the storage of non-conforming products should be controlled to ensure that they are not unintentionally issued or used. Proper segregation of items especially those items that are hostile to each other. For example, storage of acetylene and oxygen cylinders together mgy result in a dangerous situation in case of leakage when their combination is likely to result in an explosive atmosphere.

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Periodical checking of the stores to detect any possible deterioration. It may not be necessary to perform complete verification of the product characteristics during such periodical checking. The nature of verification is to be determined depending on what is likely to deteriorate during storage. Appropriate methods for receipt into and issue from the stores to ensure that items of acceptable quality are only stocked and issued.

PRE-DESPATCH INSPECTION BEFORE DELIVERY TO THE USER Products should not be issued from the stores unless the final inspection and testing is satisfactorily completed in accordance with the specified quality control plans and / or documented procedures. It should also be ensured that all inspection and tests specified either on receipt of the product or during in-process stages have becn canied out and the results meet specified requirements. The results of final inspection axid testing should be documented arrd authoxised by the designated persons before the product is released. For in-house manufactured items, the authorisation for receipt includes certification by the Quality Control Department. In the case of large equipment, test certificates relating thereto are verified and delivered along with the equipment to the stores. When Customer inspection prior to despatch is provided for in the contract, the equipment is offered for such illspection and then packed for delivery. SAQ 5 What are the precautions to be taken while storing items that are hostile to each other'?

SUMMARY In this unit, we have discussed various aspects of inspection and testing employed by the stores to ensure the quality of the product during the receipt and storage and ultimately while delivering the same to the customer and / or user. We also discussed various sampling and inspection techniques and the methods for maintaining the inspection and test records. We also covered aspects like qualification of suppliers, third party certification, quality control during storage, control of inspection, measuring and test equipment and identification of inspection and test status.

KEY WORDS Acceptance Number : The number of units conforming to the requirements in 100 units of the sample tested. Acceptance Quality Level : Non-conformities per 100 units of the sample tested. Quality in Stores Stom Management FIFO : First in first out, applicable to stocks with a limited shelf

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life. JIT : Just in Time is the designation of products received from self-certified suppliers which are taken directly to the production line or the stores without inspection. Lot : A consignme'nt of items, materials or products from a supplier. Sample : The units taken from a lot for taste or quality. Shelf- life : Also know as storage life. The specified length of time prior to use for which items which are inherently subject to deterioration are deemed to remain fit for use under prescribed conditions. (From B. S. 4778) ~hfidPa rty Certification : The certification scheme for products generally operated by National Standards Bodies.

ANSWERS TO SAOs Please refer the corresponding preceding texts for the answers to SAQs. FURTHER READING Quality in Stores ( 1 ) S tarr and Miller, "Inventory Control - Theory and Practice ". (2) Buchan and Koenigsberg, "Scientific Inventory A4anagemenr". (3) S. C. Bhattacharjee, "Modem Concepts on Materials Management", Indian Institute of Materials Management, 8B, Short Street. Calcutta - 17. (4) N. K. Nair, "Materials Management", Asia Publishing House. (5) Gopala Krishnan P and Sundarajan, "Materials Management -An Integrated Approach", Prentice Hall of India, New Delhi. (6) Khanna's compilation of Central Public Works Account Code, Revised Edition. (7) David Jessop and Alex Morrison, 1991, "Storage and Supply of Materials", Institute of Purchasing and Supply with PITMAN Publications, London. (8) H. K. Compton, 1981, "Storehouse and Stockyard Management', Jointly published by PITMAN with the Institute of Purchasing and Supply. (9) Frank Osbom, "Costing and Control ofMaterials", Published with Institute of Cost & Management Accountants, London. (10) Vas Prabhu and Malcolm Baker, "Materials Management", Published by Institute of Production Control, London in associatim with Mc Graw Hill Book Company. ( I 1) P. Ciopalakrishnan & M. Sundaresan, 1992, "Materials Management -An Integrated Approach", Prentice Hall of India Pvt. Ltd., New Delhi. (12) Ted Barker, 1989, "Essentials of Material Management", Mc Graw Hill Book Company.

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ANNEXURE 1 Article ...................... Code No. .................. Unit ...................... .... Issue Rate .................. SPECIMEN BIN CARD Referred to in Paragraph 5.3.3 Bin Card No. ................. Maximum Stock ................ Minimum Stock .................. Ordering Level .................... From ................. From ................. Signature of Issuing Officer -- Initials of Remarks Date GRS Quantity Balance Initials of Remarks Store-Keeper Store-Keeper Sectional InNdoe.n t In Out Sectional Officer - Officer 5 6 1 2 3A 3B 4 5 6 I ANNEXURE - 2 Division ............................................ Sub-Division Section ............................ SPECIMAN GOODS RECEIVED SHEET (Referred to in paragraph 5.3.3) ........................................................ / Name of the Supplier S1. No. 1 Note : (1) A separate G. R. S. should be prepared in respect of goods purchased from each supplier. (2) The articles falling under each sub-head of stock should be grouped together or entered on separate sheets. I Dated signature & designation of the officer entering measurements. Date 2 Incidental Charges 11 Rs. P. Stores Ledger Folio No.

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No. 14 Amount including incidental charges 12 Rs. P. Invoice / R R No. 3 Bin Card No. 13 Description of materials 5 Remarks including result of test check by suprior ofiicers 16 Reference to payment voucher of adjustment of debit Purchase / Supply Order No. 15A No. Date 15B Stores Code No. 6 Date Unit 8 Quantity 47 Rate 9 Rs. P.

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Y Amount 10 Rs. P. ANNEXURE - 3 No .................................... SPECIMEN STORES INDENT Date .................................. (Referred to in paragraph 5.3.4) Division .......................... Sub-Division .................. Section ............................. Officer of ............................................................................. Stores Indent on ..................... Division. ............................ SI. No. 1 Dated signature of indentor and his d-tion Pal'o n Su Divisional Offcer) 12 Bin Card No ............. Signature of ............. Sbre Keeper ......,... Sectional Officer. ..... 15 I Quantit ~[ndentei 4 Destription ofstores 2 hued on ...... .. ..... Signa turn..".." ...... Designation.. ......, . 13 Name of work job (with name of contractor from whom value is

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recoverable) 10 Code No. 3 Received on ......... Signature .... ,... ...... Designation. .......... 14 Quantity lssued 5 &marks, if anyl 17 Ledger Folio No. and Sl. No. of i tern. Name of the person to whom the stores are to be delivered and his signature Name Ledger Keeper + Signature Unit 6 Divisional Accountant 11 16 Rate 7

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Value 8 -Head of Account 9 ANNEXURE - 4 FORM 5.3.6 SUMMARY OF STOCK RECEIPTS (Referred to in paragraph 5.3.6) Division ............................... Name of the Sub-head ......................................................... Month ............................. Note : A separate summary should be prepared for each sub-head of stock and the value of the subhe'ads abstracted on another sheet in the following form : Small Stores Building materials and so on Total value of receipts Less items paid for during the month Net debits to 'stock' by credits to 'purchase' Sl. No. 1 Divisional Accountant Date 2 Goods Received Sheet No. 3 Value debitable to Stock 4 Rs. P. Remarks, including reference to voucher in the case of items paid for during the month 5 ANNEXURE - 5 SPECIMEN SUMMARY OF INDENTS (Referred to in paragraph 5.3.6)

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Division ............................... Name of the Sub-head .......................................................M.. onth ............................. Note : A separate summary shouid be prepared for each sub-head of stock and the value of the spbheads abstracted on another sheet in the following form : Abstract of Debits Rs. P. (i) Division A (ii) Division B (iii) Work A (iv) Work B etc. Certified that the total amount debitable to other Division has been agreed with the amount shown in the Division-wise Ledger of stores issued Total Divisional Accountant I SPECIMEN PRICED STORES 1,EDGER (Heffered to in Paragrahph 5.3.7) Sub-Division ............................. Section ..................................... ANNEXURE - 6 Article .................................. Maximum ............................ Minimum ............................ Ordering Level .................... Code No. ............................. Unit ..................................... Issue Rate ......................... S1. No. 1 Date 2 Issues Quantity 6A From whom received / To whom issued 3 Value 6B Rs. P.

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Balance Quantity 7A GRS / Indent No. 4 Value 7B Rs P. Reference to payment or adjustment of debit dg$n$&i enhy 9 Voucher TEO No. 8A Receipts Initials of th ~ivisionaAlC & 10 Date 8B Quantity 5A Rate 5B Rs. P. Value 5C Rs. P. Incidentals 5D Rs. P. TRANSFER ENTRY ORDERS (Referred to in Paragraph 5.3.8) No. Dated Particulars of the transaction :Reason for Transfer Initials of the Officer initiating the Transfer Entry Date

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