CHAPTER 1

STORES MANAGEMENT AND STOCK CONTROL

DEFINITION
Stores management plays an important role in any organization as it determines the
cost of goods and services.
Material management is a distinct process consisting of material cost, supply and its
utilization. It affects the flow of materials in a manner in which it helps in conserving the
materials cost, best utilization of materials and maintaining the quality of both incoming
and outgoing materials. The chief aim of the stores is to ensure the smooth flow of
production without any interruption. Stores generally include raw materials, work in
progress and finished goods.
SCOPE OF MATERIAL MANAGEMENT
Areas of MM
Material planning and programming (sourcing)
Purchasing and inventory control
Receiving warehousing and stores keeping
Transportation and materials handling
Disposal of scrap and surplus
RELATIONSHIP BETWEEN MM AND OTHER DEPARTMENTS
Engineering- specifies the materials required
Finance- pays the bills for acquired materials
Production – Transforms materials into finished goods
Marketing-sells the finished goods
Objectives of materials management
The goal of material management include
 Minimizing the cost of production and distribution
 Helps the enterprise in attaining its objectives
 Helps maintain the continuity of production
 Ensures economic procurement – buying materials of the right quality, right
 quantity at the right time from the right place at comparatively cheaper price
 Efficiently controlling the inventories
 Establishing good buyer-seller relations
 Maintain ethical standards within the organization
STOREKEEPING
DEF: It refers to the safe custody of all the items of materials stocked in the storeroom
for which the store keeper acts as a trustee.
It also refers to physical storage of materials carried into the storeroom in a systematic
manner with a view to save them from damage and exercising overall control over their
movement.
Objectives of stores keeping
1. Minimizing the cost of production-These costs include cost of capital investment in
materials, cost of preservation and handling of stores, cost of record keeping, cost of
storage equipment and building, heating and ventilation, insurance and losses due to
spoilage. All these costs add up towards the cost of production hence its important to
keep them at minimum
2. Provides efficient service through ensuring a balanced flow of the right quality and
quantity of raw materials, equipment and tools receiving from production department
and issuing to the sales department the finished goods accepting and storing the scrap
and other discarded materials and making proper arrangement for their disposal
3. Establishing coordination stores department establishes coordination between all other
departments to ensure smooth flow of the organizations’ activities
4. Advising the management the stores keeper gives advice to management with regard
to physical verification, inspection, replenishment, obsolescence and disposal of scrap
Objectives of stores keeping
1. Minimizing the cost of production:
These costs include cost of capital investment in materials, cost of preservation
and handling of stores, cost of record keeping, cost of storage equipment and
building, heating and ventilation, insurance and losses due to spoilage. All these
costs add up towards the cost of production hence its important to keep them at
minimum
2. Provides efficient service
Through
 Ensuring a balanced flow of the right quality and quantity of raw materials, equipment
and tools
 Receiving from production department and issuing to the sales department the finished
goods
 Accepting and storing the scrap and other discarded materials and making proper
arrangement for their disposal
3. Establishing coordination:
Stores department establishes coordination between all other departments to ensure
smooth flow of the organizations’ activities
4. Advising the management:
The stores keeper gives advice to management with regard to physical
verification, inspection, replenishment, obsolescence and disposal of scrap

FUNCTIONS OF STORE KEEPING

1. Receipt of materials into the store- all materials are delivered into the store’s
receiving section where they are inspected before being moved into the
appropriate storage areas. A proper record is kept for all such receipts.
2. Storage and preservation- storage means custody of materials in a scientific
way so as to maintain a regular flow of materials into and out of the storehouse.
Preservation means the safe custody of the materials so as to maintain their
value and quality
3. Record keeping-this involves keeping records of materials carried into and out
of the storehouse. Proper record keeping minimizes the cost of storage and
production through determining the right stock levels
4. Issue of materials- this involves distributing the materials to all the departments
as per the requisition requirements. Proper authorization is needed for all
requisitions.
FACTORS UNDERLYING SUCCESSFUL STORE KEEPING
1) Location of the store: storehouse should be centrally located to be accessible to all the
departments which results into better coordination
2) Layout of the store: the storehouse should be free from congestion to allow free
movement of materials , timely inspection and day to day verification of receipts and
issues
3) Records: proper, update records and complete records results in reduction or
elimination of wastage and misappropriation in the stores department
4) Preservation: the aim of store keeping is to preserve the materials from all kinds of
damage so that they do not lose their quality and value. This requires that the store is
bright, airy, fireproof and is well ventilated
5) Verification: this involves constant check on the movement of materials and on the
balance of the materials in the storage bins. This can help in the detection of fraud and
mismanagement
 6) Management: all levels of management from policy makers to the store keepers should
ensure proper management of stores.

BENEFITS OF EFFICIENT STOREKEEPING

1) The location of the materials in the store room becomes easier therefore avoiding
unnecessary delays and confusion
2) Facilitates smooth running of the whole organization
3) Avoids blocking unnecessary capital in stock
4) Avoids stock outs due to under stocking
5) Encourages physical verification
6) Facilitates proper stores accounting
7) Minimizes wastage of labor , time and money due to leakages, theft and pilferage
8) Provides reliable data to management for decision making