STORE ADMINISTRATION IN PUBLIC SECTOR


Content

 

TABLE OF CONTENTS

                                                                                PAGES

Title page                                                                 i

Certification                                                             ii

Dedication                                                               iii

Acknowledgement                                                    iv

Table of content                                                       v

CHAPTER ONE

1.0   Introduction                                                     1

1.1   Purpose of the Study                                       3

1.2   Stores Functions in an Organisation               4

1.3   Types of Stores                                                5

1.4   Stores Organisation                                         8

1.5   Relationship between Stores and other major departments.    12

 

CHAPTER TWO

2.0   Materials Storage Processes                             19

2.1   Stock Control                                                  23

2.2   Identification of Materials in Store                   29

2.3   Stores Layout                                                   35

 

CHAPTER THREE

3.0   Stores related problem in the public sector     38

3.1   Summary                                                         40

3.2   Conclusion                                                      42

        REFERENCES                                                 43

 

 

 

CHAPTER ONE

 

1.0      INTRODUCTION

Stores have been considered as the livelihood of industries in both private and public sectors of the economy.  Without stores, there could be neither production nor operation of any kind.  Manufacturers are constantly conscious of the significant role of stores with regards to availability of raw materials and need for effective warehousing of their finished products. Occasional stock-outs can lead to production stoppage and hence a substantial loss of anticipated profits.

 

Cater R. J. in his book “Store Management and related operation” defined stores as a small/large building or an area (stockyard) in which all kinds of materials tools, spares and so on needed for production, distribution, maintenance, packing, servicing are stored until when required by the users or consumers.

 

Isola, O. T. define the term stores as the building, or room or place where materials are kept.

 

Apart from the fact that store is used to refer to buildings holding goods, it may be used to prescribe goods held in such a store house or stockyard.  The goods may include finished goods awaiting dispatch as well as partly finished goods (W.I.P) awaiting completion (inventory management).

 

In “management of stores Activities” store management is defined as the act of keeping  goods and materials, which have been produced by an individual or group, making it available as it when needed so that the objective can be met.

 

Aremu S. S. in his book “Modern store Administration” defined store keeping as an act or process of receiving, inspecting, recording, arranging and storing all kinds of materials, tolls, stores, equipment etc, needed for production, distribution, maintenance, packing servicing until when required by the users or consumers.  The above definition shows that store – keeping should contribute directly to profitability and be concerned with lead time, storage cost, acquision cost, material handling, work study in store, preservation, packaging, pre-selection and issue packing and dispatch.

 

This chapter essentially discusses the conceptual frame works, purpose of study, store functions in an organisation, types of stores, stores organisation and relationship between stores and other major organisation departments.

 

1.1   PURPOSE OF THE STUDY

The reason behind this study is to enlight both the public and private sectors” store personnel on how to achieve adequate and proper store management. One of the major problem of this great country is material procurement which lack adequate store management and organisation.

 

1.2      STORES FUNCTIONS IN AN ORGANISATION

Store provides its function to all other departments within same industry especially the operative department.

(a)    Store Controls in most industries upward 50% of a working capital.

(b)    Because it controls large amount of working capital, its inefficiency will cause an organisation to liquidate (i.e run out of cash).

(c)    Proper store-keeping is a safeguard against deterioration obsolescence, obsolete materials and theft, and fraud.

(d)    Efficiency system of stores accounting helps in the preparation of dependable budgetary control for the organisation.

(e)    Immediate provision of required materials, on presenting proper authorized documents.

(f)     Determination of movement of materials is achieved i.e issues and records.

(h)    Security of stores is ensured.

 

1.3   TYPES OF STORES

                ORDINARY STORE:- This is a store also known as goods Warehouse may belong to the manufacturer or wholesaler or rented by him.  It is where the manufacturer stores his goods until they are needed and sold to the retailers or their agents.

        BONDED STORE:- It is a place where government keeps goods whose owner have not paid there required duties.  As the name suggests, it is hired from individuals who sign bond with the government not to release the goods until government gives them an indication that the duties on them have been paid.

        STATE WAREHOUSE/STORE:- Also known as the Queen Warehouse, especially in Britain and other countries that are under them, is a place where goods that are not allowed to enter a country also known as contraband, seized by board of customs and Excise are kept until they are sold on auction to members of the public.  This store building is owned by the government and this is why it is known as state warehouse in Republic such as Nigeria and others.

 

        According to Bosler W. Robert (1970, P.88) presented five (5) classification of store rooms according to the types of materials stored.  These in cases:

1.     DIRECT MATERIAL STORES:- This houses direct materials purchase in bulk that may be used intermittently and generally stored in protected areas to ensure adequate inventories are available at all time.  Materials in protected stores are issued only on the authority of an approved.

(a)    Requisition form

(b)    Product order, or

(c)    Bill of Material

        Specialized materials used on high-production operating and on standardizes product are frequently ordered for delivery according to the production schedule and are delivered directly to operation area.

 

2.     INDIRECT MATERIALS STORE:- This type are usually used for indirect materials such as oils, solvents and other flammables, which often-times are stored in fire-protected areas away from the production operation area.

3.     TOOLS, DIE, JIG AND FIXTURE CRIBS: - Lastly tools, gages and inspection instruments are kept in protected crib areas.  NOTE: (A crib is a metal box, metal container, or small building for storing).

4.     MAINTENANCE AND JANITORIAL SUPPLY CRIBS:- This is a separate storage that do not occupy potentially valuable manufacturing space storing maintenance and janitor supplies, which differ considerably from direct and indirect material store.

5.     OFFICE AND CLERICAL SUPPLIES:- These supplies are usually kept in one central storehouse from which departmental requirements can be not drawn as required.

 

 

 

 

1.4   STORES ORGANISATION

Organisation, as an element of management is concerned with arrangement of activities or responsibilities in such a manner that enterprises predetermined aims and objectives are achieved to organizational structure.  It is good to note that, in order to accomplish any goal, activities must be grouped logically or reasonably and authority should as well be provided so that conflict of actions can be avoided.

 

Stores organisation involves designing stores to best facilities goal accomplishment and establish relationships among the various parts of the stores.

 

The position of store keeping activities in the organisation structure varies considerably from company to company depending upon the following factors;

(i)     The size of the product plant

(ii)    The type and size of product produced, and

(iii)   The cost of raw material and finished materials parts, tools, Jigs, dies and fixtures.

The store function may operated from a single office run by the store keeper in a small firm, but, in a large organisation, it is necessary to apportion (share, or divide) the various duties to separate section.

 

Hence, there are two main types of stores organisation;

(a)    Internal Organisation

(b)    External Organisation

        INTERNAL ORGANISATION

        Internal organisation is must, where;

(1)    The organisation is large or fairly large

(2)    The organisation is not production oriented

(3)    That has no branch elsewhere.

A very good example of the type of internal store organisation is that of servicing organisation i.e. institution.  Such organisation may include:-

        Identification or Vocabulary Section

        Storehouse function

        Stockyard Section

        Record Section

        Account Section

        Standardization/Inspection section

        Stock Control Section

        EXTERNAL SECTION

        The store external organisatioin is characterized with:

i.      Large organisation

ii.     Production oriented concern

iii.    With many location / Branches

The external organisation could then be subdivided into three;

(a)    Central Store

(b)    Sub-stores and

(c)    Departmental Stores

 

 

 

 

 

 

 

TYPICAL STORES ORGANISATION

SOURCE: MANAGEMENT OF STORES ACTIVITIES

ISHOLA, TIMOTHY OLADELE

STORES

MANAGER









 

 

 

 


PROCEDURES       STOCK CONTROL     CHIEF                     VOCABULARY

OFFICER               OFFICER                 STORE KEEPER       OFFICER

 

 

Stores Manual         Stock Control         Management of        Coding

Standard form          Provisioning           Storehouses and      Standardization

Other instructions   General Stock        Stockyard                Specification



 

 

 

 

 

 


                                                                             STORES

                                                                             ACCOUNTANT

                                                                        -    Store Control accounts

                                                                        -    Material pricing costing

                                                                        -    Chief Stocktaker

                                                                        -    Stock Checking

                                                                        -    Obsolete and redundant reviews

 

 

Store keeper       Storekeepers in           Storekeepers in        Storekeepers      Store

In charge of        charge of central         charge of unit           in charge of        in charge of

Units                  stores and stock          stores – B                 unit stores          unit stores

                           Yard                                                              -C-                      -D-

 

 

 

1.5      RELATIONSHIP BETWEEN STORES AND OTHER MAJOR DEPARTMENT

The concept of service in relation to store operations: the stores, by the virtue of its function must be seen as providing service to the rest of the organisation in which it operates. The standard of the service will affect the overall efficiency of the organisation. The relationship between stores and other major departments within the organisation are therefore very important. Although stores are providing the service, it needs a certain amount of participation and information from the other major departments to ensure that service provided is efficient and meets the needs of the organisation in every dimension.

 

In any organisation the four (4) major other departments are:        

                Marketing (sales) department

                Finance/Account department

                Personnel department

                        Production department

 

The needs and duties of the other departments in relation to stores are as follows:

PRODUCTION: As this is obviously one of the most important users of the stores services, store management has to ensure that all materials needed for continuation of production are available as and when required. Production management’s plan in this relationship is to ensure that adequate warning is given to store about need for materials together with information about the type and quality required for future demands and also the performance of the materials issued.

SALES DEPARTMENT

The relationship between stores and sales is a very important one. Stores is responsible for ensuring that all stocks held for sales are stored issued, and controlled as efficiently as possible. The sales staff will often rely on stores to ensure that finished stock is available  and when required, they will also require(s) store to ensure that marshaling of stock is carried out and that the process of stocking-up in relationship to sales promotion and other marketing activities is carried out effectively. Store may also be responsible for the control of spare part and accessories used in connection with the finished goods, which have to be supplied as at when required by the sales department. Stores management must also be aware of the forecasts of future sales so as to be able to make plans in terms of stock levels, storage space outside warehousing and staff levels.

PURCHASING DEPARTMENT

The links between stores and purchasing in terms of their activities have always been very close. In many cases these two departments are united under the heading “supply management” where two separate operations do exist, the relationship responsible between them is vital. Purchasing is responsible for buying all the goods and services needed by the company. Purchasing depends on stores for many information to carryout their activities. Purchasing needs stores to keep it informed about the levels of stock at any given time and it is left to stores to keep purchasing up-to-date as to the total stock situation. This will enable purchasing to ensure that all stocks are provided and economic flow of goods and services is provided.

FINANCE /ACCOUNT DEPARTMENT

The relationship which exists between store and account/finance impinges on several important areas. Finance relies on stores for information covering the value of stock hold, and about items damaged and therefore to be written off and the asset left. The accounts department will often ask stores to confirm the receipt of goods as invoiced, especially in cases of doubt or query. Stores also provided a continuous supply of data regarding the use of stock in the operations and therefore aids the accounts department in its functions of cost allocation of particular batch or job as carried out by the operation function.

 

 

 

ENGINEERING DEPARTMENT

The engineers are responsible for ensuring the plant and machinery operate by the organisation is kept in working condition or order and is performing at its designed efficiency. Stores management has to ensure that necessary spare parts, tools and equipments are in stock or especially available from supplier stock.

 

On their part, the engineering department often work to an engineering schedule (a timetable of engineering activities covering two or three months) copy of this schedule must be given to the store manager so that stocks can be checked and items bought in that will be needed during the time period covered by the schedule. This will ensure that items required thus by the engineers, thus avoiding the situation of stripped down machines being left for weeks awaiting spare parts.

 

 

 

QUALITY CONTROL AND INSPECTION DEPARTMENT

Quality control is the department, which is responsible for administering the (quality) standards set by the organization in relation to materials both used and produced by the organisation. Inspection is very important part of the process stores management has to ensure that all delivered goods are held aside until checked out and passed by quality control that items have been delivered.

 

In return, the inspection department have inspected deliveries must indicate acceptance or rejection. The supplies function must work closely with the quality department if quality is approached from an assurance viewpoint.

 

MAINTENANCE DEPARTMENT

The supplies services in this case consists in acquiring appropriate materials and machinery spares and being in a position to issue them as and when required. To facilitates this work, the maintenance department advise details of the forward programme on repairs and overhauls as far a possible, particularly where planned maintenance is in operation, and advises on the initials of spares to be provided when any major new plant or machinery is installed.

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