The aim of any business activity is to increase the value of the original resources which are risked by the owners in the venture. The aim of the manufacturing operation, which is an important facet of the business activity, is the timely manufacturing of the desired products of specified quality, in proper quantities at least possible cost resulting in the increase in the value of the resources. The efficiency of the manufacturing operations largely depends on the efficient functioning of the receiving and stores operations. Receiving and storing are the service functions and involve much of the paper work. The benefits out of an efficient receiving and storing are bound to out space the cost of administering them. Moreover there is an ample scope for simplifying and standardizing the paper work involved in these functions. Receiving and storing are the key considerations in the materials management because (1) the quality of the end product largely depends on the quality of materials received, (2) the smooth and uninterrupted production flow is dependent on the efficient stores function, (3) the stores organization acts as custodian of stock items and (4) above all these functions directly as well as indirectly affect the production cost. The direct production cost is reduced by strategic location of stores ensuring quick issue and elimination of production stoppages caused by waiting for materials. It indirectly reduces the production costs in terms of reduced investments in materials, storage space and insurance, elimination of pilferage and theft, obsolation, reduced handling cost etc.
The important functions of the stores are as follows:
1) Receipt: It receives and accounts inventories
2) Storage: It stores and preserves the inventories protecting them from damage pilferage and deterioration.
3) Retrieval: It helps easy accessibility to materials and ensures optimum space utilization. Materials can be located and retrieved with ease.
4) Issue: It satisfies the demands of consuming departments by proper issue of inventories on receiving the requisitions
5) Records: It keeps proper records of the issue and receipts
6) Housekeeping: The space is kept neat and clean so that materials handling, preservation, storage, issue and receipts is done satisfactorily.
7) Surplus stock: Scrap and surplus disposal management is a function of stores.
8) Verification: Physical verification and purchase initiation to avoid stock outs
9) Co-ordination & co-operation: To interface with production inspection and inspection department.
Receiving of materials:
Receiving is an important control point in the material control system. It is sometimes considered that receiving is a routine is a routine clerical work where the materials shipped by the supplier are received, unpacked, checked and compared with the packing slip. In fact receiving is something more than this. Lee and Dobler in their purchasing and Materials Management stated that, any problem or error in specific purchase transaction should come to light during the receiving operations. If the problem (shortage in quantity, damaged material wrong item shipped etc) is not detected and corrected during the receiving operations, the cost to correct the mistake later is much higher. Many hours are frequently spent in determining what really happened and rectifying the stations. Hours are required to correct the error that could have been corrected at the receiving station in minutes.
Receiving procedures: The receiving involves much of the paper work ad it varies firm to firm. However, the key issues involved in the receiving function are commonly described in the following procedure:
The receiving division unloads the goods at the delivery bay and verifies the condition of the consignment to satisfy that it is not received in a damaged condition. The receiving clerk opens the consignment and verifies the contents with the packing slip and the purchase order. The details are recorded in the separate report which is popularly known as the goods received note or GR note. The goods received note is an important document because it is the only document with the firm which signifies the details of the materials it has received. This document is used as the basis for invoice payment, for continued purchase negotiation and for closing the order. Generally, the receiving clerk counts or weighs the physical volume and the apparent condition of the goods. If there is discrepancy between the physical volume and packing slip or purchase order particulars, it is recorded on the goods received note. The condition of the consignment is also recorded. The copy of the goods received note is sent to the purchase department and other needy departments. The next step in the receiving process is the inspection of the materials.
The inspector compares the quality of the incoming materials with their specifications with the help of gauges, visual tests, chemical, electrical or mechanical tests, laboratory tests and such other tests. He reports his findings on the receiving report. The inspection report may be a separate form or it can be a part of the goods received note. The inspection report is sent to the purchase department and such other departments.