MATERIAL STORAGE AND CONTROL
Points outlined below are equally applicable to finished goods stocks as well as inventories going into production. The same care in handling, storage and cost controls can be followed to get the desired objectives.
The interrelationship between the many features of factory organization and production methods renders it impossible to deal with each as an entirely separate subject. The employment of adequate equipment in the discharge of all factory operations, good factory layout, the strategic location of stores in relation to the requirements of manufacture and the benefits which are likely to result there from are matters in an efficient production unit Therefore attention is focused when viewing this function from a cost reduction angle.
A review of the storage and issuing procedures should take cognizance of the following factors which arise directly from them:
1. Costs of stores administration and the processes, both manual and clerical, involved in the performance of this necessary service of production.
2. The adequacy and cost of the storage area and facilities in use..
3. Costs arising from theft, loss, obsolescence, deterioration or breakage of materials and goods, and their prevention.
4. Production, costs arising directly or indirectly from the discharge of these tasks, e.g. increased cost resulting from interrupted production flow occasioned by material shortages, unbalanced stocks or general stores inefficiency. One of the most vital needs in industry is the maintenance of a constant or gradually expanding level of production, since violent changes for these and other reasons constitute a major cause of reduced efficiencies..
Material handling in this context relates to the means whereby materials and products are transferred to from and through a manufacturing unit.
Its importance as a subject for consideration in relation to increase productivity and cost reduction is gaining increasing recognition in industry, where it is not unusual for fifty tones of material to be handled for every ton of finished goods.
The costs of material handling are many and varied, embracing as they do the operating costs of handling services-trucks, conveyors, cranes, hoists, labor-the costs of damage or breakage and the less obvious, but equally real, costs of waste capacity and the general manufacturing inefficiencies which may arise under unsatisfactory conditions.
These costs are not easily measured, but it is evident that substantial benefits can accrue from improved handling. These include improved flow of parts and materials, leading to increased machine utilization, shorter manufacturing cycles and reduced inventories.
Material handling research cannot be dissociated from the study of the effectiveness of plant layout. The flow of materials should be examined throughout every department of the business in an endeavor to discover possible scope for cost reduction by the increased use of mechanical aids, the strategic sitting of stocks and the intelligent disposition of production facilities.
5. Materials Usage and Yield:
The control and reduction of material usage in industry merits a very thorough inquiry in cost reduction
Despite the fact that material frequently represents a most important element in the total cost of a commodity, it all too often is the most neglected from the point of view of control. Wherever these circumstances exist they provide an obvious area for the exercise of cost reduction techniques.