Stores Management in Production and Operation Management

Stores play a vital role in the operations of company. It is in direct touch with the user departments in its day-to-day activities. The most important purpose served by the stores is to provide
uninterrupted service to the manufacturing divisions. Further, stores are often equated directly with money, as money is locked up in the stores.

Functions of Stores

The functions of stores can be classified as follows:

1. To receive raw materials, components, tools, equipment’s and other items and account for them.
2. To provide adequate and proper storage and preservation to the various items.
3. To meet the demands of the consuming departments by proper issues and account for the consumption.
4. To minimise obsolescence, surplus and scrap through proper codification, preservation and handling.
5. To highlight stock accumulation, discrepancies and abnormal consumption and effect control measures.
6. To ensure good house keeping so that material handling, material preservation, stocking, receipt and issue can be done adequately.
7. To assist in verification and provide supporting information for effective purchase action.

Codification

It is one of the functions of stores management. Codification is a process of representing each item by a number, the digit of which indicates the group, the sub-group, the type and the dimension of the item. Many organizations in the public and private sectors, railways have their own system of codification, varying from eight to thirteen digits. The first two digits represents the major groups, such as raw materials, spare parts, sub-contracted items, hardware items, packing material, tools, oil, stationery etc. The next two digits indicate the sub-groups, such as, ferrous, non-ferrous etc. Dimensional characteristics of length, width, head diameter etc. constitute further three digits and the last digit is reserved for minor variations.

Whatever may be the basis, each code should uniquely represent one item. It should be simple and capable of being understood by all. Codification should be compact, concise, consistent and flexible enough to accommodate new items. The groupings should be logical, holding similar parts near to one another. Each digit must be significant enough to represent some characteristic of the item.

Objectives of Codification

The objectives of a rationalized material coding system are:

1. Bringing all items together.
2. To enable putting up of any future item in its proper place.
3. To classify an item according to its characteristics.
4. To give an unique code number to each item to avoid duplication and ambiguity.
5. To reveal excessive variety and promote standardization and variety reduction.
6. To establish a common language for the identification of an item.
7. To fix essential parameters for specifying an item.
8. To specify item as per national and international standards.
9. To enable data processing and analysis.

Advantages of Codification

As a result of rationalized codification, many firms have reduced the number of items. It enables systematic grouping of similar items and avoids confusion caused by long description of items since standardization of names is achieved through codification, it serves as the starting point of simplification and standardization. It helps in avoiding duplication of items and results in the minimisation of the number of items, leading to accurate record. Codification enables easy recognition of an item in stores, thereby reducing clerical efforts to the minimum. If items are coded according to the sources, it is possible to bulk the items while ordering. To maximise the aforesaid advantages, it is necessary to develop the codes as concerned, namely, personnel from design, production, engineering, inspection, maintenance and materials.

Source: KumarAnil, Suresh N. (2009), Production and operations management, New Age International Pvt Ltd; 2nd Ed. edition.