Store Keeping: Importance, Functions and

Organization
Article shared by : Pushpender Pal

In this article we will discuss about Store Keeping:- 1. Importance of Store-Keeping 2.

Functions of a Store-keeper 3. Organisation of Stores 4. Store Layout 5. Centralised Stores.

Contents:

1. Importance of Store-Keeping
2. Functions of a Store-keeper
3. Organisation of Stores
4. Store Layout
5. Centralised Stores

1. Importance of Store-Keeping

The cost of materials is one of the largest elements of cost. Proper storing of materials is
very important to prevent losses from damage, pilferage and deterioration in quality of
materials. The stores must, therefore, be properly organised and equipped for the handling
of raw materials.

Ideal stock levels must be maintained for every item of raw material so that the production
departments get their required quantity of materials in time, and excessive working capital
is not unnecessarily locked up in overstocking. Moreover, overstocking enhances the cost of
production. However, the store department should be under the control of a technically
qualified Store Officer.

2. Functions of a Store-Keeper:

The Store keeper is a responsible person and should be placed in a high position in the
management hierarchy since he has to control the stores from every point of view. He is
expected to help the cost department for its effective functioning.

His duties and responsibilities are:

(i) To receive the materials from receiving department.

(ii) To maintain proper records of stores.

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(iii) To make arrangement for proper storage of materials and finished goods.

(iv) To issue materials to production departments against proper and authorised

requisition.

(v) To keep an eye on different stock levels and issue purchase requisition to the purchase
department in time.

(vi) To report on waste, scrap and obsolete stock.

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(vii) To prevent unauthorized persons from entering the stores.

(viii) Periodic comparison of physical stocks and book figures and to reconcile the
discrepancies, if any.

(ix) To keep stores clean, tidy.

(x) To make suitable arrangement for maintenance and preservation of the materials
during storage.

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(xi) To take back surplus materials returned from departments or shops.

The above functions of the Store-keeper demonstrate that store-keeping is an important

factor and can make a substantial contribution to the efficient operations of a business unit.

Store-keeping includes the following activities:

(i) Efficient and speedy issue of materials and tools to production departments which is
absolutely necessary for increased production.

(ii) Receipt of materials from goods reception and from production departments.

(iii) Organising storage in logical sequences so as to ensure that all items can be identified
precisely and storage space is used economically and effectively.

(iv) Organising stock checks either on a continuous or a periodic basis so as to be able to

provide accurate stock figures when required.

(v) Protecting materials from damage and deterioration.

(vi) Securing the stores from pilfering, theft and fire.

3. Organisation of Stores:

In a large organisation the management is faced with the problem of adopting the type of
organisation of store:

Types of Stores:

(a) Central Store.

(b) Central Store with sub-stores.

(c) Independent stores situated in various departments.

Central store indicates centralised buying and handling of stores.

Advantages of Stores:

(a) It is economical because there is economy in floor space, office overheads, stationery etc.

(b) It ensures better control and supervision because of availability of specialised

knowledge and experience of stores staff.

(c) Better lay-out is possible.

(d) It facilitates inventory checks.

(e) The amount of capital invested in stock is minimised.

(f) Since all stores are located in one place, it becomes convenient to control the physical
stock balances more effectively.

(g) Concise reports on scrap, obsolete stocks can be prepared regularly.

(h) Better security arrangement can be made.

But centralised stores have some disadvantages.

Disadvantages:

(a) It takes time to deliver materials to production departments if store is situated at some
distance from many departments. So it causes inconvenience and delay.
(b) There is a greater risk of loss by fire because of concentration of all types of materials in
one place.

(c) There is increased transportation cost.

(d) Breakdowns in transport in central store may cause production stoppage leading to
increased cost.

(e) Administration becomes too complicated in a very large store.

4. Store Layout:

As we have seen in our previous discussion that store plays an important role in the
efficient and effective management of factory, the layout of store should be carefully and
judiciously planned to ensure maximum efficiency.

The stores department should conveniently be located so that it can receive materials from
the suppliers and issue materials to production department without making much delay. It
must have easy access to any part of the factory to minimise expense. So, it is desirable that
store should be located centrally to discharge its responsibilities efficiently.

In large factories having many departments the store cannot be situated in a place from
where materials can conveniently be delivered and at the same time its location shall be
near the receiving department. So, it is necessary to set up sub-stores situated conveniently
to serve a particular part of the organisation.

The layout of the stores department requires thoughtful considerations. Racks, bins,
shelves etc. must be arranged for easy access. There must be enough provision for open
space for the passage of trucks. Special arrangement should be made for the storage of
materials which are affected by atmospheric conditions.

Heavy and bulky goods which cannot be kept in racks or bins are to be kept on floor. In
that case, the area of the floor where these materials are to be kept should be marked with
white lines indicating the area kept reserved for storing those materials.

5. Centralised Stores:

A large factory may choose to have subsidiary stores within productive departments. This
facilitates the spontaneous supply of materials required by the production department. It is
very difficult to take a decision on whether a factory should have subsidiary stores or a
centralised store. Before taking a decision the advantages of a centralised store must be
taken into consideration.
Advantages of a Centralised Store:

i. Purchase order can be placed for the total requirements of the firm and the larger order
results in cost savings.

ii. As there are many small stocks, the total buffer stock is much higher which leads to:

(a) Less capital investment in Stocks;

(b) Less space taken up;

(c) Less danger of obsolescence and deterioration; and

(d) Less time taken for checking stock balances.

iii. Better supervision is possible for using specialised skills and equipment.

iv. Administration cost relating to stock recording is less.

v. Better layout of Stores is possible which results in efficiency in stock control.

vi. Absence of any worker does not affect the work since staff become acquainted with
different types of stores.

vii. Better security arrangements can be made.

Disadvantages of Centralised Stores:

The centralised storage of materials suffers from the following disadvantages:

i. It involves increased transportation costs.

ii. It causes inconvenience and delay in supply of materials as the production departments
have to obtain supply from the store situated at a distance.

iii. More frequent movements of small quantities of materials may increase costs and cause
production control problems.

iv. Greater risks of loss by fire.