Purchase and

Material Management
POM205
(Module II)

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 Stores Management

Stores refer to physical place where material of all

variety are kept.

The function of store is to receive, inspect, store,

issue and accounting of material with the objective
of efficiently and economically providing the right
material at right time in the right condition to
provide uninterrupted service to all user
departments.

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 Stores Management
Stores act as a link between purchase and
manufacturing on one hand and manufacturing
and marketing on the other.

Store keeping does not add any value to product

but still it is an essential function.

Decisions related to stores have a dramatic impact

on the operational efficiency of the production
department and profitability of the entire
organization.
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 Stores Management

Routine decisions such as selection of racks,

shells, bins, material handling equipment, safety
practices, inspection procedures etc. are reflected
in the operational efficiency.

The stores play role in maintaining optimum

inventory and highlighting exception cases through
building up of proper mis by maintaining accurate
records.

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 Receipt Function
The receipt function is the last step in the
purchasing activity and the first link in the stores
function. The broad functions of a receiving section
can be outlined as follows :
Receive incoming materials,
Physically check received materials.
Arrange for speedy and proper inspection and
verifying that the deliveries correspond exactly as
to the nature and quantity as per specified in
purchase order.

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 Receipt Function
 Raise goods inward note,
 Notify user departments about availability or non
availability of materials requisitioned by them,
 Inform purchase section regarding excess
supply, shortage, or defective supply,
 Deliver material to appropriate stores for
storage,
 Prepare record keeping.

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 Receipt Function
• The tasks of receipt section starts even before
the materials enter the stores.
• When a purchase order is placed, one copy of
the same is sent to stores.
• The copy informs the stores in charge about the
item description, the quantity, quality / grade /
type, and delivery date, suppliers name etc.

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 Receipt Function
• This copy of the purchase order helps to preplan
for labor to receive and unload the material,
make adequate arrangements for separate
space and inform inspection department about
probable schedule of inspection.
• Once the suppliers dispatch the goods through
their carrier they arrange to send an advice note
to the receiving stores.

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 Receipt Function
• Such an advice note provides information about
date of dispatch, carrier details, description of
consignment, packaging, labeling, handling
instructions, value of the consignment, reference
of the corresponding purchasing order etc.
• The advice note is sent in sufficient advance to
help make suitable arrangements and expedite
clearance of goods and related documents.

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 Receipt Function
• On receipt of goods, those are physically verified
and tallied with the consignment note sent by the
carrier.
• Thus, the three documents, viz. Purchase order
copy, advice note, sent by the supplier,
consignment note sent by the carrier, must tally
with each other and with the received
consignment.

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 Receipt Function
Receiving section can be of various type given as
below:
•Centralized receipts: This is a part of a centralized
store set up where all materials are received,
physically checked, inspected and either stored for
distribution to users or are directly dispatched to
various sub – stores along with the goods inward
note.
•Semi – centralized receipts : In this arrangement
the record keeping part is centralized.

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 Receipt Function
• and special, high value materials are received
centrally. Most of the other incoming material is
directed to respective stores and is checked and
verified and got inspected by the respective
stores receiving section staff. This arrangement
precludes the possibility of bottlenecks due to a
heavy work load on the receiving section. It also
saves on transportation costs from central stores
to sub – stores and then to the user
departments.

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 Receipt Function
• Decentralized receipts : This arrangement
attaches a receiving section to every stores. This
is usually used when the volumes of incoming
materials is usually high and users departments
are spread over a wide geographical area. Gins
are prepared separately at each receiving
section.

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 Receipt Function
• All incoming materials must necessarily pass
through the receipt section and in no
circumstance go directly to the users
department.
• The receiving in charge must complete all
documentation and paper work at the receipt
stores before the dispatch or storage of goods.
• On receiving the challan and other documents
from the carrier, the consignment is unloaded
and is checked against the packing list.
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 Receipt Function
• Appropriate entries are made on the delivery
note and a copy of the same is returned to the
carrier.
• If the delivery note is returned signed, without
any qualifying statements then the consignment
is deemed to be in proper condition.

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 Receipt Function
The contents of the daily goods receipt register
also called ‘goods inward register’ are as follows :
Date and time of receipt
Name of the supplier & name of the carrier
Challan number and date
Item description, quantity and value of items
Purchase order reference
Carrier details (lorry number)
Goods inward note reference
Received by & Inspected by
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 Receipt Function

The incoming goods may be from one or more of

the following sources :
•Suppliers through receiving section on goods
inward note.
•User departments that return surplus stock,
obsolete stock and scrap on material return note.
•Transfer from other stores on store transfer note.

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 Receipt Function
• Equipment received after maintenance and
repairs on store credit note or completion slip.
• Goods rejected by customers
• Outside parties, of sub – contracted goods.
• This deals with the function of receiving and
physically handling delivered materials, and
verifying that the deliveries correspond exactly
as to the nature and quantity as per specified in
purchase order.

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Thank You

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