The Importance Stores Management

Introduction

In an enterprise with a small quantity of stock, one person might be placed in charge of it, if the owner/manager does not look after it himself. Where the volume of stock is too large to be handled on a part-time basis, one or more storekeepers will be required. Enterprises with large quantities of stock must employ trained stores personnel (storekeepers, clerks, etc) under the control of a Stores Manager (who might go by the designation of Head or Chief Storekeeper, Stock Controller, Stores Administrator, or a similar title).

It is impossible to state at what stage a Stores Manager will be appointed by a particular enterprise, as circumstances and sizes vary so greatly. But whatever its size and the volume of its stocks, the success of the enterprise can depend to a large extent on the efficient management of its Store and stocks.

Let us now examine why that is so.
1. All the possessions of an enterprise – that is, what it owns – are called its ‘assets’. Frequently the value of the stocks of goods and/or materials held in its Store is as great as – if not greater than – the total value of all its other possessions – e.g. land and/or buildings, plant, machinery, motor vehicles, equipment, etc., and, of course, money and investments – added together!
2. The items and/or materials in the Store cost money; if, through bad Stores Management, there are too many held in the Store or if the wrong items or materials are being held, money will be “tied up” – money which might be required to buy other, needed items and/or materials or to pay the many expenses involved in running the enterprise.
3. Conversely, if poor stores management has led to shortages of needed items and materials, there will be hold-ups and interruptions in production, or losses of production and/or losses of sales to customers and, indeed, losses of the customers themselves, and losses of profits which can in turn lead to job losses and – in extreme cases – to the collapse of the enterprise.
4. If items in the Store are lost, stolen or damaged in any way, the enterprise loses money.
5. And it costs money to run the Store – on building maintenance and/or rent, on salaries of stores personnel, on containers and equipment, on heating or cooling, on lighting and power, etc. – and the enterprise must receive a “return” from its expenditure, in terms of efficiency, particularly as its Stores is “nonproductive” (a matter which we return to later in this Module).

What is involved in Stores Management?

Stores management is concerned with ensuring that all the activities involved in store-keeping and stock control are carried out efficiently and economically by those employed in the Store. In many cases it will also encompass the recruitment, selection, induction and the training of stores personnel, and much more.
The work of any manager comprises two different aspects:
the ‘technical’ aspect, which is concerned with the work to be performed in the section, department or enterprise concerned.
the ‘human’ aspect, which is concerned directly with the people who are employed to perform that work.
The ‘technical’ work of different managers might vary considerably; thus, the technical (and we use the word in the widest sense of its meaning) work of a factory manager will be very different from the technical work of a sales manager or a store’s manager or an office manager, etc. Even the technical work of two stores managers working for two different enterprises might differ in many areas. However, the ‘human’ aspect of the work of ALL managers must be similar because it involves managing the activities of other people.
The management of people is an art; men and women are unpredictable and each person has his or her own different and complex character. The management of human beings requires the provision of leadership for a group of people and more; they require training, advice and guidance, supervision and control, and their work must be so organised and co-ordinated that they work together as a team to achieve a stated objective – which in the case of stores management is the efficient running of the Store of an enterprise.

What is involved in Storekeeping?

The term storekeeping covers the actual handling of the items or materials received into, held in and issued from the Store. The work involves:
• receiving items and materials, including the inspection of them;
• storing the various stock items in the most appropriate fashion, binning and/or racking them by the best methods, and placing them in such a way that any item or material in the Store can be located quickly and easily when it is required;
• ensuring the safety of all items and materials whilst in the Store – that is, protecting them from pilfering, theft, damage and deterioration; and
• ensuring, when necessary, that items issued from the Store are so packed that they will not be damaged or caused to deteriorate whilst in transit to their destinations.

What is involved in Stock Control?

Stock control comprises mainly the clerical and administrative functions of stores work. It involves:
• Ensuring that the right types and qualities of items needed for production, sale and distribution, are always available when required;
• ensuring that stock is issued in the correct sequence, that is, “first in first out”, so that “older” stock is not allowed to deteriorate by being kept too long in the Store, for instance because it has been hidden from view by more recently received stock;
• maintaining records showing the “movement” of items into and out of the Store, controlling and monitoring those movements and maintaining full records of the items in the Store;
• ensuring that the correct “stock levels” of the various items are set and are maintained, that orders and reorders are made (or requested to be made) in good time, and that what is ordered is received;
• checking, counting or otherwise measuring stock to ensure that records are accurate and that no losses are occurring due to pilfering, theft, damage or poor storage;
• pricing and valuing the items in the Store.

Stocks – Grouping of enterprise types

The range of items and materials – stocks – which might be held in Stores is huge. The variety and quantity of items and materials held in the Store of a particular enterprise will depend on its size and on its range of activities. Broadly speaking, the various activities of different enterprises can be divided according to the Four main groups of enterprises:
i. Industrial Enterprises e.g. Mumias Sugar Company Ltd.,
ii. Trading Enterprises e.g. Uchumi Supermarket
iii. Service Enterprises e.g. Kenya Airways Ltd., (KQ)
iv. Multi-Activity Enterprises e.g. Tuskys Supermarket and Equity Bank Ltd – financial Services

Industrial Enterprises

Into this group fall enterprises like mines, which extract raw materials such as oil, coal, iron, etc., which are in general sold to other enterprises for use as power or for use in manufacture. Agriculture and fishing are also classified as extractive.
Other enterprises in this category are classified as processing or refining because they “process” the raw materials and, in so doing, alter their original form into more useful or saleable forms.
Still other industrial enterprises are involved in using the raw or processed materials in the
manufacture – in factories or in workshops – of the wide range of products available on the market today, or in producing components which will form part of the final products of other manufacturers. In addition, there are industrial enterprises involved in construction and allied fields.

Trading Enterprises

 

In this group the range of enterprises in this group is very wide, but the common activity is the buying and selling of the raw materials, components and products produced by the industrial enterprises.
Enterprises involved in trading range from small one-man shops and kiosks to huge supermarkets, departmental stores, hypermarkets and shopping centres. Some trading enterprises are involved in wholesaling; they purchase products from their producers in large quantities, and then sell them in smaller quantities to retailers, who in turn sell them, generally in even smaller quantities, to their customers, who might or might not be the final consumers. Some larger trading concerns might eliminate wholesalers – often called “middlemen” – by buying direct from the producers.

Service Enterprises

Frequently the services provided involve the performance of some work, only the results of which might be seen; examples include banking, finance, transport, maintenance of machinery, etc., and the provision of insurance cover.

Besides those already mentioned, services are provided by such diverse businesses as hotels, restaurants, estate agents, computer bureaux, travel agents, tailors, electricians, hair dressers and barbers, and many more. (Note that certain services are provided by persons who do not consider themselves to be “in business”, e.g. accountants, doctors, lawyers, dentists, auditors, etc. They refer to themselves as being in “the professions”, although their services are rarely provided without charge!).
There are also enterprises which provide specialized services which are called utilities. These include enterprises – often fully or partly state-owned and run – which provide supplies of electricity, water and gas, as well as sewerage, post and telecommunications, and similar services, often on a national or on a regional scale.

Multi-activity Enterprises

There are, of course, some enterprises which fall into more than one of the three major groups. For example, a business might operate a factory, and then sell the products of its factory from its own shop(s) – and is thus involved in both industrial and trading activities. Another enterprise might sell, say, office machines and also provide a maintenance service for those machines, and so is involved in both trading and service-providing activities.

 

The Stores Function and its interrelationships with other Functional Departments

Introduction

You will have noted that earlier we stated that the Stores Department has a nonproductive function. We can now explain what we meant. Departments of an enterprise such as its Sales Department and/or its Production Department are directly involved in the primary or revenue-earning functions of that enterprise. Their functions – or activities – are designed to bring money into the enterprise as the result of producing and/or selling goods or services. For example, if an enterprise has a Production Department, its function is to make or manufacture goods or other items which will be sold to bring in money. The whole function of the Sales Department of an enterprise is to sell goods or other items (whether produced internally or purchased for resale from other enterprises) and/or services, in return for which customers will pay money to the enterprise.

In contrast, the Stores Department of an enterprise does NOT make or – in general – sell goods or services to customers. Its function is to: Provide a SERVICE to the rest of the enterprise of which it is part. The SERVICE provided by the Stores Department is ESSENTIAL to all other parts of the enterprise, because it is basically intended: To ensure that all other sections or departments of the enterprise are furnished, when required, with the correct items, in the correct quantities and of the correct qualities.

As we explained earlier, the standard of the service provided by the Stores Department will affect the efficiency and profitability of the entire enterprise of which it is a part. Obviously, the Stores Department cannot be expected to provide the best service unless it receives adequate information from other departments. Furthermore, it must work closely in co-operation and co-ordination with those other departments. The departments with which the Stores will have contact will, of course, depend on the activities in which an enterprise is engaged. However, we now look briefly at some of the major departments with which close contact by Stores Departments might be necessary.

The Relationships – The Stores and the Production Department and the Sales Department

As the Stores Department must ensure that all items, materials and tools, as well as spare parts for machinery, are always available for continuous, uninterrupted production, it requires adequate warning about expected future needs, in terms of types, quantities, qualities (and possibly even colours). Stores might also have responsibility for quality control and for inspection (although these might be the responsibility of a separate department which, again, must work closely with the Stores).

The Diagrams below shows the Interrelationship between the Stores Department and other two Departments – Sales Department and Production Department.

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17 thoughts on “The Importance Stores Management

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