PRODUCTION PLANNING AND CONTROL

Planned production is an important feature of the small industry. The small entrepreneur possessing the ability to look ahead, organize and coordinate and having plenty of driving force and capacity to lead and ability to supervise and coordinate work and simulates his associates by means of a program of human relation and organization of employees, he would be able to get the best out of his small industrial unit.Gorden and Carson observe production; planning and control involve generally the organization and planning of manufacturing process. Especially it consists of the planning of routing, scheduling, dispatching inspection, and coordination, control of materials, methods machines, tools and operating times. The ultimate objective is the organization of the supply and movement of materials and labour, machines utilization and related activities, in order to bring about the desired manufacturing results in terms of quality, quantity, time and place.Production planning without production control is like a bank without a bank manager, planning initiates action while control is an adjusting process, providingCorrective measures for planned development. Production control regulates andstimulates the orderly how of materials in the manufacturing process from the beginning to the end.

BENEFITS OF PPC

Production planning and control can facilitate the small entrepreneur in the following ways(1) Optimum Utilisation of Capacity:With the help of Production Planning and Control [PPC] the entrepreneur can schedule his tasks and production runs and thereby ensure that his productive capacity does not remain idle and there is no undue queuing up of tasks via proper allocation of tasks to the production facilities. No order goes unattended and no machine remains idle.(2) Inventory control:Proper PPC will help the entrepreneur to resort to just- in- time systems and thereby reduce the overall inventory. It will enable him to ensure that the right supplies are available at the right time.(3) Economy in production time:PPC will help the entrepreneur to reduce the cycle time and increase the turnover via proper scheduling.

(4) Ensure quality:A good PPC will provide for adherence to the quality standards so that quality of output is ensured.To sum up we may say that PPC is of immense value to the entrepreneur in capacity utilization and inventory control. More importantly it improves his response time and quality. As such effective PPC contributes to time, quality and cost parameters of entrepreneurial success.

STEPS OF PRODUCTION PLANNING AND CONTROLProduction Planning and Control (PPC) is a process that comprises the performance of some critical; functions on either side, viz., planning as well as control.

FIG: PPC Process

Production planning: Production planning may be defined as the technique of foreseeing every step in a long series of separate operations, each step to be taken at the right time and in the right place and each operation to be performed in maximum efficiency. It helps entrepreneur to work out the quantity of material manpower, machine and money requires for producing predetermined level of output in given period of time.Routing: Under this, the operations, their path and sequence are established. To perform these operations the proper class of machines and personnel required are also worked out. The main aim of routing is to determine the best and cheapest sequence of operations and to ensure that this sequence is strictly followed. In small enterprises, this job is usually done by entrepreneur himself in a rather adhoc manner. Routing procedure involves following different activities.(1) An analysis of the article to determine what to make and what to buy.(2) To determine the quality and type of material(3) Determining the manufacturing operations and their sequence.(4) A determination of lot sizes(5) Determination of scrap factors

(6) An analysis of cost of the article(7) Organization of production control forms.

Scheduling: It means working out of time that should be required to perform each operation and also the time necessary to perform the entire series as routed, making allowances for all factors concerned. It mainly concerns with time element and priorities of a job. The pattern of scheduling differs from one job to another which is explained as below:Production schedule: The main aim is to schedule that amount of work which can easily be handled by plant and equipment without interference. Its not independent decision as it takes into account following factors.(1) Physical plant facilities of the type required to process the material being scheduled.(2) Personnel who possess the desired skills and experience to operate the equipment and perform the type of work involved.(3) Necessary materials and purchased parts.

Master Schedule: Scheduling usually starts with preparation of master schedule which is weekly or monthly break-down of the production requirement for each product for a definite time period, by having this as a running record of total production requirements the entrepreneur is in better position to shift the production from one product to another as per the changed production requirements. This forms a base for all subsequent scheduling acclivities. A master schedule is followed by operator schedule which fixes total time required to do a piece of work with a given machine or which shows the time required to do each detailed operation of a given job with a given machine or process.

Manufacturing schedule: It is prepared on the basis of type of manufacturing process involved. It is very useful where single or few products are manufactured repeatedly at regular intervals. Thus it would show the required quality of each product and sequence in which the same to be operated Scheduling of Job order manufacturing: Scheduling acquires greater importance in job order manufacturing. This will enable the speedy execution of job at each center point.As far as small scale industry is concerned scheduling is of utmost importance as it brings out efficiency in the operations and s reduces cost price. The small entrepreneur should maintain four types of schedules to have a close scrutiny of all stages namely an enquiry schedule, a production schedule, a shop schedule and an arrears schedule out of above four, a shop schedule is the most important most suited to the needs of small scale industry as it enables a foreman to see at a glance.

1. The total load on any section2. The operational sequence3. The stage, which any job has reached.

Loading: The next step is the execution of the schedule plan as per the route chalked out it includes the assignment of the work to the operators at their machines or work places. So loading determines who will do the work as routing determines where and scheduling determines when it shall be done. Gantt Charts are most commonly used in small industries in order to determine the

existing load and also to foresee how fast a job can be done. The usefulness of their technique lies in the fact that they compare what has been done and what ought to have been done.Most of a small scale enterprise fails due to non-adherence to delivery schedules therefore they can be successful if they have ability to meet delivery order in time which no doubt depends upon production of quality goods in right time. It makes all the more important for entrepreneur to judge ahead of time what should be done, where and when thus to leave nothing to chance once the work has begun.Production control: Production control is the process of planning production in advance of operations, establishing the extract route of each individual item part or assembly, setting, starting and finishing for each important item, assembly or the finishing production and releasing the necessary orders as well as initiating the necessary follow-up to have the smooth function of the enterprise. The production control is of complicated nature in small industries. The production planning and control department can function at its best in small scale unit only when the work manager, the purchase manager, the personnel manager and the financial controller assist in planning production activities. The production controller directly reports to the works manager but in small scale unit, all the three functions namely material control, planning and control are often performed by the entrepreneur himself production control starts with dispatching and ends up with corrective actions.Dispatching: Dispatching involves issue of production orders for starting the operations. Necessary authority and conformation is given for:1. Movement of materials to different workstations.2. Movement of tools and fixtures necessary for each operation.3. Beginning of work on each operation.4. Recording of time and cost involved in each operation.5. Movement of work from one operation to another in accordance with the route sheet.6. Inspecting or supervision of work

Dispatching is an important step as it translates production plans into production.Follow up: Every production program involves determination of the progress of work, removing bottlenecks in the flow of work and ensuring that the productive operations are taking place in accordance with the plans. It spots delays or deviations from the production plans. It helps to reveal detects in routing and scheduling, misunderstanding of orders and instruction, under loading or overloading of work etc. All problems or deviations are investigated and remedial measures are undertaken to ensure the completion of work by the planned date.

Inspection: This is mainly to ensure the quality of goods. It can be required as effective agency of production control.Corrective measures: Corrective action may involve any of those activities of adjusting the route, rescheduling of work changing the workloads, repairs and maintenance of machinery or equipment, control over inventories of the cause of deviation is the poor performance of the employees. Certain personnel decisions like training, transfer, demotion etc. may have to be taken. Alternate methods may be suggested to handle peak loads.

Objectives of production planning and control – 

1. To plan production facilities in the best possible manner along with the proper

systematic planning of production activities.

2. Providing men, machines, materials etc. of right quality, quantity and also providing

them at the right time forms a very important factor.

3. To inform, about the difficulties or the various awkward positions expected to crop up

later, to the management beforehand.

Production planning functions are hierarchic, having different time horizons i.e. the time

period for some of the functions is in years, while for some of the functions, it is in weeks

or days—so the functions of production planning and control can be summarized into two

categories, which are as follows

1. Regular functions – Involves order preparation, process planning or routing concerns,

fixation of method of manufacture, scheduling, dispatching, progressing, expediting

etc.

2. Optimal functions – Involves cost estimation, work measurement, subcontracting,

capacity planning and demand forecasting etc.

TYPES OF PRODUCTION SYSTEM

Broadly one can think of three types of production systems which are mentioned here under: -(a) Continuous production(b) Job or unit production(c) Intermittent production

(a) Continuous production: - It refers to the production of standardized products with a standard set of process and operation sequence in anticipation of demand. It is also known as mass flow production or assembly line production.This system ensures less work in process inventory and high product quality but involves large investment in machinery and equipment. The system is suitable in plants involving large volume and small variety of output e.g. oil refineries reform cement manufacturing etc.

(b) Job or Unit production: - It involves production as per customer's specification each batch or order consists of a small lot of identical products and is different from other batches. The system requires comparatively smaller investment in machines and equipment. It is flexible and

can be adapted to changes in product design and order size without much inconvenience. This system is most suitable where heterogeneous products are produced against specific orders.

(c) Intermittent Production: Under this system the goods are produced partly for inventory and partly for customer's orders. E.g. components are made for inventory but they are combined differently for different customers. . Automobile plants, printing presses, electrical goods plant are examples of this type of manufacturing.

MANUFACTURING PROCESS

The nature of the process of production required by these three different types of production system are distinct and require different conditions for their working.Selection of manufacturing process is also a strategic decision as changes in the same are costly. Therefore the manufacturing process is selected at the stage of planning a business venture. It should meet the basic two objectives i.e. to meet the specification of the final product and to be cost effective.

TYPES OF MANUFACTURING PROCESS

The manufacturing process is classified into four types.(i) Jobbing production(ii) Batch production(iii) Mass or flow production(iv)Process Production

(i) Jobbing Production: - Herein one or few units of the products are produced as per the requirement and specification of the customer. Production is to meet the delivery schedule and costs are fixed prior to the contract.

(ii) Batch Production: - In this, limited quantities of each of the different types of products are manufactured on same set of machines. Different products are produced separately one after the other.

(iii) Mass or flow production: Under this, the production run is conducted on a set of machines arranged according to the sequence of operations. A huge quantity of same product is manufactured at a time and is stocked for sale. Different product will require different manufacturing lines. Since one line can produce only one type of product, this process is also called as line flow.

(iv) Process Production: Under this, the production run is conducted for an indefinite period.

FACTORS AFFECTING THE CHOICE OF MANUFACTURING PROCESS

Following factors need to be considered before making a choice of manufacturing process.a) Effect of volume/variety: This is one of the major considerations in selection of manufacturing process. When the volume is low and variety is high, intermittent process is most suitable and with increase in volume and reduction in variety continuous process become suitable. The following figure indicates the choice of process as a function of repetitiveness. Degree of repetitiveness is determined by dividing volume of goods by variety.

b) Capacity of the plant: Projected sales volume is the key factor to make a choice between batch and line process. In case of line process, fixed costs are substantially higher than variable costs. The reverse is true for batch process thus at low volume it would be cheaper to install and maintain a batch process and line process becomes economical at higher volumes.

c) Lead time: - The continuous process normally yields faster deliveries as compared to batch process. Therefore lead-time and level of competition certainly influence the choice of production process.

d) Flexibility and Efficiency: - The manufacturing process needs to be flexible enough to adapt contemplated changes and volume of production should be large enough to lower costs.Hence it is very important for entrepreneur to consider all above mentioned factors before taking a decision regarding the type of manufacturing process to be adopted as for as SSI are concerned they usually adopt batch processes due to low investment.

MATERIALS MANAGEMENT

Importance of materials management :-

1. Materials input is very important as excess material as inventory causes costs to the company

and shortage of material results into stoppage of conversion process and subsequently shortage

of finished goods leading to customer dissatisfaction

2. Out of 5Ms, that are inputs to a conversion process, material is substantial in terms of its

contribution to product cost, and current assets.

3. 51.1% of product cost is on account of materials. Hence the largest contributor to product cost.

This marks out materials function as the largest potential avenue for productivity improvement.

4. Materials account for 70% to 80% of working capital. Effective and efficient management of

materials can reduce substantial burden on the finances of company.

5. Accounts payable are mostly to materials suppliers. Hence the importance in management of

finance of the company.

6. Quality of the Input and product quality: When the companies become leaner and leaner, it is

crucial that inputs should remain in the plant only as long as the Through Put Time demands and

the output product should be Right First Time. The quality of inputs plays a vital role in this

situation.

7. Management of materials is crucial in a Just In Time company. Production process needs very

strong materials management support to gear up to face challenges of current market

8. Materials management provides information about availability of new products and services

in the market which leads to cost efficient changes in the process

Types of materials :-

Refer to types of inventory.

Functions of Materials Management :-

[What is a function? Every person , organization or a distinct part of an

organization has to perform a set of tasks in order to deliver customer expectations

satisfactorily. These sets of tasks are called functions of that particular entity.]

1. Materials Planning & Control –

This is the primary function of Materials Management. The market forecast is

converted into production schedules by production planning and control. Materials

management prepares the materials plan to meet the production schedule. The plan is

then implemented and controlled.

2. Procurement –

Procurement function begins with sourcing the supply after short listing suppliers. An

effective method is to rate the vendors on the basis of performance and choose the best.

Purchase order is placed on the source and the material is procured from the source.

Procurement activity includes preparation placement of purchase order, follow up,

transportation and handling.

3. Handling –

The material which reaches the company premise is to be unloaded, moved and

positioned as per the storage plan .

4. Storage & Preservation –

The procured material is to be stored and preserved against internal and external

deterioration and theft. Against the authorized demand the material from the store is

retrieved and issued.

5. Inventory control –

Inventory control function controls the inventory levels to ensure shortage free and

excess free stock to check the costs and ensure customer satisfaction

6. Vendor development –

The company makes the chosen vendors effective and efficient by providing

necessary inputs of training and information. The suppliers systems are audited to ensure

adherence. A good vendor is an asset as he makes his customer more effective and

efficient

7. Vendor rating –

Vendor rating is used as a tool for narrowing down the supplier base for productive

management of materials function. The same system is used continuously to assess

strengths and weaknesses of short listed vendors for their effective development.

8. Waste control –

Procuring standard material and continuously trying to improve yield is waste

reduction and control function. When a product is processed two types of wastes are

generated. One type of waste is called as standard scrap. This is accepted as unavoidable.

Product that is not right first time is scrap and thereby waste. Non moving obsolete

material is another waste that cripples organization. Material management should address

these wastes and not only should control but reduce the wastes.

9. Value Analysis –

Continuously trying to improve the value of the product mainly by material

substitution is a function of the materials management.

Definition and scope :-

Definition –

Coordination and planning of all functions for controlling materials in an optimum

manner to meet customer expectations at minimum cost.

Scope -

Materials management works closely with Production, Finance, Engineering and

Quality control in the process of performing the functions to meet the objectives of

customer satisfaction.

Materials management and Production –

As we saw earlier JIT system needs very reliable procurement and delivery

systems for inputs and outputs. Production department is the internal customer for

Materials management. Hence very close interaction with production department is

primary to meet internal customer expectations and customer delight. Only this ensures

unfailing satisfaction and delight of the external customer.

Scope of materials management function decisions includes suppliers,

subcontractors, production support warehouses, transportation service providers and

internal departments subordinate to the function.

Importance and scope of material handling

Material handling in addition to handling of materials in an industry is also significant in terms

of costs in overall operations because it is something that is quite common to all manufacturers.

But when once its nature is exposed it may be difficult to overlook it as a major potential of

effecting cost reduction. Materials handling problems assume importance due to a number of

factors.

1. Various studies made in different industries indicate that the cost of handling alone accounts

for about 20-25% of total manufacturing costs. What the cost in any particular industry may be is

largely the result of the methods and equipment used.

2. It is usually found that each part is handled 50-60 times while it passes through the chain of

manufacture. Expressed in tons, it is found that on an average 59 tons of material are handled for

every ton of finished product.

3. Increased safety — Material handling account for 21% of the permanent disabilities and over

25% of the temporary disabilities.

4. Reduce damage claims — Modern handling methods have paid off in the reduction of damage

in parts and materials.

5. Ease drudgery for men — Most of the jobs done by man handling are mere drudgery for men

in the first place. Some of the mechanized handling jobs being done today would be a sheer

physical impossibility for manual labor within the present economic frame work.

6. The field of materials handling remains still to be fully to be fully explored. Material handling

techniques are not only industry biggest opportunity — they are industry biggest necessity.

Competition is beginning to force this new technology upon industry.

Scope of Material handling:

Materials handling is spread over to many different industries and fields of engineering,

Manufacturing

Manufacturing is the largest single field for applications of material handling where a wide range

of materials handling equipments are used.

Materials handling problems involve surveys, plant and equipment layouts, routing, packaging

and storage of materials.

Processing

Processing requires handling of bulk materials (like gases, liquids, semi-liquids and bulk solids).

Special handling problems affect the plant design.

Construction

Construction needs proper receiving, sorting, storing and moving materials. In heavy

construction projects, there is now a choice of special methods and equipments of materials

handling. It influences the civil engineers in project planning.

Mining

In both underground mines and open pit operations, there is now a variety of equipment for

extraction, handling and transportation of coal and ore. Cost of extracting the materials has been

reduced to the minimum.

Power

Materials handling equipment for handling fuel and ash are needed.

Machine Tools

The design of many processing machines is influenced by the need for integrating various

material handling features or attachments to modern machine mechanisms.

Truck building

The automotive engineer develops trucks and trailer as efficient materials handling vehicles,

designed for speedy loading and unloading, ensure cargo is secured properly, and safe

transportation of a variety of materials.

Rail road car builders

The above are involved in improved rail road cars, development of terminal equipment,

improvement in materials handling procedure for loading and securing freight and transferring or

unloading it at terminals.

Ship building

New handling devices and improved kinds of marine carriers are manufactured in this industry.

Aircraft

Better cargo and storage methods for air transport where materials handling is concerned.

PURCHASING MANAGEMENT

Most major companies and even some government organizations have a purchasing or

procurement department as part of everyday operations. These departments provide a service that

is the backbone of many manufacturing, retail, military and other industrial organizations. Many

individuals, even some who work for these companies, are unaware of what the purchasing

department does, why it exists or what purposes it serves. To understand better what the role of

the purchasing department is, consider some functions it performs.

Procuring Materials

One role of the purchasing department is to procure all necessary materials needed for production or daily operation of the company or government organization. For a manufacturing company, this might include raw materials such as iron, steel, aluminum or plastics, but it also might include tools, machinery, delivery trucks or even the office supplies needed for the secretaries and sales team. In a retail environment, the purchasing department makes sure there is always sufficient product on the shelves or in the warehouses to keep the customers happy and keep the store well-stocked. With a small business, it is especially important to keep inventory ordering at a reasonable level; investing large amounts of capital in excess stock could result in storage problems and in a shortage of capital for other expenditures such as advertising or research and development. Purchasing also oversees all of the vendors that supply a company with the items it needs to operate properly.

Evaluating Price

A purchasing department also is charged with continuously evaluating whether it is receiving these materials at the best possible price in order to maximize profitability. This can be challenging for a small business that may purchase in lesser quantities than a larger vendor and which thus may not receive the same type of bulk discounts. A purchasing department in a small business needs to shop around to find the best vendors at the most reasonable prices for the company's particular size orders. Purchasing department staff may communicate with alternate vendors, negotiate better pricing for bulk orders or investigate the possibility of procuring cheaper materials from alternative sources as part of their daily activities.

Paperwork and Accounting

Purchasing departments handle all of the paperwork involved with purchasing and delivery of supplies and materials. Purchasing ensures timely delivery of materials from vendors, generates and tracks purchase orders and works alongside the receiving department and the accounts payable department to ensure that promised deliveries were received in full and are being paid for on time. In a small business, this means working closely with the accounting department to ensure that there is sufficient capital to buy the items purchased and that cash is flowing smoothly and all payments are made on time.

Policy Compliance

The purchasing department also must ensure that it is complying with all company policies. For example, in a small business, individual staff members may communicate with the purchasing department about purchasing needs for things such as office supplies or computers. Before making a purchase, the purchasing department must ensure that it heeds the proper protocols for

purchase and budget approval and must ensure that any items are purchased in accordance with the overall purchasing policy of the organization.

FUNCTIONS & RESPONSIBILITIES OF PURCHASE DEPARTMENT

OBJECTIVES

The following are the objectives of purchasing

1. To maintain uninterrupted flow of materials to support the production schedules.

2. To procure materials economically at a cost consistent with the quality and service required. However, generally all purchases may be attempted at the lowest cost.

3. To provide the necessary expertise, advice, information to the Curators and Education Officers with regard to the best quality of material available in the market, supplier’s capability and performance etc.

4. To develop and maintain good buyer-seller relationship.

5. To promote source development.

6. To maintain NCSM’s reputation and credibility in the market by fair dealings and prompt payments.

FUNCTIONS

The main functions of the Purchase Department are defined as follows:

1. Procurement of stores through indigenous and foreign sources as required in accordance with the rules in force.

2. Checking of requisitions/purchase indents.

3. Selection of suppliers for issue of enquiries.

4. Issuing enquiries/tenders and obtaining quotations.

5. Analysing quotations and bids etc., and preparation of comparative statement (quotation charts).

6. Consultation with the Indentor for selection and approval of quotations and with Accounts Officer for pre-audit.

7. Negotiating contracts.

8. Checking legal conditions of contracts. Consulting Administrative Officer or Secretary, NCSM – where necessary.

9. Issue of Purchase Orders.

10. Follow-up of purchase orders for delivery in due time

11. Verification and passing of suppliers’ bills to see that payments are made promptly.

12. Correspondence and dealing with suppliers, carriers etc., regarding shortages, rejections etc., reported by the Stores Department.

13. Maintenance of purchase records.

14. Maintenance of progressive expenditure statement, sub-head wise.

15. Maintenance of vendor performance records/data.

16. Arrangement for Insurance Surveys, as and when necessary.

STORES MANAGEMENT

We are quite familiar with word store and its utility. Normally it is assumed that store is a place where excess material is kept which will be used as and when required. Loss of items, deterioration, obsolescence and inadequacy (insufficiency / shortage) [of what is stored to what is needed] are treated as ‘part of life’.

Modern scientific management has no place for such defects built into the system as ‘part of life’. As the students of management, we have to constantly look for Non Value Activities in the system and eliminate (get rid off / reduce / remove) them totally or minimize them. Let us look at stores as a function of modern management.

Objectives of store as a management function :- In the chain of internal customers and suppliers, stores have several internal customers.

As a matter of fact, all functions of management are internal customers to stores. Customers as

usual expect Quality Cost and Delivery from every supplier. Stores also have to deliver these

customer expectations. In the process of discharging this obligation, Stores perform some

activities that are functions of Stores.

Functions of stores -1. Receipt2. Storage 3. Retrieval4. Issue5. Records6. Housekeeping7. Control8. Surplus management

9. Verification10. Interaction & coordination

1. Receipt: It refers to the flow diagramme. Any item of goods or material that enters the organization always enters through the stores. Similarly, every item unless specifically excluded, has to leave through the store. Stores is the final account keeper of all materials. Material sent by any supplier after the security clearance comes to the stores. Stores check the document carried by the carrier, known as Delivery Challan, against the copy of the Purchase Order placed on the supplier by the organization. Once the adequacy is established and quantity is verified, the material is sent for testing for quality parameters. Sometimes quality control teats are elaborate and time consuming. If the policy of receipt is to unload the material subject to quality control acceptance, it is cleared for unloading. Unloaded material is kept on the hold if it not yet cleared by quality control department. If the material is rejected it is sent back to the supplier after clear documentation.

2. Storage: Once the quality control department, as per the quality plan in the quality system, approves

the unloaded material it is moved to a specific place in the stores layout. The material is so stored that it becomes easy to retrieve and issue subsequently. Storage should also ensure protection against deterioration, damage and pilferage. Detailed system is adopted for location and labeling of items while in storage. Storage plan is made keeping in mind,

nature of the product- physical state, toxicity, inflammability and other hazards volume and weight- heavy or light movement frequency- fast moving or slow moving point of use .

3. Retrieval: Easy and quick retrievability of items that are demanded by the internal customers. Easy

identification, maximum space utilization and minimum handling are key factors to retrieval functions. It is common knowledge in many of the companies that after hours of searching for the item is declared to be out of stock. This causes hold up of production process and avoidable

urgent purchase of out of stock material. This function takes place as per established retrieval system.

4. Issue: It refers to the flow diag., fulfilling customer demand for the item in minimum time, keeping

quality high and cost minimum is issue. An internal customer doesn’t pay the price but he has to fulfill requirement of authorization for the demand. A duly authorized indent or requisition for the item is the key

5. Records: It is maintaining records of receipt and issue. Updating the stock levels as per movement of

materials. Basic records of store are bin card and stock register. Bin card is placed on the bin in which items are stored. This gives information about receipt, issue and balance. Stock register gives all the information in the bin card and also the value.

6. Housekeeping: Maintenance of spic and span cleanliness in the store and ensuring principle of Place for Everything and Everything in its place is fully implemented. Good housekeeping ensures satisfactory work practices

7. Control: Taking measures to ensure material plan is being adhered to. Any changes in consumption

pattern or replenishment pattern are closely monitored for corrective action. Material movement is watched to identify nonmoving material for disposal. Effective control puts into effect management objective of ‘no shortage and no excess’.

8. Surplus management: Effective disposal system for unneeded material to reduce inventory cost and proactive

measures to eliminate deterioration and obsolescence.

Ref. To the note on obsolete, surplus and scrap management.

9. Verification: Stock verification to eliminate gap between information and physical stock. In stores some

items are maintained as stock items. The stores triggers the procurement cycle for such items when a predetermined reorder level is reached. Hence correct stock position through verification is critical to ensure ‘no shortage and no excess’ for the item.

10. Interaction & coordination: Very close interaction between Purchasing, production, quality control and engineering

functions is obviously needed in the discharge of the functions discussed so far. It also becomes necessary to coordinate the flow of material samples and information through a network of departments for performance of stores functions. Besides, every management function being an internal customer interaction is very important.

Stores organization :- Store is a function of materials management in an organization. Hence it is generally

found that stores function reports to the materials manager. But in some situations stores function reports to the production function.

The earlier type of arrangement is based on the concept that stores along with other

functions of materials management can be integrated into the materials organization. This will

stream line all materials management functions effectively.

The other arrangement is leaning on the fact that production function is very closely linked to stores. And a common command can reduce cost and increase effectiveness. And also keep material accounting outside the scope of procurement function.

Centralized or decentralized stores organization - Centralized stores concept is to store all items at a central place and control materials

movement from this central place. Whereas decentralization concept is moving the material to the respective consumer function or directly to the points of use.

Features of centralized stores organization - 1. Effective supervision and control.2. Issue at single point reduces cost of issue3. Reduced personnel requirement4. Efficient layout for stores5. Better handling technology6. Better inventory checks7. Maintenance of optimum stores8. Fewer redundant and obsolete items9. Elaborate documentation

Features of decentralized stores organization - 1. Reduced handling2. Customer friendly3. Diluted risk of fire4. Fewer production stoppages5. Visual management is easier