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Materials - Types of Stores

        In industries, about 80-90% of capital may be invested in the materials. So, severe losses may have to be suffered by the industries, unless the stores are efficiently managed. The main objectives that must be fulfilled while managing the stores efficiently are mentioned below:

  1. Smoothly receiving & issuing materials.

  2. To maintain stocks at desired levels.

  3. To protect stock from pilferage, theft, evaporation, deterioration, sublimation etc.

 Depending on the type of industry, size of the business, location & policy of the management, stores may be of three types:

  1. Centralized stores i.e. materials are supplied to all departments by one store

  2. Decentralized stores i.e. for each department there is a separate store

  3. Centralized stores with sub-stores, i.e. there is one central store which holds the stocks in general with separate sub stores for each department which gets supply from the central stores.

From the receiving department, the materials are received by the stores & then materials are supplied to the production & service departments. So near the receiving department should be the location of the store & at the same time, it should also be near the departments which requires supply from it. For the location & layout of stores the factors to be considered are: - (i) highest efficiency, (ii) lowest cost of internal transport, & (iii) easy accessibility to all departments which require materials.

Merits & demerits of Centralized Store:

 Merits:

  1. Better control & layout.

  2. Technical skill is high & supervision is better.

  3. Less storage space is needed because stocks should be kept as low as possible.

  4. Replenishment should be quicker.

  5. As maintenance of record of same material need not be required in different departments, less clerical work, stationery & other costs is involved.

  6. For stores audit there is better facility.

  7. Stock taking is easier.

  8. Insurance cost is lower etc.

Demerits:

  1. Cost of internal transport is higher.

  2. In the flow of materials to production, possibility of bottle-neck is there.

  3. Risk of obsolescence is greater.

  4. All the production departments are affected by any disturbance.

Merits & demerits of Decentralized Store:

Merits:

  1. Cost of internal transport is avoided.

  2. Production is not affected by the disturbance in the central store.

  3. Delay in getting the issues can be avoided.

  4. Chance of obsolescence is lower.

Demerits:

  1. Cost of organization & space is increased by separate cost for each department.

  2. Departmental heads, in addition to their normal work, will have to maintain the store.

  3. Technical skill obtainable is less.

Centralized Store with Sub-stores:

 In this case, near the receiving department, is located a central store & each department has a sub store with it. From the central store, the materials are received by the sub-store on imprest system & issues to the department are made.

When, from the central store, work sites are fairly distant, this system is essential. Bottlenecks in the supply of materials for production are avoided by the system. However, the system is costlier than the centralized store.

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