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STORE ADMINISTRATION IN PUBLIC SECTOR
CHAPTER ONE
INTRODUCTION
Stores have been considered as the livelihood of industries in both private and public sectors of the economy. Without stores, there could be neither production nor operation of any kind. Manufacturers are constantly conscious of the significant role of stores with regards to availability of raw materials and need for effective warehousing of their finished products. Occasional stock-outs can lead to production stoppage and hence a substantial loss of anticipated profits. Cater R. J. in his book “Store Management and related operation” defined stores as a small/large building or an area (stockyard) in which all kinds of materials tools, spares and so on needed for production, distribution, maintenance, packing, servicing are stored until when required by the users or consumers.
Isola, O. T. define the term stores as the building, or room or place where materials are kept. Apart from the fact that store is used to refer to buildings holding goods, it may be used to prescribe goods held in such a store house or stockyard. The goods may include finished goods awaiting dispatch as well as partly finished goods (W.I.P) awaiting completion (inventory management). In “management of stores Activities” store management is defined as the act of keeping goods and materials, which have been produced by an individual or group, making it available as it when needed so that the objective can be met.
Aremu S. S. in his book “Modern store Administration” defined store keeping as an act or process of receiving, inspecting, recording, arranging and storing all kinds of materials, tolls, stores, equipment etc, needed for production, distribution, maintenance, packing servicing until when required by the users or consumers. The above definition shows that store – keeping should contribute directly to profitability and be concerned with lead time, storage cost, acquision cost, material handling, work study in store, preservation, packaging, pre-selection and issue packing and dispatch. This chapter essentially discusses the conceptual frame works, purpose of study, store functions in an organisation, types of stores, stores organisation and relationship between stores and other major organisation departments.
1.1 PURPOSE OF THE STUDY
The reason behind this study is to enlight both the public and private sectors” store personnel on how to achieve adequate and proper store management. One of the major problem of this great country is material procurement which lack adequate store management and organisation.
1.2 STORES FUNCTIONS IN AN ORGANISATION
Store provides its function to all other departments within same industry especially the operative department.
(a) Store Controls in most industries upward 50% of a working capital.
(b) Because it controls large amount of working capital, its inefficiency will cause an organisation to liquidate (i.e run out of cash).
(c) Proper store-keeping is a safeguard against deterioration obsolescence, obsolete materials and theft, and fraud.
(d) Efficiency system of stores accounting helps in the preparation of dependable budgetary control for the organisation.
(e) Immediate provision of required materials, on presenting proper authorized documents.
(f) Determination of movement of materials is achieved i.e issues and records.
(h) Security of stores is ensured.
1.3 TYPES OF STORES
ORDINARY STORE:- This is a store also known as goods Warehouse may belong to the manufacturer or wholesaler or rented by him. It is where the manufacturer stores his goods until they are needed and sold to the retailers or their agents.
BONDED STORE:- It is a place where government keeps goods whose owner have not paid there required duties. As the name suggests, it is hired from individuals who sign bond with the government not to release the goods until government gives them an indication that the duties on them have been paid.
STATE WAREHOUSE/STORE:- Also known as the Queen Warehouse, especially in Britain and other countries that are under them, is a place where goods that are not allowed to enter a country also known as contraband, seized by board of customs and Excise are kept until they are sold on auction to members of the public. This store building is owned by the government and this is why it is known as state warehouse in Republic such as Nigeria and others. According to Bosler W. Robert (1970, P.88) presented five (5) classification of store rooms according to the types of materials stored. These in cases:
1. DIRECT MATERIAL STORES:- This houses direct materials purchase in bulk that may be used intermittently and generally stored in protected areas to ensure adequate inventories are available at all time. Materials in protected stores are issued only on the authority of an approved.
(a) Requisition form
(b) Product order, or
(c) Bill of Material
Specialized materials used on high-production operating and on standardizes product are frequently ordered for delivery according to the production schedule and are delivered directly to operation area.
2. INDIRECT MATERIALS STORE:- This type are usually used for indirect materials such as oils, solvents and other flammables, which often-times are stored in fire-protected areas away from the production operation area.
3. TOOLS, DIE, JIG AND FIXTURE CRIBS: - Lastly tools, gages and inspection instruments are kept in protected crib areas. NOTE: (A crib is a metal box, metal container, or small building for storing).
4. MAINTENANCE AND JANITORIAL SUPPLY CRIBS:- This is a separate storage that do not occupy potentially valuable manufacturing space storing maintenance and janitor supplies, which differ considerably from direct and indirect material store.
5. OFFICE AND CLERICAL SUPPLIES:- These supplies are usually kept in one central storehouse from which departmental requirements can be not drawn as required.
1.4 STORES ORGANISATION
Organisation, as an element of management is concerned with arrangement of activities or responsibilities in such a manner that enterprises predetermined aims and objectives are achieved to organizational structure. It is good to note that, in order to accomplish any goal, activities must be grouped logically or reasonably and authority should as well be provided so that conflict of actions can be avoided. Stores organisation involves designing stores to best facilities goal accomplishment and establish relationships among the various parts of the stores. The position of store keeping activities in the organisation structure varies considerably from company to company depending upon the following factors;
(i) The size of the product plant
(ii) The type and size of product produced, and
(iii) The cost of raw material and finished materials parts, tools, Jigs, dies and fixtures.
The store function may operated from a single office run by the store keeper in a small firm, but, in a large organisation, it is necessary to apportion (share, or divide) the various duties to separate section.
Hence, there are two main types of stores organisation;
(a) Internal Organisation
(b) External Organisation
INTERNAL ORGANISATION: Internal organisation is must, where;
(1) The organisation is large or fairly large
(2) The organisation is not production oriented
(3) That has no branch elsewhere.
A very good example of the type of internal store organisation is that of servicing organisation i.e. institution. Such organisation may include:-
Identification or Vocabulary Section Storehouse function Stockyard Section Record Section Account Section Standardization/Inspection section Stock Control Section
EXTERNAL SECTION: The store external organisatioin is characterized with:
i. Large organisation
ii. Production oriented concern
iii. With many location / Branches
The external organisation could then be subdivided into three;
(a) Central Store
(b) Sub-stores and
(c) Departmental Stores
TYPICAL STORES ORGANISATION
