ERP Functions: Supply Chain Management 2

Last week we initiated the Supply Chain Management (SCM) with Purchase Department. We understood that Purchase department functions are exactly same as Sales/Marketing functions in reverse way. 

In this blog lets move on to Functions of Stores. Stores by simple meaning is the place in which all the materials supplied to the industry is stored and maintained. By stores only the user departments have to do the material transactions i.e. getting the materials, returning back the materials.

Stores is heart of any industry as it provides the required materials to various departments for their functions. Lets see the flow and functions of Stores.

Before to get into the flow we will look into the methods of procurement of materials to an industry. Basically we can divide the procurement into three categories

1. Based on Production Requirement (Raw Materials, Important Consumables for direct production)

2. Based on Min-Re Order-Max level of the Materials (Consumables, Tools)

3. Based on Requirement (Special Consumables, Spares, Capital Machinery Parts)

We know already that Production Requirement is handled by Planning department which gives the requirements for the production directly to purchase department for purchasing the required material.

The other two types of materials are to be made available to the user departments from stores itself. So the requisition for the material are to be generated from Stores to the Purchase Department for the purchase of the materials. This document is called as Purchase Indent (Purchase Requisition).

For the 2nd category items once the stock of the item reaches the Re-Order Level, Stores has to raise the Purchase Indent for the material. The Qty in the Purchase requisition for the material is Max. Level - Current Stock. 

For the 3rd category items user departments has to request for the material they needed to the Stores Department. This business document is called as Store Indent (Store Requisition). Based on the Store Indent, if the material required is already in the stock of stores then that material will be issued to the user department, Else Purchase Indent is raised to the Purchase department. However in some companies user department themselves has to raise the Purchase Indent for their requirement if the stock is not there in the stores. This is mainly done to track the department-wise requirement and consumption of materials.

These are the business standard methods of material coming into the stores. Next week we shall study how the material is issued to the departments, return of materials from the departments and other concepts of Stores. 

Keep Looking this space..