ERP Functions: Supply Chain Management 5

With the preparation for the  blossom Mansoon we will continue the Chain i.e Supply Chain Management (SCM) . Last week we have seen how the Materials are received and stored in Stores. This week we shall see how the items are issued to the required departments and returned back.

We have seen in the material requirement section that the materials in the stores of three kind, 

1. Production Based

2. Min-Reorder-Max Level Based

3. Requirement Based

Production Based direct materials are in most of the companies is directly issued to Production department. And from the production department daily consumption of the materials in production is recorded as consumption of the material. In some of the industries these materials are issued on the basis of daily production plan.

The other two types of materials in the stores i.e. Min-Reorder-Max Level and Requirement Based materials are issued to the requirement department based on the requisition from the user department. In some industries Min-Max level materials are issued based on production plan or in bulk and then tracking day wise consumption like Direct Raw Materials. 

The department which requires the material will submit a Store Requisition generally called as Store Indent to the stores. Stores department person look for the stock of the material in the store, if the stock is available and is not assigned to anyone else then the material is issued against the Store Indent. If the available stock of the material is less than the Indent required quantity then Store will raise Purchase Requisition to Purchase department to procure the material.

An Issue Slip or Material Issue Note is generated for all the issues of the materials from the stores. This is the Business document for consumption of the materials in the industry.

All the materials issued to the department meant for complete consumption of the material. However there will be cases where due to production reduction, break down material issued may not be used completely in the department. In some cases the defect in the material will be known after consumption. So in these cases materials which are not required for usage in the department is to return back to the Stores. This is done with the business document called Material Return Note.

This is how the materials are issued to the required departments and returned from them. Further we will see other functions of stores like Subcontracting in the coming week. Keep watch this space....