List of documents to be maintain at construction project
CHAPTER 11. STORES MANAGEMENT
11.1 Definition of Material Management
Materials management is that process of management which co-ordinates, supervises and executes the tasks associated with the flow of materials to, through and out of an organization in an integrated fashion.
11.2 AIM OF MATERIAL MANAGEMENT (Objective)
11.3 Scope of Material Management
Procurement (including Planning & Scheduling)
Inspection & QC
Stores & Inventory Control
Transportation & handling
Distribution (logistics)
11.4 Objective of material management
Primary
• Good supplier relations
• Development of personnel
• Good information system
• New materials & products
• Favorable reciprocal relationships
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11.5 PURPOSE OF MATERIAL MANAGEMENT
• To gain economy in purchasing
• To satisfy the demand during period of replenishment
• To carry reserve stock to avoid stock out
• To stabilize fluctuations in consumption
• To provide reasonable level of client services
11.6 CLASSIFICATION OF MATERIALS
11.6.1 Why should we classify materials?
We deal with hundreds of different types of inventory items. With so many items, complexity of managing the process increases.
To manage these inventories effectively grouping is essential.
Grouping together of materials of technical affinity is known as classification.
11.6.2 Classification can be based on various attributes:
By size
Is a basic analytical management tool
It enables management to place efforts where the results will be greatest.
This technique is popularly known as Always Better Control.
This technique tries to analyze the distribution of any characteristic by money value of importance in order to determine its priority.
11.6.4 Principles of ABC analysis:
1. The analysis does not depend upon the unit cost of the items but only on its annual consumption value.
2. It is independent of the importance of the item.
3. The limits of ABC analysis are not uniform but depend upon the size of the undertaking, its inventory as well as the number of items controlled.
Nicmar Hyderabad. Page 140 Applications of this technique
For:
This technique is based on Pareto’s Law ( an Italian Economist) which states the rule of 80:20.
Based on the principle that:
- FEW ARE VITAL - MANY ARE TRIVIAL
This aims to direct efforts where results are important.
“Use of ABC analysis”
Helps in rationalizing the number of orders and reduce the overall inventory even though overall purchase orders are the same, the average inventory can be reduced substantially.
Steps for classifying the items into A,B,C categories.
1. List out all the items in the inventory.
2. Ascertain the unit cost of each of the items.
3. Ascertain the number of units issued in a year. Assumption: Issues and consumption are the same.
4. To obtain the annual consumption value multiply the unit cost of each item with the number of units issued in a year.
5. Sort the list of consumption value of each item in the descending order.
6. Starting at the top of the list compute the cumulative total of the rupee consumption value.
7. Compute for each item the cumulative percentages for the item count and cumulative annual value.
This is based on cost criteria.
It helps to exercise selective control when confronted with large number of items it rationalizes the number of orders, number of items & reduce the inventory.
About 10 % of materials consume 70 % of resources About 20 % of materials consume 20 % of resources About 70 % of materials consume 10 % of resources
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11.7 PURCHASING
What is purchasing? : Purchasing is a service function Definition
Purchasing implies the act of exchange of goods and services for money.
OR
Purchasing is the process of buying - learning a need , selecting a supplier , negotiating a price and fixing the terms of delivery and payment.
11.7.1 Basic objectives of Purchasing
1. To maintain continuity of supply to support construction schedules.
2. To ensure minimum investment in stores and materials inventory, consistent with supply and economy.
3. To avoid duplication of purchases and costly delays.
4. To maintain proper quality standards based on suitability criteria.
5. To procure materials at lowest possible cost, consistent with quality and service requirement.
6. To maintain company‟s competitive position in the market by controlling material costs.
11.7.2 Purchase Procedure
1. Purchase Requisition or Indent from user.
2. Verification of current stock levels by the Stores department.
3. Assessing exact procurement required with detailed specifications.
4. Enquiry / RFQ.
5. Evaluation of Bids received preparation of comparative statement.
6. Negotiations.
7. Placing of the Purchase Order.
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11.7.3 Requisition/ indent – key information check list 1. Date & time
2. Material Description
3. Detailed specification, standards or make.
4. Quantity
5. Suggested supplier 6. Purpose
7. Approximate date when required 8. Originating department
9. Authorisation
11.7.4 Purchase Order - definition
A purchase order is a buyer-generated document that authorizes a purchase transaction.
It sets forth the descriptions, quantities, prices, discounts, payment terms, date of performance or shipment, other associated terms and conditions, and identifies a specific seller.
When accepted by the seller, it becomes a contract binding on both parties. Also called order.
11.7.5 Purchase Order – key information check list 1. P.O. reference no.
2. Date 3. No. of copies
4. Quotation / Offer for supply ref.
5. Description of material
6. Detailed specification – detailed description of characteristics, blue print, drawing, market grades, brand names or trade names, commercial standards, preference characteristics.
7. Quantity required.
8. Delivery schedule.
9. Price and discounts + taxes and duties.
10. Packing Instructions.
11. Shipping instructions.
12. Place of delivery (Location where material required).
13. Detailed terms and conditions - vendor rating.
14. Payment terms.
15. Price variation / escalation or reduction.
16. Exit terms – order cancellation
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11.8 STORES FUNCTIONS
To receive goods – raw materials, components, tools & equipments and other items and account for them.
To provide adequate and proper storage and preservation of the goods in store.
To meet the demands of the consuming departments.
To minimize obsolescence, surplus and scrap.
To highlight stock accumulation, discrepancies, abnormal consumption and effect control measures.
To ensure good housekeeping
11.8.1 Design factors for good stores management
Location – ideally should be as near to the point of consumption as possible so as to reduce handling and to have timely despatch.
Layout – should ensure easy movement of materials. Ensure easy retrieval, ergonomically.
Sufficient space (for men and material handling equipment) shelves, racks, pallets.
Proper preservation – rain, light, heat, cold storage, air conditioning.
Lighting – adequate lighting is essential
Safety - training safety consciousness, safety appliances, Personal Protective Equipment (PPE)
good house keeping
keep stores equipment in good order, forklifts, cranes, trolleys, conveyors.
fire fighting equipment
toilets
11.8.2 Specific Functions of a Store.