CHAPTER FIVE

STORAGE

5.1 Storage Functions and Responsibilities

Materials and supplies constitute the most important assets in most of the business enterprises.
The success of the business, besides other factors, depends to a great extent on the efficient
storage and material control. Material pilferage, deterioration of materials and careless handling
of stores lead to reduced profits. Even losses can be incurred by concerns in which the store-
room is available to all employees without check as to the qualities and purpose for which
materials are to be used. Store may be defined as: An area set aside into which all the items and
materials required for production and/or for sale/distribution are received, where they are
housed for safekeeping, and from which they will be issued as required.

Stock items in the store of an enterprise could include any or all of:
Raw materials
Components (parts)
Spare parts
partly finished work (sub-assemblies, work in progress)
Materials for maintenance
Consumables
Tools, jigs and gauges
Finished products (of the enterprise or purchased from others) ready for sale
Packaging materials
Scrap and by-products of production
Damaged substandard or obsolete items and others.

Some items and materials might be solid, others might be liquid, and yet others might be
gaseous. We shall refer to all things held in Stores as ‘items’ or ‘stock items’ or ‘materials’ or
‘stocks’.

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5.2 The Importance of Efficient Stores Management
In an enterprise with a small quantity of stock, one person might be placed in charge of it, if the
owner/manager does not look after it himself/herself. Where the volume of stock is too large to
be handled on a part-time basis, one or more storekeepers will be required. Enterprises with
large quantities of stock must employ trained stores personnel (storekeepers, clerks, etc) under
the control of a Store Manager (who might go by the designation of Head or Chief Storekeeper,
Stock Controller, Stores Administrator, or a similar title). It is impossible to state at what stage a
Store Manager will be appointed by a particular enterprise, as circumstances and sizes vary so
greatly. But whatever its size and the volume of its stocks, the success of the enterprise can
depend to a large extent on the efficient management of its store and stocks. Let us now examine
why that is so.

All the possessions of an enterprise- that is, what it owns- are called its ‘assets’. Frequently the
value of the stocks of goods and/or materials held in its store is as great as- if not greater than-
the total value of all its other possessions- example, land and/or buildings, plant, machinery,
motor vehicles, equipment, etc., and, of course, money and investments- added together! The
items and/or materials in the store cost money; if, through bad Stores Management, there are too
many held in the store or if the wrong items or materials are being held, money will be “tied up”
- money which might be required to buy other, needed items and/or materials or to pay the many
expenses involved in running the enterprise. Conversely, if poor stores management has led to
shortages of needed items and materials, there will be hold-ups and interruptions in production,
or losses of production and/or losses of sales to customers and, indeed, losses of the customers
themselves, and losses of profits which can in turn lead to job losses and- in extreme cases- to
the collapse of the enterprise. If items in the store are lost, stolen or damaged in any way, the
enterprise loses money. And it costs money to run the store- on building maintenance and/or
rent, on salaries of stores personnel, on containers and equipment, on heating or cooling, on
lighting and power, etc. – and the enterprise must receive a “return” from its expenditure, in
terms of efficiency, particularly as its Stores is “nonproductive”.

Therefore, the stores management should ensure:

That the required material never goes out of stock ;
That no material is available in (much) excess than required

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 To purchase materials on the principle of economic order quantity so that the associated
costs can be minimized; and
To protect stores against damage, theft, etc.

This can be achieved by the following:

A proper purchasing practice (i.e., when to order materials).
An adequate procedure of receipt and issue of materials.
Proper methods of storing materials.
An effective system of physical control of materials.
A proper method of keeping store records.

5.3 Functions of Stores Department and the Duties of the Storekeeper

They are given as follows:
To receive materials, goods and equipment, and to check them for identification.
To receive parts and components which have been processed in the factory.
To record the receipt of goods.
To correct positioning of all materials and supplies in the store.
To maintain stocks safely and in good condition by taking all precautions to ensure that
they do not suffer from damage, pilfering or deterioration.
To issue items to the users only on the receipt of authorized stores requisitions.
To record and update receipts and issue of materials.
To check the bin card balances with the physical quantities in the bins.
To make sure that stores are kept clean and in good order.
To prevent unauthorized persons from entering the stores.
To make sure that materials are issued promptly to the users.
To plan store for optimum utilization of the cubic space (i.e., length, breadth and height).
To ensure that the required materials are located easily.
To initiate purchasing cycle at the appropriate time so that the materials required are
never out of stock.
To coordinate and cooperate to the full extent with the purchasing, manufacturing,
inspection and production planning and control departments.

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5.4 Location and Layout of Stores
Following points need to be taken care of:
 Location of the stores should be carefully decided and planned so as to ensure maximum
efficiency.
 The best location of stores is one that minimizes total handling costs and other costs
related to stores operation and at the same time provides the needed protection for stored
items and materials.
 Store location depends upon the nature and value of the items to be stored and the
frequency with which the items are received and issued.
 In general, stores are located close to the point of use. Raw materials are stored near the
first operation, in-process materials close to the next operation, finished goods near the
shipping area and tools and supplies in location central to the personnel and equipment
served.
 All departments should have easy access to the stores and especially those which require
heavy and bulky materials should have stores located nearby.
 In big industries having many departments, stores department possibly cannot be situated
where it is convenient to deliver materials to all departments and at the same time be near
the receiving department; thus it becomes often necessary to set up sub-stores
conveniently situated to serve different departments. This leads to the concept of
decentralized stores.
 In decentralized stores system, each section of the industry (e.g., foundry, machine shop,
forging, etc.) has separate store attached with it; whereas in centralized stores system, the
main store located centrally fulfills the needs for each and every department.

Advantages of Centralization of Stores

Centralized store results into the following benefits:
Better supervision and control.
It requires less personnel to manage and thus involves reduced related costs.
Better layout of stores.
Inventory checks facilitated.
Optimum (minimum) stores can be maintained.
Fewer obsolete items.
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 Better security arrangements can be made.

Advantages of Decentralization of Stores

Reduced material handling and the associated cost.
Convenient for every department to draw materials, etc.
Less risk by fire or theft.
Less chances of production stoppages owing to easy and prompt availability of materials,
etc.
An idea about the disadvantages of centralized and decentralized stores can be had from
the advantages of decentralized and centralized stores.

5.5 Location of Items in the Store

Location of any item in the store can be decided in three ways:
Fixed Location: Here some fixed place is designated to each class of items. The basis can be
supplier wise, time wise, utility wise, etc.
Random Location: Items are placed accordingly to the availability of space in the store at the
time of receiving items. This method can be applied when the number of items to be stored is
few and the store keeper is efficient in remembering the location of each item.
Zonal Location: Generally the whole inventory is divided into three zones namely bulk zone,
reserve stokes and indirect materials like spares and consumable items.

5.6 Identification of Items in the Store

A system has to developed that can identify and classify the wide range of items held in the store
quickly and efficiently. By adopting a well designed codification system, the store manager can
have a unique, precise, simple, and consistent identification of items. Identification can be done
by:
 Tagging some piece of paper or cloth with the items,
 Labels may be fixed on the items,
 The coded number or any other identification mark,
 Painting or color coding of items.

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Generally alphabets or numerals or the combination of the two is used for codifications of items.
Mnemonic Method: Here alphabets closely associated with the name of the item are used.
Example: MT can be used for some metallic item. This method is useful when the numbers of
items to be stored are few.
Random Method: Here both alphabets and numerals can be used randomly. However, this
method is very tiresome.
Scientific Method: In this method the items are divided into a number of groups and each group
is given some code. Their sub-grouping is done on the basis of classification of the item in any
group based on functions, shape etc. The complete code of the item is written by the sub-codes
of the group and the sub-groups for that item.

Proper codification of items has the following advantages. It helps to keep records; Reduces
errors; Facilitates quick identification and standardization facilitates accounting.

5.7 Stock Taking and Stock Verification

Stock taking is the process of physically counting, weighting, measuring, and estimating to find
out the balance of items. This implies physical checking of items in store to see that these are in
accordance with the records. The objectives of stock taking and stock verification are:
 To control the activities of stores,
 To minimize and avoid pilferage and fraudulent practices,
 To reconcile the stock records and documents for their accuracy, and
 To know whether there are any discrepancies and whether the materials in a good
condition or not.

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 CHAPTER SIX

MATERIAL HANDLING

6.1 Definition of Material Handling

“Material handling is defined as the art and science of moving, packaging and storing of
substances in a form.”
Material handling is movement and storage of material at the lowest possible cost through the
use of proper methods and equipments.
Material handling is lifting, shifting and placing of material which effect in a saving in money,
time and place.

6.2 The Scope of Materials Handling

The scope of materials handling activity within an organization depends on the type of product
manufactured, the size of organization, the value of the product and the value of the activity
being performed and the relative importance of materials handling to the enterprise. There are
three perspectives about materials handling viz:
a) The traditional point of view.
b) Plant wide– concern for overall flow of materials.
c) The system point of view.

In the traditional point of view of materials handling, the emphasis is on the movement of
materials from one location to another within the confines of the individual plant. The concern is
to find the best way to move the materials from one place to another within the plant. Plant wide
concern focuses the attention on the overall flow of materials in the plant. The main concern is
the hinter-relationship between all the handling problems and the possibility of establishing an
overall materials handling plan. The systems point of view of material handling requires
visualization of material handling problems, the physical distribution activities, and all closely
related functions as one, an all – encompassing system. This point of view involves a much
broader considerations of materials handling activities involving the movement of material from
all sources of supply (vendors), all handling activities within and around the plant and the
activities involved in the distribution of finished goods to all customers of the firm.

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6.3 Importance of Material Handling
1. Efficient materials handling is important to manufacturing operations. Materials sent by
vendors must be unloaded, moved through inspections and production operations to stores and
finally to the shipping departments. These movements do not add value to the product but, they
do add to the cost.
2. Materials handling analysis is a subset to plant layout and materials handling are all part of
design of a production facility and can hardly be treated as separate. Materials handling system
and plant enhance effectiveness of each other. A good plant layout enables an operation to use
the most effective handling method. Efficient operation of appropriate materials handling
methods reduces costs and enables maximum capabilities to be derived from a given production
facility.

6.4 Objectives of Materials Handling

Even though the best solution to the materials handling problem, is no handling, it is hardly
practicable in the manufacturing process. Hence, the main objective of materials handling is to
reduce the number of handling equipments and reducing the distances through which the
materials are handled.

Other objectives of materials handling are:

1. Lower unit materials handling costs.
2. Reduction in the manufacturing cycle time through faster movements of materials and by
reducing the distance through which the materials are moved. Reduction in manufacturing
cycle time results in reduced work in progress inventory costs.
3. Contribution towards a better control of the flow of materials through the manufacturing
facility.
4. Improved working conditions and the greater safety in the movement of materials.
5. Contribute to better quality by avoiding damage to products by inefficient handling.
6. Increases storage capacity through better utilization of storage areas.
7. Higher productivity at lower manufacturing cost.

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6.5 Material Handling Principles
Certain principles have evolved to guide facility layout to ensure efficient handling of materials.
Although, there are no hard and fast rules, they do provide effective guidelines for the efficient
movement of materials in most facility layouts.
Principle 1: Materials should move through the facility in direct flow pattern, minimizing
zigzagging or backtracking.
Principle 2: Related production processes should be arranged to provide for direct material
flows.
Principle 3: Mechanized materials handling devices should be designed and located so that
human effort is minimized.
Principle 4: Heavy and bulk materials should be moved the shortest distance during processing.
Principle 5: The number of times each material is handled should be minimized.
Principle 6: Systems flexibility should allow for unexpected breakdowns of materials handling
equipments, changes in production system technology, etc.
Principle 7: Mobile equipments should carry full loads all the times.

Factors affecting the selection of materials handling equipments

The selection of materials handling equipments requires consideration of and attaining of proper
balance between the following factors:
i. Production problem.
ii. The capabilities of the handling equipment available.
iii. The human element involved.
The ultimate aim is to arrive at the lowest cost per unit of materials handled.

6.6 Types of Material Handling Systems

The materials handling equipments are classified into four basic types, viz. conveyors, cranes
and hoists, trucks and auxiliary equipment.
1. Conveyors
These are gravity or powered devices, commonly used for moving loads from point to point over
fixed paths. The various types of conveyors are:
a. Belt Conveyor: Motor driven belt, usually made of rubberized fabric or metal fabric on a rigid
frame.

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b. Chain Conveyor: Motor driven chain that drags materials along a metal slide base.
c. Roller conveyor: Boxes, large parts or unit lands roll on top of a series of rollers mounted on
a rigid frame.
d. Pneumatic Conveyor: high volume of air flows through a tube, carrying materials along with
the airflow.

The other types of conveyors are bucket conveyor, screw conveyor, pipeline conveyor, vibratory
conveyor, trolley conveyor, and chute or gravity conveyors. Advantages of conveyors are that
they do not require operators, will move a large volume of products and inexpensive to operate.

2. Cranes, Elevators and Hoists

These are overloaded devices used for moving various loads intermittently between points within
an area, fixed by supporting and binding rails.
a. Cranes are devices mounted on overhead rails or ground level wheels or rails. They lift, swing
and transport large and heavy materials. Examples are Gantry Crane, Jib Crane and
Electrically Operated Overhead Crane (EOTC).
b. Elevators are a type of cranes that lift materials usually between floors of buildings.
c. Hoists are devices, which move materials vertically and horizontally in a limited area.
Examples are Air Hoists, electric hoists and chain hoists.

Hoists
3. Industrial Trucks
These devices are used for moving mixed or uniform loads intermittently over variable paths.
They are electric, diesel, gasoline or liquefied petroleum, gas powered vehicles equipped with
beds, forks, arms or other holding devices. Examples are forklift trucks, pallet trucks, tractor
with trailers, hand trucks and power trolleys.

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Hand truck

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4. Auxiliary Equipments
These are devices or attachments used with handling equipment to make their use more effective
and versatile. Examples are ramps, positioners, pallets, containers and turn-tables.

Miscellaneous Handling Equipments

1. Pipe Lines, which are closed tubes that transport liquids by means of pumps or gravity.
2. Automatic transfer devices, which automatically grasp materials, hold them firmly while
operations are being performed and move them to other locations.
3. Automated guided vehicle (AGV) Systems: These devices do not require operations and
provide a great deal of flexibility in the paths they travel and the functions they perform and
the AGVs are controlled by signals sent through the wires embedded in the floor or inductive
tape on the floor surface. A remote control computer is needed to control the movement of
AGVs.
4. Industrial Robots: a robot is a mechanism that has a movable arm like projection with a
gripper on the end that can perform a variety of functions with the control that can be
reprogrammed and hence they are very versatile.

The process design and the principles of efficient materials handling provide the framework for
selecting specific materials handling devices as the core of the materials handling system. Each
of the handling devices has its own unique characteristics and advantages and disadvantages.

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