MATERIALS MANAGEMENT:

• WAREHOUSING, PURCHASING, HANDLING AND

PROCUREMENT OF MATERIALS

Course Code: 1054

ALLAMA IQBAL OPEN UNIVERSITY

ISLAMABAD
 (All Rights Reserved with the Publisher)

Year of Printing.' • 2015

'Quantity: I 200 •

Printing Coordinator: Printing Press Operations Committee

Printer: AIOU-Printing Press, 11-8, Islamabad.

Allama Iqbal Open Univeysity, Islainabad.

 COURSE TEAM

, Chairman Course Team: Prof. Javaid kihal Syed

Course Developnient Coordinator: Raja Inayatullah

Author: Salah-ud-Din Mir

Reviewers: : Prof. Javaid LSI Syed

Majed Rashid

Editor: • Khalid Mehmood

,:Designer: Aftab Ahmed

SHORT TERM EDUCATIONAL PROGRAMMES COMMITTEE

Prof. Javaid Iqbal Syed

Vice Chancellor
Allama Iqbal Open University, Islamabad.

2. Qasim Haider
Director Information Service
Mama lqbal Open University, Islamabad.

3. Muhammad Umar Farooq

English Editor
Directorate of Information Services
Allama Iqbal Open Univeristy, Islamabad.

Mohammad Majid Mahmood

Lecturer
Management Sciences Department
Allama Iqbal Open University, Islamabad.

5. Syed Asjad Hussain Bukhari

Assistant Librarian
Department of Library Sciences
Mama IqbalOpen University, Islamabad.

6 Muhammad Muneer Malik

Assistant Producer
Institute of Educational Technology
Allama Iqbal Open University, Islamabad. '

2
 CONTENTS

Units Titles Page No.

1. Scope and Objectives of Warehousing in Materials Management 11

‘2. Provisioning or Material Control:Basic Principles and Procedures 35

3. Purchasing (Procurement): Basic Principles and Procedures , 61

Warehousing (General Principles) 10.1

5. Type and Layout of Stores, Buildings and Areas 121

6. Warehousing: Organization and Control 137

7. Material Handling and Store room Equipment 161

Stacking 181

9. Care and Preservation of Stores 201

 FOREWORD

The Allama lqbal Open University since its inception in 1974 has
rendered valuable contribution in dissemination of learning in a wide range of
studies through its framework of Distance Learning System.

Now, on the eve of its 2ffh anniversary, the AIOU cherishes to explore
new possibilities by introducing exclusive professional study programme
titled "Short-Term Educational Programmes (STEPS)" without traditions of
degree-oriented and period-bound semester and sequence of examinations

These STEPS Course are progressive in character and open new avenues
for further in-depth studies in respective disciplines. Such academic activities
are successfully in practice in the universities and colleges of many developed
nations. Thus AIOU STEPS provides this facility to professionals and other
• interested groups in Pakistan as. well.

The study material contained in the given book is only to help enhance
your working proficiency and knowledge pertaining to the profession and
therefore does not entail any formal examination. However, the Evaluation
Paper is supplemented with the purpose of self-monitoring at the student's
end..

• I would put on record my appreciation for efforts of STEPS Committee, •

which rnade the dream of Short-Term Educational Programmes come true.

Vice-Chancellor

7
 INTRODUCTION TO THE COURSE

The process of industrialization in Pakistan is rapidly multiplying and

need for trained manpower in the field of Materials Management is also
expanding. Launching of any industrial venture - requires a variety of steps to be
taken which primarily deal with functions of Provisioning, Purchasing, Storing,
Transportation, Accounting, etc. Completion of these requirements put an
immediate and great demand for availability of trained personnel.
Taking cognizance. of present and future demand in the field of Materials
Management, a short-term certificate course of 12 weeks duration has been
designed by The course provides an excellent exposure in the subject
and the, teaching- package- skillfully deals. with all essential areas of Materials
Management. No doubt completion of the certificate course cannot produce an
expert but essentially it caters for a complete orientation and thereby brings the
student a step closer to be an expert on the subject.
,
Materials Management is a significant :part of each organization and
department and more so with the strengthening of industrial sector. The holder of
this certificate will be able to fill the vacuum in this discipline. Accordingly the
course tends to develop a pool of personnel equipped with basic know how in
Materials Management.
Purchasing for resale is performed by merchants and speculators. This
topic deals with purchasing's role in business that is buying for consumption or
conversion. An industrial buyer has important problems. He participates in
determining what products his company should make, what components or parts
of these products the company should manufactures and what components or
parts should be purchased from Outside suppliers i.e. make or buy decision-
making. He correlates his purchasing actions with sales forecasts and production
schedule. He -Selects vendor's form whom purchase can be made On a continuing

9
or mutually profitable basis. For Optimum results he integrates the efforts of his
departments with those of the other department of the firm,
Material Handling may be defined as the rationalization of handling,
moving, and storing materials economically and with speed. The efficiency of a
store room is greatly... increased by the use of proper store room and material
handling equipment. Materials handling with mechanical aids has, indeed, many
advantages. It is safer, economical, and consumes less time and Labour.. In
manual handling of dangerous goods and fragile store, as acid carboys/bottles,
glassware, gas cylinders, and ammunitiOn and explosive boxes. A golden rule to
remember is 'Do not drag them and Do not drop them".
The storekeeper (Incharge warehouse) is required to keep stores in his
charge in a serviceable condition. For this purpose he must ensure that proper
storage conditions are provided to each type of stores and suitable preservative
treatment is given to prolong be life of stoek while in storage.
This topic introduces students to the techniques of care and custody of
each type/description of stores and to the scientific preservative methods applied
to them with reference to the obtaining environmental and climatic conditions:

Mohammad Majid Mahmood

Lecturer-Management Sciences Department

10
UNIT-1

SCOPE & OBJECTIVES OF

WAREHOUSING IN MATERIALS
MANAGEMENT

Written By: Salah-ud-Din Mir

Reviewer' By:. Prof Javed Iqbargyed
and
Majed Rashid
 INTRODUCTION

Store and materials are used everywhere —.be it a home, an office, a private or
a public institution, a Department, an organization or. an. industry. Some quantity -
of stores and materials is often set aside or put in stock as reserve tbr:
(a) Use when any further need arises;
(b) Replacing item/quantities in use as these are consumed/damaged
or worn out;
• (è) Saving money on piecemeal buying or f or fear/in anticipation of
risein prices;'
(d) Resale to-Make profit;
(e) Further processing/conversion or Manufacture etc.
It follows that for all goods (stores and materials):
i) First, the items and quantities required hae to be
determined/estimated;
ii) Them these are purchased at competitive prices, and
iii). Finally, these, are placed hi' stock under proper care and
custody to avoid any deterioration until such time as these
are consumed or deposed Of ,
• This entire exercise is named: "Material Management". And, as is apparent from
the preceding narrative the materials management covers three stages:
1) -Estimation of demand/requirements
2) Procurement
3) Storage and distribution
In this book we shall discuss in detail the stockage d goods and supplies
(i.e.. ware housing/storekeeping) after giving you a brief introduction into the
methods of preparation of demand forecasts and the principles and practices in the
procurement of goods and Supplies.
OBJECTIVES

After studying this unit you will be able to explain:.

1. How material management is a distinct field of specialization.

•• 2. That, personnel specializing in this field can contribute a lot not only
towards the. efficiency of the Materials Departments but also towaixis
materials economy in the context of national ecOnomy.

14
 CONTENTS

1. • Terminology 17
2. Warehousing-both a science & an aft 17
3. Warehousing Technology 17
4. Definitions 18
5. . Objectives of materials management 21
6. Material Management Organizational set up 22
7. MateriallvIanagement versus other Departments
of a Production unit 22
Categories of stores 23
9. Economics of materials management and Inventory Investment
Costs & Controls. 25
10. Responsibilities of stores (warehousing) Deptt. 26
•
11. Fundamentals of planning for warehousing 27
12. The imperatives of effective organization and control
in warehousing 29
13. Avoiding mistakes. 30
14. Self-Assessment questions 31
15. Answer to S.A Qs. 32

15
 1- TERMINOLOGY

In our country The term "store" is used more often instead of the term .
"Inventory". But in other countries the term "inventory" is more•commoply used.
Thus Tor example, here we say "Store Stocks" or "Store Items" but internationally
the term "Inventory Stocks"- or Inventory items" is more current.
Similarly "Warehousing" is an appropriate term for care, custody and
distribution of stocks and tOres. But in our country the tenn "Store-keeping" is
being use instead.
. And the Words; "Store Officers" "Store-keeper" or "Store house" are
derived therefrom. Although it. Would be equally right to use the term "I/C
warehousing" and "Warehouse" etc.
Some time for "Storekeeper" and "Store-house" the words "Godown-
keeper" and "Godown" are also used.

2- WAREHOUSING - BOTH A SCIENCE & AN ART

Warehousing is both an art and a science. The arrangement and disposition

of stocks is an art. But the preservation of stocks by applying various preservative'
treatments to goods is storage or in transit is.a branch of science.

3- WARE HOUSING TECHNOLOGY .

Because of the extremes of temperatures iii ourcountry (and it is a tropical
country) handling, transportation and stoekage of all types of goods and materials
needs special techniques and preservations. And, therefore, the need for scientific
methods and technology in the matter of warehousing Of stores and Supplies) is
essential. It is The primary duty of an 1/C 'warehousing to see that stores in his
custody do not deteriorate in storage and are protected from. damage, running
"handling and transportation and that as long as in stockage they remain in a "Fit .
for issue' condition. Thus, for example, life of ready made paints in tropical
17
climate is only six months. If the I/C warehouse does not know or apply the
preservative treatment the paints 'in stock will become unfit for use after six
months because of sedimentation and solidification. Same thing applies to kisses
during stockage of low boiling point chemicals (volatile chemicals) unless these
are stored in a temperature controlled building and similarly to all other types 'of
stores.
The I/C warehouse has, therefore, to have ftill knowledge of the types of
stored, their storage conditions and the preservative treatment required so as to
prolong the stores in his custody.
Strictly speaking warehousing' responsibilities begin when stores have
been collected/received and placed in stdck. Nevertheless some basic knowledge
of how demand forecasts are prepared and procurement of goods in arranged
before stores arrive at the warehouse, is necessary for the I/C warehouse.
Therefore; brief chapters have been included in this syllabus apropos of
provisioning (indent preparation) and purchasing (procurement).

DEFINITIONS
(1) Definition of Stores:
(a) Commodity-wise: The term stores (Inventory) embraces.all types
of stocks but for .purposes of this course on warehousing food-grains and fodder
stocks are excluded as they need special treatment and are part of agriculture
science and services.
In the context of warehousing the term stores includes:
Raw material
In process goods. (in industrial units)
Finished goods
Spare and parts, supplies and services for manufacturing and plant
maintenance
18
 Tools and Gauges, Jigs and Fixture etc
Rejected, salvaged & scrap material
Office. furniture & Equipment & moveable shop fittings
Packing material.

. /
NOTE:- . . .
"Raw materials": Broadly speaking basic materials, ingredients for chemicals,
agricultural procedure etc. are taken as raw materials'. But it is a relative term. Cotton ,
may be "raw material" for a factory producing cloth. But 4 -rolling mill would use
"Billets" a product of the steel Mills as its raw materials. Thus the definition of raw'
materials varies from unit to unit.

(b) Cost-wise
For purpose of costing only, steam, power, water (treated and untreated)
and gas consumed in production are also treated as stores.

(c)- Category-wise
Broadly speaking in industrial units the inventory stores) . falls in two.
categories:

(0 Production materials;
(ii) Maintenance stores.

Again the production material consists of:

(i) Direct materials, that is, materials which go into the finished product, and

(ii) Indirect materials, that is consumable oi t,ommon use items, which use in
production processes. •

19
(2) Definition of Warehousing
The term warehousing may be defined as warehouse management for
receiving, storing, accounting and issuing of materials and 'supplies.
Good storeroom management (warehouse management) coordinated with
a. well organized store record system prevents • accumulation of excessive
inventory which results in unnecessary tying up of capital Material and supplies
•cost not only what is paid to get them but also the expenses incurred in their
..
storing, handling and accounting etc.

(3) Definition of Materiits Management •

Materials management is an integrated activity embracing the various
functions of provisioning, purchasing and warehousing.. Depending on its size
these basic functions may be supervised by a single manager or by individual
managers for each function. The material management system may be defined
as a inter-dependent combination of activities designed with the object of
providing an uninterrupted flow of materials and supplies and services and
storage or movement of goods in the physical distribution process.

20
 5- OBJECTIVES OF MATERIALS MANAGEMENT

These are:
a) Continuity of supply
b) Consistent quality
c) Competitive prices
d) Low operating costs
e) High inventory turn over
0 Low payroll costs and development of materials
g) Good vendor buyer relationship
h) Good records/controls
0. Standardization to reduce inventory
j) Reciprocity-buying from own customers as much as possible
k) Development and use of indigenous materials and products
I) 'Economic make or buy decisions
Basically the job of material management is to ensure the flow of
materials to the manufacturing/processing departments and the flow of semi
finished goods from manufacturing/processing departments to the retail outlet
directly or via warehouse/wholesaler/dealer. For companies in the distributive
trade physical distribution of finished goods is the primary function in order to
have the right goods in the right place at the right time The military equivalent of
the physical distribution management is termed as logistics management. The
peace time version of logistics management would be an airlines' distribution of
key spare parts needed to serve its fleet or for the matter of that OGDC who have
to diversify stocks of spare etc. at rig sites.

21
 6-MATERIAL MANAGEMENT, ORGANIZATIONA SET UP

METERIAL MANAGER

.• V
Provision Purchase. Deptt . . ' Warehousing Deptt .
of Material (or Store Deptt).
' Demand forecasts)

,Each of these sub systems are inter-related and interdependent and for
effective material management all of these sub-system should function smoothly
to 'achieve greater harmony and better results it being realized that with the
growth in business and the, application of mass . production technology more
functional:specialization is necessary and therefore a total and integrated control
of all functions relating to materials is highly advantageous.

7- MATERIALS MANAGEMENT VERSUS OTHER DEPARTMENTS OF

A PRODUCTION UNIT

Following is a typical organizationdl chart in which ' all activities'

pertaining to materials have been grouped under the materials head and the
materials head placed at the same level as other departmental heads.

GENERAL MANAGER
V V V
VC VC VC
Engineering Production Material Personnel 1' Marketing Finance

Relationship of Material Management

to Engineering production 8z Finance
in a Manufacturing concern.

22
Engineering Finance pay the Bill

MATERIAL
Management
Plans & Schedules
Buys, Moves stores

Marketing " Production

Sells Transforms into
Products

. 8- CATEGORIES OF STORES

Normally plant and machinery are not included in the responsibilities of

I/C warehouse, These are socked and accounted for separately as capital items.

(NOTE) Building, plant, machined, vehicles etc ate' clashed as capital outlay and in
costing these, and there is the element of annual depreciation.
(While in the case of stores, carrying costs (that is store stock maintenance .
costs) keep adding up. Carrying costs is expressed as a percentage of aVerage
Inventory stock. It includes cost of accommodation, personnel, preservative
treatment, transport and Insurance etc.) Average inventory stock is half of the •
total quantity plus safety stock).

For purpose of storage, inventory is divided into the following broad categories:-

1. Abrasives (Grinding wheels etc).

2: Ammunition and Explosives.
3. Chemicals (Laboratory & Industrial)
4. Cinematographic stores (including sensitized paper etc).
5. Civil stores (or Building materials) Cement, sand, Bricks etc.
6. Door Window fittings.

23
 Drawing Office stores & Survey instruments.
8. Electrical stores (Wire & Cables, Lamps, Motors, Switch gear, fittings •
and electronic stores etc).
9. Fire fighting equipment
10. Foundry, stores. • ,
11. -Furniture (wood & steel) ihr office & Residential purpose including
items of office equipment, typewriter's, curtains, 'photo state machines.
etc.
12. Gases (combustible & non combustible).
13: .1-land Tools (small professional tools and measuring instruments etc).
• 14. Iron mongery (nuts, bolts, nails, screws and rivets etc).
15. Leather, rubber and plastic goods.
16. Laboratory equipment land stores including laboratory glassware.
17.. Metals (Ferrous & non-Ferrous)
18. Oils & Creases (or POL=Petrol, Oil & Lubricants).
19. Packing material. •
20. Paints, Lacquers. & Varnishes.
21. -Pipes & Fittings (CI, Steel, 0.1, PVC, AC Pipes and Glazed earthen
Pipes etc)..
22. Refractories (Heat Resistant Material);
23. Safety equipment and clothing.
• 24. Sanitary stores:
25. Spares (machine 8z plants).
• 26. Scrap and Salvaged stores.
-- 27. Stationery (Expendable & non-expendable and forms.-
•
28. Textile and paper.
29. Timber.
30. Tools, Jigs and Fixtures.
24
 9- ECONOMICS OF MATERIALS MANAGEMENT AND
INVENTORY INVESTMENT COSTS AND CONTROLS.

Since one, of the most critical investments of manufacturing organization

is in physical inventory which is usually the largest single 'item of cots-size of
inventory, its purchasing, storage and. issues are matters which demand the most -
careful attention so that investments in materials do not remain locked-up.

Slow rate of consumption viz-a-viz stock levels, deterioration of stocks

during long storage or the increasing volume Of obsolescent or obsolete
inventories which build up and occupy precious storage accommodation or in-
accurate and unwise buying at peak prices or the damage caused to goods in
transit are taken care of by the material management.

Although idle and dead inventory is reflected as assets in balance sheets, it

is in fact a burden on. the organization's resources. It means loss of money; capital
tied up; enhanced income tax and unnecessary carrying costs.

The management and control of inventory is exercised both in quantity

and value. The input and output of each item i5 controlled because the higher the
rate of turn over the more active and economical is the use of capital.

The most important consideration therefore, is to maintain the value of

stores in stock at the lowest practicable level at all times in order to economize in
the use df working capital and to minimize the cost of buying and storage.

In the matter of finished goods inventories, the strategy is formulated

primarily on the advice of marketing and in consultation with production. But the
inventory management organizations are responsible for its stockage and physical
distribution; Stock management for finished; goods inventories at the
25
manufacturing location depends upon whether the manufacturer's customers are
wholesalers, retailers or the ultimate consumers or clients and upon the types of
production processes. involved. Nevertheless for fear of out of stock situation right
down the distribution network, the tendency is to keep raw material inventories
generally nt a high level.

The material Manager should promote standardization in order to reduce

inventory, thereby keeping the costs to a minimum. (Note: Standardization is a
continuous process of eliminating unwanted types, sizes, colors etc. Thus for
example, if you have paint light green and very light green you might standardize
oh either of the two).

NOTE:-
Inventory accounting is no longer a manual exercise. It is being computerized
everywhere even for small size inventories. Material handling too is now a highly
mechanized thing and includes ultra-modem devices as containerization for
transportation of goods. Besides container vessels for shipments by sea we have NLC
containers traffic service for movement of goods within the country.

10- RESPONSIBILITIES OF STORES (WAREHOUSING) DEPTT.

The Stores Department is responsible for:-

I. Proper planning and lay-out of stores

2. Organization and control
3. Receiving, sorting and inspection.
4. Storage-care and preservation.
5. Checking stocks to ensure agreement with records.
6. Issuing stores against authorized requisitions.
'7: Safe handling, packing and marking of stOres..
8. Store accounting.

26
 11- FUNDAMENTALS OF PLANNING FOR WAREHOUSING'
When you plan for:-
(a) Store Depots-buildings Mid open areas,
(b) Store houses only,
(e) Small godownS in congested areas,
' You have to have in view:-.
i) The normal principles of range and
ii) The Govt. rules and regulations, if any.

In the latter case not all the types of stores are covered under Government
regulations like the existing rules and regulations on POL stores (Petrol, .Oil &
Lubricants) Gases, Acids, Cinematographic stores Ammunition and Explosives
and other dangerous goods etc.

However, planning for stores depotshmit/Deptt depends upon the plan and
purposes of the organization for the concern to which it belongs. The lay out of
stores areas and buildings depends upon the requirements of parent organization
or the plant concerned. There is SOIM advantage in having decentralized stoles. so
that stores are located nearest to the user thereby avoiding unnecessary handling,
record keeping and delays in delivery. After planning for the disposition of stores
areas and buildings in keeping with the requirements and the type of storeS to be
stocked and conforming with store. house, specification etc, it is necessary to plan
the detailed inside lay out of each store room also.

Now, much as rules, principles and practices provide necessary

safeguards, irresponsible and ill conceived plans of storage 'either deliberate or
born of ignorance have often caused fires, losses, damages and destruction.
Sitting, safety distances from habitations, rails and Toads and other dangerous
installations.are all major factors in locating stores Depots or warehouses,
27
 Knowledge of rules and regulations, principles and practices is therefore,
' necessary fro materials personnel.
It will be reali7ed that different principles would have to be applied in
different circumstances, for example:

1) Defense • Org, would locate store Depcits strategically to meet defense

requirements.
For civil stores Depots as WAPDA, Irrigation, Agriculture, T&T,
Railways, PIA and Oil Cos, etc the location is nearest to the point of
use/Rail/Road Heads; availability of cheap labor force would be an extra
consideration.
3) .For factories, at a point, nearest to the gate within the Factory premises.

Again, different types of stores would need different kind of storage

conditions and different types of buildings. But in view of our economic strategy,
as we are only a developing country, it would not be advisable to always construct
permanent cement and brick structures where prefabs that is prefabricated steel
structures (which are comparatively less costly and save burden on cement
resources) would serve the purpose.

28
 12- THE IMPERATIVES OF EFFECTIVE ORGANISATION AND
CONTROL IN WAREHOUSING

• In the preceding paragraphs we have discussed what is material

management, its cobstituent departments and among them the significance of the
warehouSing Deptt in relation to materials handling, storage and distribution.

The care and custody of stocks is both an extensive and an expensive

propos .ion. You have to construct or hire storage accommodation, place stores in
a proper sequence, give these stores preservative treatment to avoid deterioration,
employ personnel and 'transport for their handling, receipts and issues, appoint
security and fire fighting staff and to arrange insurance of buildings and stocks.
All these costs add to the cost of goods in stocks. All these costs are known as
"carrying cost of inventory" which as already stated is expressed in terms of
percentage of total inventory cost such as 1%or 2% of the inventory cost, per
annum. It happens that an item purchased for a certain price, if it remains in stock
for long periods/years, its original cost is almost doubled because carrying costs
keep addiug up. Therefore, shelf life of stores has to be kept to the minimum by
speeding up inventory turn-over - that is flow of materials in and oat is regulated
in a manner that stores do not stay in warehouse for long periods.

The warehouse efficiency has to be adjudged - from this angle also.

Deterioration of stores in stock, damage/loss of stores for any reason what so ever
-through neglect or otherwise and incidence of obsolescent and obsolete
inventories that is stocks going redundant and out of use and idle Inventories that
is items of stocks being held in qUantities which are in excess of the rate of
consumption (say, for example, stock of an Item is enough to last for several
years) are circumstances which not only tell upon an organisation's economy but
on the economy.of the country as a whole.
29
 Therefore, the need .to have personnel properlY trained in this discipline so
that modern Warehousing techniques and methodology are harnessed in the .
' service of this developing country.

14. AVOIDING MISTAKES

•

Mistakes such as following should be avoided:•

Cement bags should not be stacked more than seven high. Stacks must be
raised on dunnage-preferably "duck boards type". Bags should not be stacked on
floor. Some cement factories are stacking cement bags ten high for ease of
counting. But with this height there arc more chances of damage to the bottom •
layers;

• An organisation had to shut down production for want of steel strip 18

guage x 3/41. The store peOPle did not 'realise that 18 guage sheet was in stock.
Cutting arrangements were also available in the shop. This mistake happened
because record of substitutes was not being made on folios/account cards.. Soap
'yellow bars were taken on charge by weight and issued piecemeal. At the end it
was realised that stock had run short. As a matter of fact soap bars had dried in
storage. The mistake was realised and soap bars began to be accounted for in
numbers.

A firm in •Lahore Were getting some • components made in Karachi.

Components as wheel drums etc. were packed in costly 'wooden crates &
dispatched by open trucks. The crates broke enroute causing loss.. The firm were
. asked to discard crating and to use NLC container traffic. This saved them entire
cost of crating. Some stock of adhesive-non-corrosive had deteriorated in storage.
(This is a type of a glue used for niaking paper tubes by rolling paper strips). The

30
storekeeper put up stock to the Inspector for examination. The inspector returned
inspection note to the storekeeper with the following sentence:
"The is not adhesive-non-corrosive but corrosive-non-adhesive".

• .
Note : The fault lies with purchase who did no in the first instance, order
"Tropical packing".

15— SELF-ASSESSMENT QUESTIONS

Q.1 What is generally the type of stocks included in the term Inventory or Stores?
Q.2 Please enumerate some of the main objectives of Materials Management.
Q.3 Broadly speaking what are all the math categories of Stores and Materials?
Q.4 What are the objectives and responsibilities of a warehousing department.
Q.5 Incharge warehouse should be cost conscious, why?
Q.6 Define and differentiate between the terms (a) Rules (b) Working Procedures.
Q.7 What is meant by:
a) Direct materials
b) Indirect materials

, 31
 16- ANSWERSTO S.A.Qs

Q.1 See under para 1.4 (a)

Q.2 See under para 1.5
Q.3 See under para 1.8
Q.4 See under para 1.10

Q.5' Because heavy investments . are involved in physical inventory and

considerable' expenses are incurred on handling, care and custody; and
• losses result .from incidence of damage to goods in storage and handling;
and capital remains tied up because of accumulation of idie inventories
and dead stocks. Failure of any of //C warehouse's responsibilities with
regard to proper care and custody of stores can add to company costs and
decrease company's profits and in fact poor Warehouse management can
have disastrous effects on the very liquidity and profitability of any
• organisation.
I/C warehouse has therefore, to 'be careful not only about level of stocks
so. as to reduce inventory investments but he has also to economise on •
handling costs of goods and costs involved in their care and custody.

Q.6 Rules are • mandatory and embrace basic principal factors for achieving
objective in a controlled and organi7ed manner. But rules are generally
constant. Procedures are not. Piocedures keep changing with the changed
circumstances. Procedures are amplifications of the rules pronouncing
their correct interpretations and providing comprehensive guidelines from
step to step in the smooth flow of work and performance of men and
materials with a view to overcome any difficulties or to meet different,
situations which may arisein the course of, what may be called, routine .
working/, exercise commonly known as daily routine work.

32 •
 Q.7 In. a manufacturing unit materials are divided in two categories:

a) Direct materials- are , those, which go into the finished product. For
example a wooden table is made up of

wood
Nails/screw s
and polish etc.

Al] these are direct materials.

- 1)) Indirect materials are those, which do not go into the•finished product but
help in the production processes and maintenance of shops. In the case of
"tables" the carpenters tools, paint-brushes, glass- paper etc. are the stores
- and materials which helped in the manufacture of the tables., These
indirect materials are also often called "common use items" or
conSumables.

33
 PROVISIONING OF MATERIAL
CONTROL: BASIC PRINCIPLES & PROCEDURES

. Written by: Salah-ud-Din Mir.

Reviwed by: Prof. Javed Iqbal Syed .
and
Majid. Rashid

35
 INTRODUCTION
The two main factors in any provisioning are:
When to order.
b) How much to order.

Material control is exercised both in quantity and value, and aims at

controlling the input and output of eaCh item Value wise by the Cost & Accounts
Deptt.)

Material Control Deptt. is a vital part of any industrial concern. It is

responsible for maintaining perpetual inventory records and appropriate data. for
raising of demands, recoupment of stocks when stock levels fall, standardisation
of Inventory. Materials budget, arranging substitutes and disposal of unwanted
stocks.

It is important to maintain the value of stores in stock at the lowest

practicable level at all times in order to economise in the use of working capital.

OBJECTIVES

The study of this unit will assist students in appreciating the ' technology of
preparing demand estimates for all the requirements in a manner that the
quantities worked out are just right neither short nor in excess of the needs and
within the means and resources.

37
 CONTENTS

1. Definition 41
2. Function 41
3. Organisation & Control 41
4. Procedure for recording of stock transactions 42
5. Compilation of demands-Procedure 42
6. Safety Stock 43
7. Bills of Details 44
8. Continuous/Periodical Reviews. 44
9. Staggered Deliveries 45
10. Availability of Funds 45
11. Idle Inventory 45
12. A. B. C. Formula 46
13. Provision of Transport spares 46
14. Provision Formula 50
15. Pivotal role of Material Control
(Provisions Deptt.) in an Industrial Unit. 52
16. Description of Items 53
17. No. of Items on Indents 53
18. Distribution of Copies of Indents 54
19. Precautions in preparing Indents 54
20. Rounding up of quantity indented 55
21. Finished Goods inventory 55
22. Indent Form 58
23. Self-Assessment Questions 59
24. Answers to S. A. Qs. 59

39
 1. DEFINITION

Provisions a function whereby adequate supplies of stores and materials

are procured sufficiently in advance to meet requirements. • Provision is
fundamentally based on the maintenance of correct statistics. A slight error can
result in over or under provisioning and thereby cause serious set-back to an
. operation or. production or lockitig up of capital •

2: FUNCTION
It is the responsibility of the Provision Department, also called 'Material.
Control' in industrial concerns, to ensure that stockS of all - materials and stores are
kept at the propel levels at all times and to take timely provision action where
.stocks fall short of-fequirements.

3. ORGANIZATION & CONTROL

The Provision or Material Control organization usually consists of four

departments:

Perpetual Inventory Record.

2: Indent Preparation.
3, Budget & Control.
4. Standardisation.

. Competent Material. Control (Provision) is. the heart of a good supply

system. The purpose is to maintain an adequate in Venture with the minimum
feasible investment. This purpose is achieved by balancing requirements against
purchasing-lead-time and the -cost of storing against the cost of purchasing-.

The' Prevision or the Material Control Department must have adequate

data and timely information. It should be the ally' of this department, in an

41
industrial concern, to assist the production group in obtaining out-turn by having
stoics and materials available in advance of production programmed where this is
Dot the case every assistance must be rendered in providing suitable substitutes.

4. PROCEDUREFOR RECORDING STOCK TRANSACTIONS

The ledgers or visible Index Cards, record the stock balance and all receipt and
issue transactions. For purposes of calculating requirements ledger folios or
Provision Cards where maintained separately, should - give the item number,
complete description, accounting unit, end-use, the maximum desirable inventory,
order point, danger level, approximate purchase lead time, and planned periods
between orders etc. All information should be typed on ledger folios/provision
cards for clarity.

Responsibility for compiling provision data and initiating demands should

be-districted commodity-wise or department-wise, among the provision staff. •
Each member of the staff should know his materials and where these are used.
The more knowledge he has the mare sensitive he will be to unusual changes. The
basic problem in controlling mails is determining ordering levels to make sure
that supplies are received before stocks reach a danger point which also should be
determined for each item, also that average stocks are kept at an economic point.
This requites careful balancing costs but even more important, it requires definite
purchasing lead times.

5. COMPILATION OF DEMAND — PROCEDURE

With the information that will be available, it would be possible to

compile a demand. The compilation of demand is done well ahead of the fiscal
year or the planned periods and is done with due regard to the allocation of finds
earmarked for the purpose. Demands are prepared for each group of stores

42
 according co a pre-arranged programme. A review is carried out which will
analyse the position at date for the stores in question. This review will take into
account known and anticipated requirements baaed on the past activity or the
forward pron-amme. To prepare demand for provision of a particular material,
'therefore, work out the quantity that is planned to be consumed upto the
provision review period. To this should be added 'reserves' if any and safety stock
that is sufficient quantity to cover the time lag in materialization of supplies. From
the total figure derived thus, deduct stocks and dues outstanding at the date of the
compilation of the demand, leaving the balance quantity to .be provided for. The
quantity to be demanded is suitably rounded off, to unit packing quantity of the
store or to complete a trade unit such as dozen, gross etc. There are varying
formulas to work out Economic Order Quantity (E0Q) or the optimum lot size
quantity just as there are varying re-order systems.

6. SAFETY STOCK

Safety stock or working balance: It is impossible that a new shipment or

Consigiunent would arrive just as the last unit of existing stock- was exhausted.
Because often:
a) supplier fails to keep delivery promises;
b) usage forecasts are inaccurate;
c) unexpected delay takes place in delivery

To meet such situations and uncertainties extra quantity of each item is

. .
maintained in stock. This extra inventory is called safety stock. Safety stocks are
worked mit with reference to lead time and usage. It is necessary to ensure that
. • safety stocks are neither in excess nor inadequate because excess safety stocks
boost inventory investment and inadequate safety stocks fail to give the desired
protection.

43
 7. BILL OF DETAILS

To enable Provision Department to calculate requirements of direct and

indirect materials, the. Estimating . Organization in an Industry prepares
Bills of Details/Schedules of Materials/Standard Estimates which indicate
the amount of material required to produce a unit of production of an
article making allowance for wastage on • forging, stamping, pressing,
machining and/or conversion etc.
ii) As regards spare parts it is important for indetters to ask suppliers/
manufacturers for sufficient copies of their spare parts list along with
workshop/maintenance manuals.

The list once compiled shall serve as a manual full future indenting which
should be revised/reviewed =Wally so as to include/exclude items based on
consumption/experience over the past year. Care should be taken to ensure that
where repair kits. will do a whole unit or assembly/e.g. carburetor assembly or
starter motor assembly etc. are not demanded. .
The demand should be finally checked by the competent staff in respect of
correct description of store and specification etc.

8. CONTINUOUS / PERIODICAL REVIEWS

Besides this provision review it is always desirable to have a continuous or..

a periodical replenishment review.

i) Continuous-, The provision staff keep a vigilant eye on the issues vis-a-vis
stock levels. As and when order level is reached provision is initiated
before the stipulated date for review.
Periodical- This is meant to avoid shortages due to abnormal consumption.

44
 In addition to the above reviews special reviews are uarried,out with a
view to declaring the dormant or the redundant stores as non-standard items .or
declaring them for disposal or weeding out duplicate headings or canceling or
reducing dues on un-completed and outstanding contracts.
9. STAGGERED DELIVERIES
Before forwarding demands for procurement, the Provision or the Material
Control Organization. should consult the Store Department who are entitled to a
knowledge of the quantity it is to receive against purchase requisitions. The
deliveries 'against the purchase order should be staggered depending on the
availability of storage accommodation but without causing any risks to the
production programmes or requirements of a business.
10. AVAILABILITY OF FUNDS
The availability of funds should be endorsed on all indents/purchase 'requisitions
besides all other information necessary for arranging correct and timely supplies.
11. IDLE INVENTORY
In any firm engaged in large scale manufacturing operations the inventory
of manufacturing supplies and spare parts will usually contain a very large
number of items. This inventory can tie up a considerable amount of capital and
require extensive storage facilities and personnel. Further the purchasing of this
inventory is a major and time consuming operation and the accumulation of large
quantities of obsolete and slow moving items over the years creates physical and
financial problems. The over investment problem can be tackled by getting rid of
a major portion of the obsolete and Mow moving inventory. But it would be
necessary perhaps to hold and to acquire further quantities of some of these items
hi stock because they consist of spares essential for the proper maintenance of the
machines and ecptipment. These 'insurance stocks' would be needed in a break
down and for overhauling equipment, but would not he needed for regular
consumption.

45
 12. A. B. C. FORMULA

As for items of regular consumption application of ABC formula is a

must. Under this fomiulp items•are divided in various classes e.g. A Class items
which though few in number account for the bulk of the capital involved, items in
B or C Class are those which though large in numbers account for a small part of
total capital. Management's attention should be concentrated primarily on A Class
items so that their inventory is kept as low as possible. On the other hand
inventories of B & C Class items should be kept at levels sufficient to cover
several months consumption without seriously increasing the total capital
involved.

13. PROVISION FORMULA

A good housewife is a typical example of an efficient provisioning.

A wife of a salaried person apportions her budget from within her resources for
household provisions monthly. And this is how she plans for it.
Say on 20th June she is calculating her requirements of Atta for the month
of July (period between 20th June and 1st July is called pre-operative period).
Period for which requirements are being worked out is July. This period is called
operative period.
She knows from experience that her monthly consumption of Atta over
last 12 months has been on average 6 maunds except for one month when for
reason of guests consumption rose to 7 thaunds and during yet another month due
to son's circumcision ceremony consumption was again 7 maunds. But then
neither this ceremony takes place every month nor do guests come every Month.
These were special occasions/requirements known as "special issues" in
our parlance. In calculating future requirements she will, therefore, take into
consideration only.

46
 "past average normal utilisation"

which has been 6 mounds. However, a good housewife would also keep
some little extra quantity to meet any unforeseen requirements or may be the
future supply that is supply for subsequent month to .Atigust is delayed for a few
days for one reason or the other_ and therefore she would need to have "this extra
quantity to tide over such periods (to delays in supply)."
.This extra-quantity to meet emergencies or to tide over periods to delays
in subsequent supplies is called "Safety Stock".
And in the case we assume. The housewife keeps 20 seers extra by way of
safety stock.
Now on 20th June the position is as follows:-
Quantity of Attain her stock = 4 mds.
She had loaned to neighbourers =.20 seers.
(This is called "Dues" or "Dues in" or "in pipeline ').

Note: If President visited a unit in 1984, the unit would have used lot of paints on
decoration. But the President would not visit the unit every year nor would the extra
quantity of paint be used every year. Therefore In 1985 or 1986 when looking at past
average normal utilisation paint spent on visit shall not be taken into account. It was a
special occasion or as we call it "a special issue".

47
Basis of calculation
Now; this is how the housewife Will work out on 20th June her requirements of
Atta for July. '

!Wets:
Stock in hand = 4 maunds.
Due from neighbour = '1/2 thaund
Total = 4.5 maunds
Liabilities
Required in July = 6 maunds

Required during preoperative

period
that is 20th June
to 1st July = 2 maunds
Plus safety stock 1/2 inaund
Total = 8.5 maunds

Now she sets liabilities against assets and the resultant quantity is what she
would demand/buy to cover the Month to July
Liabilities - assets
= 8.5 - 4.5-= 4.0 Mds.
That is, if she buys 4 maunds before July she will be able to meet the
reqiiirements of July besides having a reserve in hand of 20 seers.

Formula
The above formula applies to Government methods of provisioning for
common use items. The only difference is that housewife's budget is "Monthly"
whereas in Government Organization budgeting is done/allocated on annual basis
that is per budget year such as 1' July, 1984 to 30th June, 1985 (84-85 Budget)
48
also called financial year/fiscal year. .111 provisioning therefore, we always say
budget year 84-85 or 85-86 or 86-87 and so on.
Thus annual provisioning applies to Government Organizations/
Departments. But. Government owned factories are working on commercial basis
and in their case annual provisioning could mean 'blocking of Capital." The
Private & commercially based Government factories/Public Sector Industries
therefore, normally procure their supplies quarterly for indigenous stores and Six
monthly for imported stores. This is because the purchase lead-time is estimated
at 3 months in case of local supplies and six months in case of foreign supplies. In
European countries lead time is commonly only one month. But in our case one
month may not be always a practical proposition. Nevertheless units/Public Sector
Industries may decide on frequencies of buying but it will be noted that more
purchase orders a year would mean more costs per purchase order and more time
and effort..

Note: Like Private Sector the Public Sector Industries should have option to make
speculative purchases, that buying more than their requirements when prices Ire
reared to go up and prospects of making good profit on sale of material in excess
of own requirements are also there.

. The Department of the factory who are responsible for calculation of

demands have to have adequate and precise data/information for the purpose.
They, therefore, are required to maintain perpetual inventory records (Ledgers or
Account Cards). The perpetual inventory record consist of a separate folio being
allotted to each different item and each folio is super scribed with the relevant
information on top of the folio (Ledger sheet/Account Card/Computer Card).

49
 14. PROVISION OF TRANSPORT SPARES

When ordering for vehicles,. the suppliers/manufacturers should, be asked to

forward/ recommend lists of initial maintenance spares for a period of two to
three years. This list should be scrutinized by the competent authorities of the
demanding agencies and a final list drawn up for ordering spares as part of the
contract for purchase of vehicles or as a separate contract soon thereafter. In
drawing u.p lists of requirements of spares emphasis should be on fast .moving -
items that is items as are important and / or constantly replaced due to quick wear
and 'tear: Items which are required not too often should be ordered as and when
required. •
As and when population of a particular make/type and model complete
their average maximum mileage or hour reading a complete survey should - be
done and vehicles fit for retention be segregated from those unfit for further use.
Simultaneously a survey of spares •Shouid be carried out. and depending on the
results, the vehicles should be repaired by providing spares from stock and
through cannibalization. Thereafter spares should only be provided on adhoc basis
or on as and when required basis but not stocked unnecessarily.
• The provision and stockade of spares should be done in such a manner that
when vehicles arc scrapped there should hardly he any sizable stocks of spares'
left in stores to dispose of. .

Noteil ) In case the population of vehicles is too small provisioning arid stocking of fast
moving and eventual items pertaining to such vehicles may be done on "fringe
benefit" basis. 'Where population of vehicles is large spares and On a
predetermined percentage basis thus for — example if for a 100' vehicles annual
maintenance allowance for a particular make, type and model in respect of
pistons is 10% the percentage for ring set piston nay be 12%. An organization
holding 100 vehicles of same type/make and model may deter mille annual
percentage of maintenance allowance for spares as follows:

• 50 •
 a) Minor Assembly, Generator, Starter, Fuel Pump, Pump Gear, Disc Clutch
etc. 3%.
Components CO gears and, bearing 6% (ii) piston Ring Sets, Cap Disc,
Armatures, Repair Kits 10% (iii) Roter Disc, Spark Plug, Diaphragm
'Washers, Nozzle Fuel Injectoi, Piston ,Wheel Master Cylinder 15% (iv)
Components made of Cork Sheets, Metallic: sheets. Rubber Sheets 20 to
•25% and (v) Elements Fuel and oil Filters 20%.
2) Tendency in the world market now is to manufacture standard spare to suit various
Makes in automobile industry, Several major and peripheral industries today are engaged
in themanufacture of standard spares.

51
 15 PIVOTAL ROLE OF MATERIAL CONTROL (Provision) DEPARTMENT
in an Industrial Unit -

PRODUCTION

- -INDIRECT/DIRECT
•• MATERIAL7 MATERIAL RECEIPT k ISSUE ACCTS
•REQUISITIONS FOR CONTROL DOCUMENTS ' COMPUTER
. -MATERIALS & SUPPLIES

INDENTS PURCHASE.

STORES
 16. DESCRIPTION OF ITEMS

Nomenclature (that is complete designation plus description) should be

given in full and in a set logical sequence. For example, when ordering steel,
nomenclature should be given as follows:-

a) Steel hot rolled/cold drawn etc

b) Shape/Round/Flat, square Hex. etc.
c) Size inches/mm.
d) Heat treatment/ anealed, hardened and tempered etc.)
e) Surface finish (tinned, galvanised, phosphated, rust protected.)
t) Method of manufacture where considered necessary.
g) Specifications Cat/Pt.No. or Drawing No.

17. NO OF ITEMS ON INDENTS

No Indent should contain more than 10 to 12 items and enough delivery
time should be allowed to purchase. .
However in case of spare parts etc. .the indent may bear several items for
same equipment if source of supply is same.

Note: Too many Items on one Indent make It difficult to keep track of each Item on
Indent and, the task of cross referencing becomes difficult and for want of one or
two Items indent may remain incomplete for long periods.

53
 18. DISTRIBUTION OF COPIES OF INDENTS

Copies of Indents should be forwarded to purchase allowing (them

sufficient lead time for purposes of procurement. Copies of Indents should
simultaneously be endorsed to Accounts.
Entry should be made in r811fectiye folios of ledgers showing the indented
quantity as "Dues in"

•Note:- Often a ledger folio/Acett. Card Is designed to 'provide a Column both for dues
and liabilities so that when any quantity Is Indented It is recorded In dues
column. Similarly if any quantity has to be issued/earmarked for any particular
job, an entry made in the liabilities column on the relevant folio.

19. PRECAUTIONS IN PREPARING INDENTS

In preparing indents following precautions shall be taken:-

a) That nomenclature/Specification is complete where specification is not
"known, drawing/sample should be referred to.
b) Do not write, "as per old supply"
c) Do not use term, "Standard Trade Supply (STS)".
except for items of daily use as dusters, bath soap, & towels etc.
Do not write, "delivery required immediately". Always specify date /
period. If you write.,60 days write 60 calendar days (often suppliers take it
as 60 working days).
e) Do not write "suitable packing" but specify it as "packing strong enough to
• withstand rough handling en-route. or packing suitable for sea
voyage(Ocean worthy) etc. or TROPICAL PACKING.
As far as possible no items should be demanded by their proprietary
names unless absolutely unavoidable where a proprietary item ..is in
use/such as shell oil etc, the equivalent brands of same specifications

54
 •
•• should be added wherever possible to facilitate competitive tendering and
econoniical purchases.

20. ROUNDING UP OF QUANTITY INDENTED

Material corm& should round up quantity required to nearest trade
paci/economic production unit to facilitate the task of purchase Deptt.

NOTE: At times quantity required is much too small so that so supplier would. supply It.
In such cases quantity should he rounded/raised to nearest trade .pack/minimum
economic production unit. A large organization asked all on companies In
Pakistan to survey their machines/equipment and to recommend suitable
lubricants for each. This enabled the organization to buy the right material .at the
most competitive prices.

21. FINISHED GOODS INVENTORY

Order Point: The order point defines when to order that is when 'available stock
'drops below order point it is time to order. Theiefore point at which new supply is
ordered is known as "Order Point".
• Assuming monthly sales of an item over past-two & a half years as:

20 — 30 — 24 — 16 — 22 — 14 — 8 — 32 — 40 — 20 — 22 — 24 — 12 — 10 — 26 — 20 — 30
- 40 18 — 22 — 30 — 20 10 28 20 12 40 26 .16

. Only 3 times in the past 30 months have sales exceeded 32. If order is
placed wheu stock drops to 32 there will be a 10% chance of an out of stock
occurring during the lead time that is maximum likely demand is at 90% .
Probability. If order is placed when stock drops to 22 (which is the most likely
sales figure in this example) then there is a 50:50-chance of demand exceeding the
available stock.- By setting the target stock level called the order point at 32
instead of 22 the probability of stock-outs is reduced from 50 to only 10%. The
most likely sales value is still 22 so that on average there will be 10 items in stock

55
 •
when the order arrives. This excess remaining stock at the time of delivery is
known as the Safety Stock and the larger the safety stock for a given item the
smaller the probability of a stock out. It is important to have at least two -years
actual sales history for use as a basis for calculation of demands.

Notes: In our country material manager is not normally given responsibility of managing
•finished goods inventory except for its stock age and distribution Quantities to be
produced or put in stock are determined by marketing. There may be a few
•exceptions, perhaps, such as multinational Companies in Pakistan.

Since this book is concerned mainly with warehousing the subject of

cOntrol of finished goods Inventory has not been dealt with in- any details.
nowever this note is meant only to apprise the warehouseman a propose of the
fundamental concept of finished goods inventory control.

FINISHED GOODS INVENTORY TERMS

Forecast error Difference between actual sales and forecast.
Service Level ' Item sales divided by item demand (Sales over sales
and lost 3aIes).
Lead Time (LT) Time between placing of order and items receipt.
Forecast (F) Maximum likely demand.
Break cycle (Situation): Breaking a cycle at any point within the cycle
or Reorder level period as and when indicated by the shortage index.
Average stock level : is equal to safety stock plus half the order quantity.
cycle (working stock)
Minimum level is .safety stock. ,
Maximum level Safety stock plus order quantity.
Safety stock (ss) is an allowance for occasions during which
or Buffer stock demand exceeds the average level.
Review interval The stock of each itein is reviewed at least once

56
(Review time) (RT) during each period.
Order Point The point at which new supply is ordered. It is
forecast for lead time plus review time plus the
safety stock.
E:O.Q. Economic order quantity or optimum order
•quantity. It is the most common formula among
other mathematical formulas followed in the
scheme of computerized • automatic inventory
control systems.

E.O.Q.

= Units required
When a = Cost of making an order (ie per purchase order)
s = annual sales in units
r = carrying cost (per annum) of Inventory
i =normal cost price.

57
 22. IDENT FORM
/FACTORY

Indent No Description Part . A/u . Quantity Rate @ Delivery

Folio No. fo Stores Catalogues/ Required Cost Required .
Specification
Drawing
R ef. N o.

I 2 3 4 5 6 7

Inspection by Follow ng items on the indent shall be insured

Items No La, t Contract No. And Date Supplier

Indent No di

For supplies during the year Is forward d duly

concurred in by the competent authority.

Total value of items demanded on the indent

Total amount of demands already rased for the

said financial year including this indent

Cost Debitable to Budget Head

58
 23. SELF-ASSESSMENT QUESTIONS

Q.1 What is ABC Formula?

Q.2 What all the Information is required to be given on an Indent?

Q.3 What is i) reorder level

• ii) safety stock?

Q4 What is the general provision formula for common Use items?

Q.5 What is Perpetual Inventory Records?

24. ANSWERSTO S.A.Qs. •

Q.1 Inventory is divided in three categories:

A - class items.
B - class items.
C — class items.

class items am always few in number but are costliest. Often these few
items are worth almost more than half the cost of the total inventory.
B- class items are also-costly but as costly as a class items and they are often
worth 2O to 25% of the total cost of inventory.
C- class items are the balance of items of less value though large in number
that is majority of the items of a total inventory, are small value items.

Q.2 i) During the course of use an iteni falls to a predetermined level (generally
half the order period's requirements). At this break Point, during the course
of review, the provision Branch checks stocks vis-a-vis requirements and
raises a supplementary demand as necessary..

59
ii) Safety stock is buffer stock (normally equal to the requirement of the
(purchase) lead time. The stocks are not allowed to fall below safety stock
level.
Q.4 See the unit
Q.5 Provision Department must have adequate data to enable it to perform its
functions' of preparation of demands, standardization of stores and the
maintenance of stocks at an appropriate, level.) To accomplish this task
Provision Deptt maintains "Perpetual Inventory records" i.e, record of
each transaction of each item stores and a record of rate of consumption
(monthly or annual) and various levels of stock namely reorder. level,
Safety stock level etc. All this data Kept upto date to enable Provision
Deptt to perform all its functions efficiently. Perpetual Inventory Records
may be computerised or maintained in the form Ledgers or Account
Cards.

60
• PURCHASING (PROCUREMENT) BASIC
PRINCIPLES AND PROCEDURES

Written By: SaLah-ud-Din Mir

Reviewed By: 1. ProfJaved Iqbal Syed
And
• Majed Rashid
 INTRODUCTION.
There are two basic types of purchasing in business (a) for resale and (b) for
consumption Or conversion. Purchasing for resale is performed by merchants and
speculators.
This chapter deals with purchasing role in business that is buying for
consumption or conversion. An industrial buyer (the designation for a buyer who
buys for consumption or conversion) has important problems. He participates in
determining what products his company should make, what components or parts
, of these products the company should manufacture and what components or parts
should be purchased from outside suppliers, (that is, Make or buy decision-
making). He correlates his purchasing actiOns with sales forecasts and production
schedules. He selects vendors from whom purchases can be made on a continuing
or mutually Profitable basis. For optimum results he integrates the efforts of his
depaitment with those of the other departments of the firrn. •

OBJECTIVES
A study of this Unit will enable you to explain bow to buy goods:-
i) Cheapest
ii) Correct to specification, and
On due time

These three things are the very basis of all purchasing.

63
 CONTENTS

1. Objectives & Responsibilities of Purchasing Department. 67

2. Function 67
3. Organization 68
4. Methods of Purchasing 70
5. Procedure 71
6. Tender Enquiries 72
7. Repeat Orders 74
8. Purchases by Negotiation 74
9. Petty Cash Purchase 74
10. Spot Purchase 74
11. Contract or purchase Order or Supply order 74
12. Other Clauses 75
13. Excess or Short Deliveries 75
14. Miscellaneous 75

15. Purchase of Machinery 78

16. General Average 79
17. A typical Purchase Order form for Local Supplies 80

18. A typical Example of Acceptance of Order by a Foreign Firm 82

19. Letter of Credit 85
20. Specimen Application Form to Clearing Agents when
goods are to be cleared through them. 96
21. Self-Assessment Questions 98
22. Answers to S.A.Qs. 99

65
.
 1. OBJECTIVES & RESPONSIBILIIES OF PURCHASING
DEPARTMENTS
A classical definition. of purchasing's objettives is to buy materials and
services of the right quality in the right quantity at the right price, from the right
source and at the right time. There are eight basic objectives and responsibilities
assigned to the Purchasing Department apropos of industrial buying activities:
(1) To Support Company operations with an uninterrupted flow of materials
and services; •
(2) To buy competitively and wisely. To buy competitively involves keeping
ahreast of the process of supply and demand that regulates. prices and
aVailability of materials. To buy wisely involves a constant search for
better values that yield the best combination of price, quality and service:-
(3) To keep inventory investment at a minimum;
(4) To develop reliable alternate sources of supply;
(5) To develop good continuing buyer/vendor relationship.
(6) To achieve maximum integration and coordination with the other
departments to the firm
(7) To train and develop highly competent personnel.
(8) To develop policies and procedures which permit accomplishment of the
preceding seven objectives at the lowest reasonable operating costs.
2. FUNCTION
The function of the purchasing department is to procure needed materials•
and supplies, both foreign and indigenous, at competitive rates and of proper
quality and to have them delivered in time to the proper place. The authority to
purchase comes from other segments of the supply department or the management
Or the production executive in the case of industrial concerns. The success of a
business enterprise depends as much on the purchasing executive as it does on the
executives who administer the other functions of the business.
67
 3. ORGANISATION
All purchasing activity in any organisation should be centralised. Large
savings are possible from an efficient centralised Purchasing Department. In
concerns operating several plants in widely spread locations it is desirable
partially to localise the purchasing function. Under this system separate
purchasing department is established in each plant but to be supervised by a
general purchasing department, the Headquarters, who should execute most of the
contracts to be drawn upon by all the various plants.
The central control and administration of all purchasing department or
departments should vest in one person who should be capable of understanding
and using world market conditions, knowing and exploiting all available foreign
market sources, and of finding and developing indigenous sources. He should'be
able to developpurchasing technique, which will tnaterially shorten purchase lead
times. He should attempt to obtain more and more of his items from local sources.
In doing so he should seek the assistance of the Government organizations set up
for the purpose, such as, Pakistan Council of Scientific and Industrial Research
and Pakistan Industrial Technical Assistance Centre etc.

Note (1) in simple words the basic principle of purchasing is:

"to buy cheapest and correct to specification".
(2) The average purchasing department is responsible 'for spending over: half of
every rupee its company receives as income from sales and other. More money is
spent for purchase of materials and services that for all other expense items
combined including expenses for wases taxes, dividends and depreciations.

• He should be able to appreciate the purchase budget, which is an

important factor in efficient buying, to adjust quantity buying on deferred
deliveries and to suggest its revision On the basis either of performance or of
altered purchasing conditions.

68
 Further he should be able to formulate policies for which knowledge and
understanding of the Government's import policies, the taxes and the law of
contract etc. is absolutely essential for him. •
In order to make the most cost effective decision Purchasing Manager
needs a technique that considers not only first cost, but also such later expenses as
installation, training, operation, maintenance etc. Life cycle costing is such a
technique.
The application of the technique can be tailored to fit the particulat
problem at hand.
The purchasing agent or the head of the purchasing department is assisted
by buyers. Each buyer is responsible for all purchases of each or similar types of
materials. The number of buyers will be controlled by the volume of purchases
and the variety of materials purchased. In some organisations the purc\ hasing
department may be set up on a divisional or functional rather than on a
commodity basis. In that case one buyer would handle all purchasing for a
particular division or function of the business.
, The buyers are further assisted by the clerical force for expediting and
following up contracts and for the maintenance of records and other clerical work
connected there.

69
 3. METHODS OF PURCHASING

On as and when required basis. This means that no purchase is made until •
need arises.

(2) For a specified future period. This is a standard practice. Goods regularly
used bought for specified future period.

(3) According to Market

By constant study of the market conditions and factors that affect prices,
an efficient purchasing department will be able to forecast the trend of
market prices. So long as the market purchasing meets the requirement of
• production programme and its possible changes or to the demands of the
plant or business, it cannot be classed as speculative buying.

•(4) Speculative Buying

Speculative purchasing means buying when the market is low, more than
• what is required to meet production demands or business commitments.
This in olves risk in acquiring an excess of materials in the belief that the
price will advance substantially thus saving the concern considerable
money. It does not bas decision on demand of the business itself, bin on
• the possibility of market price savings. Speculative purchasing is not
• strictly a function of purchasing department. It is authorised by the
• management or the Finance. It is in fact a gamble.

(5) -Contract Buying

This is a means of assuring continuous supplies as a method of getting
price advantage. By a contract stipulating deferred deliveries over a
• certain period, advantage can be taken of the low prices at the time of
placing the contract, while spreading delivery of materials for a scheduled
• period consistent with estimated future requirements.

70
 (6) Blanket Orders
This is a,major way to speed deliveries with complete control for high
volume groups of materials. The seller agrees bp furnish and the buyer agrees to
accept a stated quantity, usually within a given period. This step reduces tender
requirement and concentrates major buying decisions in a relatively few.
transactions. It 'educes the cost of purchasing ar,d enables holding stocks at lower
levels. Blanket contracts are useful in the case of companies operating seVeral
plants.

5. PROCEDURE
Purchase Requisition
For the purpose of ensuring correct supplies the purehase inquisition
placed on the Purchasing Department must specify
i) The item with Pall specification, brand, trade name, chemical analysis or
physical characteristics ibid end-use etc.
„..
n) The quantity rounded • to the nearest trade • pack or economical
Manufacturing unit;
• iii) Last paid rate or the estimated cost;
iv) The date by which delivery is required; in parts or in full;
v) The special packing or thapreservative treatment nequirech
vi) • Inspection at firm's premises or consignee's end or on warranty/guarantee.

Note:-(a) The requisitioning department or the production eiceoltive should furnish on

, demand to the purchasing agent blue prints, samples or copies ofspecitications to
guide supplies.
(b) Inspection is not a function of purchasing but the purchasing department. Should
I
demand adequate inspection.

71
 6. TENDER ENQUIRIES

-On receipt of the purchase requisition, the purchasing departmenidecides

upon the method of purchase as would be most expeditious and economical to
meet. The requirements.
Tenders for all supplies are invited on a form devised by the purchasing
agent. Before issue, the tenders ancl schedules will be carefully filled in and
completed leaving only the rates and the tenderer's signatures to be added.
Tenders will, be deposited (or if received by post by the buyer) in a securely
locked box or boxes of which the keys will be retained by the purchasing agent
himsthlf„No tenders should be received after the hour specified in notice to tenders
01 the tender to contractor. At the fixed hour boxes should be opened in the
presence of the purchasing agent, a representative'of the accounts and such other
tenderers or their accredited representatives as may be prosent there. The
purchasing agent and the Accounts representative should initial each sheet of the
tender forms received and Circle any cuttings, overwriting initialed by the
- tenderer. Comparative statement of tenders, will be prepared on the spot.
Decisions as to acceptance or otherwise of a tender/tenders should invariably be
taken the spot:

Note:- Delivery period should be specified by dates. In European countries delivery

period is calculated in terms of working days which is five days a week. There.
fore if delivery period is expressed vaguely in terms of months then in their case
6 months would mean 180 working days or nine calendar months.

The purchasing agent always reserves to himself the right to accept or to

reject any or all quotations Without assigning any reason. Earnest money should
be taken at the time of obtaining quotations. The earnest money should not exceed
5% of the indent value.

72
(i) Open Tender
In case of demands of higher value and for utmost publicity, the
requirements are advertised through the press. Tender forms are issued on demand
to any fimus. It is difficult to avoid middlemen or fake dealers from quoting in the
open tender. In respect of indigenous supplies this is all the more difficult as the
information does not get to the small cottage industry through a press
advertisement and for small quantifies the larger, manufacturers or the stockiest
are sometime disinterested. Therefore, the middleman reaps undue profits.

(ii) Limited Tender

All purchasing departments should maintain a register of reputed and
reliable manufacturers and suppliers. Registration fee may be fixed for this '
purpose. Cards of the registered firms should be maintained under broad
categories of stores. A separate register should be kept of firms blacklisted or
removed from the list of approved firms, indicating the masons of black-listing or
removal. Regiktration fee is not refundable..
Under the limited tender system tenders are invited only from firms on the
approved list.

(iii) Single Tender

This system is adopted only when the. purchase officer is satisfied that not
more than one firm is in f a position to quote and that where deviations in•
specifications are not possible i.e. for strictly proprietary-articles with a sole
agency. Requisitions for such stores should normally be stamped Proprietary.
Proprietary demands. should be rare. The materials should as far as
possible be demanded by their specification and not by brands or by trade names

73
 7. REPEAT ORDERS

May be placed in terms of a previous order and in case where this course
is considered expeditious provided the previous order is a recent one and the
purchase agent is satisfied that the price has not debreased since the last order was
placed.

(i) PURCHASES BY NEGOTIATION

Purchase by negotiation will only be made in exceptional cases when the
stores are urgently required and the time available does not permit resort to any
other mode of purchase.
(ii) Trade in supply. An old model may be changed 'with a new one by
paying differences in cost.

9. PETTY CASH PURCHASE

Makes possible immediate local purchase of sthall value items or those needed for
emergencies.

10. SPOT PURCHASE

This system calls for cash purchase of large quantities under special circum-
stances by a team of purchasers designated by the autholity for this purpose.

11. CONTRACT OR PURCHASE ORDER OR SUPPLY ORDER

Will be prepared after completion of C.S.T., and with the approval of

financial, authorities and also at times technical executive:Full details should be
endorsed on these orders namely., specifications, price terms, time clauses, mode
of payment, special packing or preservation, inspection; guarantee and penalty
clauses, arbitration etc. Legal aspects of purchase contracts demand special
attention. As contracts are generally placed with dealers on the approved list
. 'security deposit' may be waived/reduced, which is normally 5%.
74
 12. OTHER. CLAUSES
Risk purchase. When the original suppliers fail to deliver goods on due
time. The supplies may be obtained from other sources at the risk and cost of the
original suppliers.
Grace period is allowed to the suppliers to cover delay in supplies. The
delivery period is considered as automatically extended upto that limit without
issuance of any formal amendment. Otherwise liquidated damages are imposed
upto 2% per month or part of a month on quantity not delivered. Total LD.
(Liquidated damages) should not exceed 10% of the total cost of the order.

13. EXCESS OR SHORT DELIVERIES

Purchasing agents are authmiXed to accept a small percentage of the total supply
rectived short or in excess without reference to the indentois.

14. MISCELLANEOUS •
Simplify procedures and forms.
Concentrate in speed of purchasing and simplicity of ordering. Only
prompt reaction to purchase requests will permit the full development of an
effective, economical supply operation.
No advance payment should normally be made except against proper
security. Sub-standard supplies may be accepted at times at a propertionately
reduced cost no the recommendation of-the inspectors and with the approval of
the users. Part payments may be authorised only on Supply Orders for supplies
made in parts. Contractors bills are processed through Purchase Department for
payment by the Accounts.

Note: (1) It is a common practice among majority of buyers to use more than one source
specially for bulk supplies or important items. Concentration of purchases with

75
 one source also has its advantages. But whether to rely upon a single supplier or
to utilise several is a crucial proposition. The answer entirely depends on the
purchaser and h is experience.
The requirement has to be spelt out .very, clearly and completely to obviate
chances of incorrect supplies. The purchaser has to know how to order an item
and what are all the details necessary to mention. For example when placing
orders.
For wire ropes the following particulars are "to be provided'
i. Size of wire rope.
Construction.
Type of lay.
iv. Type of core (hemp core or iteel core)
v. Breaking load or tensile strength of wires.
vi. Length of each coil.
vii. Specification BSS or ASTM or any other international standard.
Any other special requirements e.g. zinc coated or uncoated.

(b) For Grinding Wheels

When placing order for grinding wheels fellowing information should be given:
(1) Quantity of wheels required.
(2) Part No. when ordering from any particular catalogue:
(3) Dimension of the wheel
i) For grinding wheels outside dia, overall thickness, hole dia and dia
& depth of recess (please state whether to be recessed on one or both
sides). •
For segments; Top width, base width, thickness or length, drawing
No. etc.
For mounted points and wheels code No. spindle dia, spindle length.
iv) For bricks and sticks cross sectional dimensions, length.

(4) Wheel Type

(5) Face shape (if periphery is to be anything other than straight.)
(6) Specification that is abrasive, grain size, Grade, Bond type etc. and
catalogue Ref No.

76
(c) For Cables
PVC Insulated and armoured
PVC Sheathed un armoured
Twin core circular copper conductor
Size of conductor Nominal Number
Area size of wires.

0.001 (5sq. inch) 0.44 inch

250/440 Volt Cables.
Thickness of insulation 0.025 inch
Thickness of sheathing 0.035 inch
Nominal over all dia 2.26
, Approx. net weight Lbs/100 Yds. 14.76

Nominate area that is nominal cross sectional area of conductor, No. and
size of wires that is number and nominal dia of wires in condurtor.

(3) All consignments requiring shipments from ports covered by Pakistan

Shipping Corporation should be,contracted on FOB basis and where PSC
express their inability, on c&F basis. Exception being Post Parcels
whether by Air Mail or Surface Mail. Surface Mail parcels are those not
normally accepted by Shipping Corporation for being less than the
specified weight/volume. ,

(4) Every rupee saved in purchasing is a new rupee of profit An additional

rupee of income sales, however, is not a new rupee of profit, applicable
expenses must be deducted from sales rupee to determine the remaining
profit.

77
 15. PERCHASE OF MACHINERY
Reputation of manufacturers; life and performance of machines,
availability of maintenance spares and operation costs are the basic factors for
determining the most suitable offers.
In general for machinery and equipment following are the pmperties to be
considered when buying: ,

Productivity
Versatility
Dependability.
Durability
Economy of operation and maintenance
Time and labour saving features

Normally one or two years spares are ordered with the machine/plant.

78
• 16. GENERAL AVERAGE
'When II ship meets with any mishap,sud, as fire on board, then the Shipping Co.,
declare declare percentage which to recovered from all consignees whose cargo is
on board. A typical notification by Ships by Ships Agents declaring general
average is reproduced below:
- "General Average — ms. A.B.C.D. Heavy Weather Damage"
The above vessel encountered heavy weather during her voyage between
Rotterdam and Lisobon on March 14-16. during the above voyage cargo shifted
on board the above vessel resulting in considerable damage to cargo of chemicals
in Hatch No.4 &5 and extensive contamination to other cargo and fumes given off
by the chemicals represented danger to crew, ship and cargo due to probability of
explosion and the vessel therefore, deviated to Antwerp as a port of refuge in
order to obtain experts assistance to arrange removal and destruction of chemicals
and other contaminated cargo. Our principals have, therefore, decided to declare
General Average. The percentage of general average to apply is still being
calculated and will be made known to consignees through the Press as soon as
possible.

79
 17. A TYPICAL PURCHASE ORDER FORM FOR LOCAL SUPPLIES
No.
M/S

Reference:

Dear Sirs,
We are pleased to place an order with your organisation for the following items as
the prices shown against them :-

Item No. Description of items Unit Qty. • Rate. Total

1. The total value of the above order is Rs ..... (Ex-godown/fite delivery at our
Store)
2. Inspection: Inspection will be carried out by the (insp.) at premises. Bulk
supply is subject to prior approval of sample. • Site/your
3. Delivery: Delivery be completed by
(when delivery period is expressed in tenns of days it includes both working
days and holidays.) -
4. Consignee.
5. Payment: You shall send your bill in triplicate along with inspection Report
and Receiving Report to Bills Sections, Payment:
6. Compensation clause: For any delay in supplies beyond the stipulated
delivery period, liquidated damages at the rate of 2% of the undelivered

80
 •quantities' per month or for any part of the month subject to a maximumn of
10% of the total contract value shall be recoverable from you at the
discretion of the purchaser.
In the event of your failing to make supplies within due time the purchaser
also reserves the right to cancel the purchase order and to repurchase
elsewhere part or whole of the quantities at your risk and cost. You shall not
be entitled to any gains in this case.
Intimation of delivery / dispatch: You shall inform Purchase Office by
' telegram or otherwise immediately as a consignment or any part of a
consignment is delivered/dispatched by you against this purchase. order to
consignee.
8. Monogram: You are required to stamp each item with our monogram at a
suitable place and in a manner that the stamp does not interfere with the
appearance/ performance of the item.
9.Security: You are required to deposited 5% of the total value of the order as .
security in form of Pay Order or Bank Guarantee within one week, of the'•
receipt of this order.
10. Income Tax: Payment against this Purchase Order is subject to deduction of
Income Tax as per laws in force.

Please return one copy of this order duly signed for our record. In case you
fail to return one copy duly signed in token of acceptance within one week: of the
receipt of this Purchase Order it shall be assumed that you have accepted this
Purchase Oreer.

Copy to: Yours faithfully

Indentor
Inspection.
Stores —2 copies
Bills — 2 copies

81
 18. A TYPICAL EXAMPLE OF ACCEPTANCE OF AN ORDER BY
A FOREIGN FIRM
Name and Address
of firm in Belgium.

We thank you for your order. Its has been booked according to the special
conditions, shown here under and the general conditions of sales hereto attached.
PAYMENT: In Belgium francs, through irrevocable and divisible letter of
credit confirmed by' a first class Belgium bank, payable in our favour at Charleroi
Cash against documents. When, for reasons beyond CDC control the goods may
not be shipped within letter•of credit period of validity, the FOB amount of the
concerned goods will be drawn from the credit; against presentation of the
warehouse warrant in the port of shipment. That clause Must consequently appear
in the said letter of credit..

PRICES: Finn and final prices.

DELIVERY TIME: They stand for material ready for dispatch in our Works or
inspection in our laboratories and tun from the date of receipt of the notification -
of the letter of credit opened by our bankers or the reference of the import license
if required.,
DELIVERY: CF KARACHI, any other fee, tax or chargé excluded.
INSURANCE AND CUSTOM CLEARANCE: through your care, charges
supported by you.
IMPORT LICENCE: References to be intimated at the soonest.
INSPECTION: Goods supposed to be definitely accepted in our works before
dispatch.
GUARANTEE: CF clause 9 of the extract from our general conditions of sales.
PACKING: on impregnated wooden reels, export type, billed with lamitlex
(flange diameter equal or less than 500 mm) or boards (flange diameter superior
to 500 mm) - 55 concerned item and annexed specification.
82
 EXTRACT
FROM GENERAL CONDMONS OF SALE
(1) Any outer placed by telephone or telegraph must be confirmed in writing
withOut " delay.
(2) No order shall be considered as being final until such time as it is accepted
in writing by our COmpany and the buyer has obtained the necessary
authorizations to acquire the material from his country.
(3) The commitments entered into by our engineers, agents or representatives
shall in noway bind our company until such tithe as they are confirmed or
ratified in writing by the Company.
(4) Suppliers are strictly limited to the material or works specified in our order
acceptance. -
The buyer w assumed to be acquainted with the quality; characteristics
arid special conditions of use of the ordered goods.
• Our company remains at the buyees disposal to supply any additional
detailed infonnation he may require inrhis respect. -
(5) ACCEPTANCE OF GOODS: Unless otherwise specially and jointly .
agreed by both patties, the sale and final acceptance of all goods shall take.
• place in our works.
(6) LATE DELIVERIES: Delivery times are not to be strictly interpreted and
shall be calculated from the date of final agreement until the time of
delivery ex-works. Unless otherwise specially agreed, we decline all
responsibility for late delivbry.
(7) CANCELLATION: Orders shall be cancelled, by full right should the
buyer fail to fulfil his obligations or more particularly, should be
generally speaking in the event of any major change in the buyers
financial position or credit rating (composition, bankruptcy respite,

83
 protest, etc) we shall be entitled to either immediately cancel any order or
balance of order or to claim thither guarantees.
(8) ACCEPTANCE OF OUR.GENERAL CONDITIONS: The present
conditions fonn an integral part Of all sale contracts and except where
otherwise expressly stipulated, the buyer is assumed to be acquainted with
& to accept-all the clauses contained therein.
(9) DISPUTE: Any dispute arising from or as a result of our supplies, shall be
*referred to the-Ccirnmercial Court of Charleroi, the jurisdiction agreed by
• both parties, which shall alone be competent to settle .dispute. .
(10) GUARANTEE: Unless otherwise expressly stipulated in our quotations
and acknowledgements of receipt of order; our material is guaranteed
• against any material or manufacturing defect for a period of one year from
the time of laying or. at the latest Six months following the date of its
being made available in our works. Any accidents or defects due to
mechanical or chemical causes, those resulting from over Voltages -or.
electrolysis or any other cause independent of the quality of the
manufacture or material may, under no cirounistances, be attributed to us.
At all events, our liability shall be limited to the simple replacement of any
cable length or part found to haVe a clearly marked material or
manufacturing defect.

84
 19. LETTER OF CREDIT

Manager
National Bank of Pakistan
Our Credit No.
Mailed/Air Mailed/Cabled
Dated

APPLICATION AND AGREEMENT FOR IRREVOCABLE LETTER OF CREDIT

We/I hereby request you to open by mail, airmail/cable on our behalf an

irrevocable credit as follows:
You will instruct your correspondent at to
negotiate the drafts of (State Name of the Beneficiaries and full address)

without recourse to them to the extent of (State amount of Credit)

draft to be drawn on (State terms of draft) at sight for full
Invoice cost of shipment purporting to be (State nature of goods to be imported
also quantity, if necessaiy)

From (State Name or Port) to part

shipment allowed/not allowed Transhipment allowed/not allowed _ Draft
negotiated under this credit are to be accompanied by shipping . documents
. satisfactory to your said correspondent and are to include beneficiary's signed
invoices in quadruplicate certifying merchandise to be of (Country of Origin).
origin, Invoices are to include the amount of freight
prepaid and may include demurrage and/or warehousing charges: On board ocean
bills of lading showing "freight prepaid" and shipment by Steamer/post Parcel
Airtitight made out to the order of the National Bank of Pakistan or 'to order' and

85
endorsed in favour of the National Bank of Pakistan.. Through Railway Bills of
Lading are unacceptable.
Insurance has been covered by us through under
their cover Note No. Insurance Company)
Bills of landing must be dated not later than
Bills of Exchange Must be dated and negotiated not. later than
You will engage with the drawers, endorsers, and bonatide holders of
drafts drawn under. and in compliance with the Mims of this credit that such
drafts will be duly honoured on delivery of documents as specified if presented
before expiry date.
This application .shall be deemed to have been accepted and this credit •
deemed to have been issued when written advice thereof has been delivered to the
beneficiary..
Licence No.
Additional Conditions

We confirm that except so far as otherwise expressly stated our letter of

Credit application therein is subject to Uniform Customs. andT practice for
Documentary Credits (1962 Revision) International Chamber of Commerce
Brochure No. 222.
In consideration of your opening your irrevocable credit, in the above
terms and conditions the undersigned unconditionally agree as per conditions
overleaf.
All cuttings and alterations authenticated. ,

Signature (Openers)

86
 L.A.P.12/78
1. To accept or pay Upon presentation all drafts drawn pursuant thereby.
2. Notwithstanding anything contained in this agreement you may on
pdyment debit our account with all sums paid in connection with this
Credit, the documents or the goods including- commission, interest and
charges or with the whole- or part to the amount of the credits at any time
or times if you think fit and on demand we will place you in funds to meet
such debits. In the case of credit in currencies other than Rupee, you may
• at any time as you may think fit pass any such debits. In the case of credit
in currencies other than Rupee you may at any time as you may think fit
pass any such debits in the cun•ency of this credit and/or in sterling and/or
in Rupee at your rate of exchange unless otherwise arranged. We will
place you in the funds in the currency in which the debits are passed, the
bills are drawn or the Acceptances are given, or at your option in Rupee at
your selling rate of exchange for the currency. That is at your sole option
to claim payment of any bill drawn pursuant hereto either at the rate of
exchange ruling on the date of its negotiation abroad, or the date of its
• payment by you to 'a local bank or the date of presentation to me/us or due
date of the date of its payment by me/us or in the date of its payment by
me/us or due date of the date of its payment by me/us or in the event, of
any legal proceedings being taken in respect of such bill at the ruling at the
date of institution of the proceedings or of the decree in such proceeding
• and I am/we are bound to make payment of the said bill at whichever of
the. above rates You maY name, Without effecting your right as before-
mentioned we agree duly to accept and pay at maturity any bills drawn
upon us under this credit or to provide you with funds to meet any
• Acceptances given by you under this credit three days before due date or
87
 earlier if required. In the event of any default; you May sell the document,
or goods before or after arrival and any deficit we will pay you on demand
as aforesaid and we will indemnify you against all claims, demands, cost,
and expenses incurred in connection with this credit.
3. To pay on demand your commission, which shall be determined by the
bank from time to time on the full amount of the Credit.
4. Until the payment of every indebtedness and liability absolute or
contingent which now is or hereafter may become due and owing by the
undersigned now or hereafter had with you including transactions under
other letters of credit, the undersigned agree that title and ownership of all
goods shipped under or in connection with the said credit or any way
relating thereto whether or not released to the undersigned against trust or
bailer receipt and/or of the proceeds of such goods are of all bills of
lading, policies or certificates of insurance or other doctuirents given
therefore, shall be and remain with you and the undersigned hereby give
you full power and authority at your direction by yourselves or through
agents at any time to have and take possession thereof and or all policies
or certificates of insurance thereon, and thereof at any time and
irrespective of the maturity to the drafts or acceptance under the said
credit.
5. In the absence of written instructions given by the undersigned expressly,
to the contrary, the undersigned authorise you of any canier including
lighterage receipt, which acknowledge receipts of goods for transportation,
whether the specific provision of such document and the date of each such
documents to be regarded as the date of bills of lading and/or shipments
with the 'terms of said credit, and the undersigned authorise you or your -
correspondent to accept as sufficiently evidencing Insurance under the
said credit either policies or certificates of such insurance.
88
6. The undersigned assume all risks of acts of any person using the said
credits who are hereby accepted as the agent of undersigned together with
all responsibility for the character, kind, quality delivery or existence of
the merchandise purporting to be represented by any documents and/or for
any difference of character, quality or quantity of merchandise shipped
under this credit from that expressed in any invoice accompanying any of
said draft, and for the validity genuineness, sufficiency from or correctness
of any documents, even if such documents should, in fact, prove to be in
any or all respect, incorrect defective, irregular, fraudulent or forged,
and/or for the time, place maimer or order in which shipment is made
and/or for partial or incomplete shipment, and/or the failure or omission to
ship any or all of the merchandise, referred to in the credit and/or for the
character adequacy, validity or genuineness or any insurance policy or
certificate of insurance of the solvency of responsibility of any insurer or
any other risk connected with insurance and/or for any delay, default,
fraud, or deviation from instructions of the shipper or other documents,
with respect thereto and/or delay in arrival or failure to arrive either of the
merchandise or of any of the said from you damages or hold you in any
manner responsible for any delay, oversight or mistake or negligence on
your part or on the part of you or sub-agents in issuing the said credit, or
in complying with any instructions of the undersigned or authorise in
relation to the application to the said credit and the undersigned will hold
you harmless from all cases, whatever suffered by you by reason of any
and all action taken hy you or your correspondent in good faith in
furtherance of our above request or due to errors., omissions, interruptions
or delays in transmission of delivery of any and all massages by main,
cable telegraph or wireless or the same be in cypher.

89
 The undersigned agree to be caused to procure pfOmptly the necessary
import and export or other licences for the said merchandise and will keep
them adequately covered by the policies of fire; marine und war risk
insurance, in companies satisfactory to your assigning the policies or
certificate of insurance to you or making the loss or adjustment if any
payable to you, at your option.
8. And the undersigned agree to give you on demand any further or other
security you may require and further agree the any. and all other funds,
credit instruments, property a securities and proceeds thereof including
also and all collection item, and proceeds then now or hereafter handed to
you or for any purpose left in your possession by the und signed or for
their account, or at their disposal, for transit to or from you by mail carrier
for any of the said purposes, are hereby made security for this obligation:
and a for any and all other obligations, and or liabilities absolute or
contingent, due or not due which are or may at any time be owing by the
undersigned to you and may be held disposed of as you may see fit, and
applied, toward payment of any and all such obligations, and liabilities, all
of which in the event of default by the undersigned, in any part thereof or
of bankruptcy, insolvency, receivership or general assignment of the
undersigned, shall subject to your option forthwith become due and.
payable and undersigned hereby authorise you if any obligation covered
by this instrument or any other indebtedness due fioni the undersigned to
you' shall not be punctually met forth with ... without further demand .or
notice or advertisement" of any kinds, all of which are hen expressly
waived to sell otherwise dispose of the whole or any part of said funds
credits instruments, property and Securities, arrive and/or to arrive at any
broker's exchange or public or private sale or otherwise, at your option,
with permission to yourselves recovery from the purchasers in whole or in
90
 part without accountability save for the purchase price and free from any
right of redemption which (is). hereby waived and released, and to apply
the net proceeds there of against any and all obligations or liabilities of
undersigned to you, however arising.
9. The receipt by you at any time of other collateral whatsoever nature, shall
not deemed a waiver of any of your rights or-order relating to any
collateral which you may hold at the time of receipt.
10: This obligation is to continue in force notwithstanding any change . in
membership any partnerships of the undersigned whether arising from the
death or retirement of to more partners or the accession of one more new
partner
11. The letter of credit can be revoked or altered only with the consent of all
parties interested.
12. That whenever shipments are made to ports other than Karachi, we shall
retire bills on demand of payment.
13. The documents accepted in connection with this credit may be those
which generally accepted for payment,/ laws customs and usage at the
place of negotiation.
14. This will also constitute an agreement between the undersigned and
correspondent whom you may employ (as you are at liberty to do) for the
purpose and in connection with this credit agreement.
15. 1/We authorise you to debit my/our account with all your charges, on
account of this credit, including amendments, extensions of this credit, as
well as charges levied by overseas correspondents or Agents.
16. We forward herewith our cheque for Re: Please debit with
all commissions and expenses.
% margin Rs. Commission Rs
Postage Rs. Cable Charges Rs
91
 - We guarantee due compliance with the terms of the above credit
agreement to issuing drafts there under and to bold the said bank harmless from
all loss or in respect of any matters and from any or all damage or loss what so
ever suffered banks by reason of any action taken uncle': the above credit
agreement.
Note:- -
If any special documents (over and above what is usually termed
document (s) arc required such as health inspection or analysis certification
special or unusual kind or class of insurance, such documents should spelcially
mentioned and included in the application.

LIABILITY RS.

92
 NATIONAL BANK OF PAKISTAN .
Incorporated in Pakistan under the National Bank Of Pakistan
Ordinance 1949

The liability of members is limited.

Main Branch Karachi
CABLES: MTh .,AT BANK"
To PLACE
DATE •

Subject to Uniform Custom and Practice

tor documentary Credits (1962 Revision)
international Chamber of Commerce
brochure No. 222.

Dear Sirs.
OUR CONFIRMED IRREVOCABLE LETTER OF CREDIT
• NO (WHICH PLEASE QUOTE).

This is airmail conformation of credit opened by our cable of

through our London New York office to you. It is only available for such cable
advice and may not be availed of at all unless attached to and as part of our
correspondent's notification of such cable advice. The two, jointly constituting
evidence of the outstanding.amonrit of this credit."
At the request of M/s

we have opened an irrevocable Credit without recourse in your favour available to

the aggregate sum of
(Say
93
by your drafts to be drawn on
• at sight for
invoice cost Of Shipment by Steamer/Motor Vessel purporting to be
from to Pru-tial'Shipment
Transhipment
Drafts are to be accompanied by the following shipping documents unless
other, wise specified:-
(a) Signed benficiary's invoice in Octuplicate certifying merchandise to be
of origin, and stating the particulars and cost of goods.
Invoices should show the amount of freight if prepaid. Seven copies of the
invokes to be sent with the original documents by Airmail and the
remaining copies to be sent with the duplicates by seamail by the
negotiating Bank.
(b) Clean; On Board' negotiable Ocean Bills of Landing marked "Freight
prepaid/Freight collect evidencing shipment by Steamer/Motor Vessel
made out to the order of National Bank of Pakistan or "To Order" and
endorsed to the National Bank of Pakistan. They must bear a written
signature— if signed by a facsimile stamp they cannot be accepted. They
must state the date of which the goods are actually shipped and not the
date received for shipment. All negotiable copies are required. Through
Railway Bills of Lading are unacceptable. Bills of Lading must bear the
mention:
Notify
(c) The Insurance has been covered by the importers in Pakistan. Please
ad vise
by registered Airmail the full particulars of shipment 0.e. name of
Steamer/ Motor Vessel, date of Bills of Lading, name of the port of
shipment, value and quantity of goods, number and marks of Packages
94
 etc.) soon after shipment but before sailing of the SteamerMotor Vessel,
quoting our Credit No. and Insurance Cover note/Open Policy no A
copy of your letter along with your certificate to the effect that the
required letter was actually dispatched soon after the shipment but before
-sailing of the Steatneri Motor Vessel is to be attached with the shipping
documents at the time of negotiation.
Additional conditions:
Bill of Lading must be dated nof later than Bills of Exchange must be
dated and negotiated not later than
Drafts should be enfaced "Drawn under National Bank of Pakistan Letter of
Credit No. payable at their selling rate of exchange at with interest at
percent per annum from date hereof to approximate date of arrival of Cover
in "Drafts drawn under this credit are negotiable through ofir
London/New York Office.
We hereby engage with the drawers, endorsers and bouatide holders of
drafts drawn under and in compliance with the terms of this Credit that such draft
will be duly. honoured on deliVery of documents as specified if presented before
expiry date at our London/New York Office.

95
 20. SPECIMEN APPLICATION FORM TO CLEARING AGENTS'
WHEN GOODS ARE TO BE CLEARED THROUGH THEM

• From A.B.C.
Messrs
Clearing Forwarding and Shipping Agents
Telephone No. Date
KARACHI.2
TELE. ADDRESS.
Our Reference No.
Dear Sirs,
We am sending you Shipping Documents for the under mentioned
consignment for clearance and onward dispatch as per instructions given below:-
(1) Number of Packages Steamer's Name
(2) Description of Goods
(3) Importefs Name and Address
(full address is required)
C.CI. and E. Registration No
The documents attached am as under:.
1. Bill of lading original duly endorsed, in your favour.
2. Extra copy of Bill of lading.
3. Invoices 7 copies.
4. Packing List.
5. Menu. of Insurance Premium.
6. Policy of Certificate of Insurance.
7. Import Licence No

87 Valuation Form (single)

96
 9. Letter of Credit, with amendment advice.
10.
11.
12.
Kindly note the following instructions:
(a) Duty is payable at %
(b) Sales-Tax is payable at %
Rebate:l'Imports are eligible to Rebate.
(Certain Industries enjoy Rebate and they must give the necessary
information).
Goods are to be delivered to
by Goods/Passenger Train. If booking is suspended or if any class of goads are
not accepted by Railway owing to packing conditions, you have the option to send
4.
the goods by a recognized Motor Transport Company.
We agree to send you an advance remittance for Duty and Sales-Tax when
called for We agree that:
• (1) We will keep you free from any liability on account of delay in
clearpnce, demurrage or-for any loss that may occur in course of
clearance or during transit to Railway, or at Railway yard or during
rail transit.
• (2) We shall-not claim any Joss from you in case the steamer agents or
the Port Trust or Insurance Company rejects any claim for shortage
or non-delivery for reasons of their own. •
(3) In the event of any dispute, no court outside Karachi will have any
jurisdiction.
yours faithfully

97
 21. SELF-ASSESSMENTQUESTIONS

Q1 What do the following signify?

CST; D. P; Limited Tender, Purchase Lead Time.

Q2 In the case of supplies from abroad, what does the delivery period signify?
Q3 Explain:
C &F, C.I.F.
Shoit Landings,
General Averages,
Force Majuere.
Differentiate between inability and Incapacity.
What are the compensation clauses in a Contract Agreement? And what is
meant by price Escalation & when is it unavoidable?
Q5 What is speculative buying?

98
 22. ANSWERS TO SA.Qs.
Inability is suppliefs failure to make supplies as promised. For example a
supplier says he is unable to make supplies on due time due to non
availability of raw materials. Inability is no excuse in contract and the
Supplier remains liable to make supply or else the buyer can impose
liquidated damages or make risk purchase. Incapacity renders supplier
incapable of making supplies and in such cases contract becomes void:
For example, a petty vendor is incapacitated by fire, theft or loss. Suppose
a petty vendor is given an order to supply 2000 beetle. leaves. If he comes
&says he is unable to make supply because beetle leaves were not
available in the market, then it only a question of his inability be-cause
he should have foreseen these circumstances. But if his whole shop is
looted/ gutted by five at night including the 2000 beetle leaves he was
hoping to supply then it is a question of incapacity because he is a petty
vendor Who cannot afford to buy 2000 beetle leaves again to make this
supply. If his case is proved the contract becomes void.

Note: For answers to other questions refer to relevant paragraphs in this unit.

99
UNIT -4

WARE HOUSING
GENRAL PRINCIPLES

Written by: Salah-ud-Din Mir

Rewieved by: 1. ProfJaved Iqbal Syed
2. Majid Rashid
101
 • INTRODUCTION
Warehousing (commonly called "storekeeping" in our country) is the
function of receiving, storing and issuing stores, materials and supplies. The
maintenance of stocks in a serviceable condition during storage and their proffer
accounting is the prime responsibility of the Warehouse Incharge. For this
purpose knowledge of care and preservation of each type of store is important A
good store room record system is essential for correct maintenance of store
accounts which also is the responsibility of incharge stores. Protection of stores
from sun, rain and dust and against theft, fraud, fire and sabotage is also yart of
the responsibilities of incharge stores who has to maintain adequate security
•

arrangements in respect of stores in his charge.

OBJECTIVES
A'study of this unit will give students a bird's eye view of the entire field
of Warehousing with reference to handling, storage & preservation of goods so as
to avoid damage in handling and transportation, obviate chances of deterioration
in storage & prolonging life of various types of stores by using latest methods and
techniques, of preservation.

103
 CONTENTS •

1. Nomec lature. 107

2. All Stores on Dunnage/under shelter and stacked away from
walls/Railway Lines. 107
3. Grouping of Stores under.One Roof-Formula. 110 ‘,
4. Method of Open Storage. 110
5. Working Spaces/ Locationing & lndentification 111
6. Stack Boards & Bin Cards 114
7. Material Handling. 114
8. Care & Preservation to ensure serviceability 115
9. First in First Out 115
10. Str- rplus & Waste Stores. 116
11. Security & Fire Prevention. 117
12. Unaccounted for Stores. 117
13. Opening of Store Houses For Air Circulation 118
14. Handling of Dangerous Stores .118
15. Packing Material 118
16. Shortage & Discrepancies 118
17. Self-Assessment Questions. 119
18 Answers to S.A.Qs. 120

105
 1. NOMENCLATURE

All stores items are known by their nomenclature, which means designation of the
item plus description and specification (if any). The Account cant the Bin Card
and all store accounting documents must record complete nomenclature of all
items together with the local code number allotted (Be it seriatim in the scheme of
standardisation or by Decimal Classification or as per the computer code
numbering system).

Note: For example, the nomenclature of a ceiling fan would be "Ceiling Fan 56" Sweep
Capacitor type (off white) complete with 2 ft downrod and regulator" to spec. PS-1/66.

2. ALL STORES ON DUNNAGE/UNDERSHELTER & STACICEDAWAY

FROM WALLS/RAILWAY LINES

a. All stores should be placed on Dunnage**

and stored under (Appropriate) Shekels
b. All stores should be protected from sun, rain and dust.
c. No stores should be stacked against the walls nor any stacks built within .
18"of a wall.
d. No stack should be erected where any part of it will be within five feet of a
rail track.
INSTRUCTIONS: Where storage accommodation facilities arc not adequate
structural steels (mild steels) may be stored on dunnage in the open for short
toreadors provided treated periodically with preservative oils. Building material
•and Foundry stores as sand, burnt bricks, lime stone, ganister, quartzite, ore etc.
may also be stored in the open in specially constructed/improvised bins. Scraps
and wastes may similarly be. stored ill the open provided no fire/security risks are
involved. Non-perishable solids which do not deteriorate by the action of sun or
ran, if in large quantity arc stored in the open either in bags or as such. Typical
107
examples are coal and sulphur. But the substances, which are likely to
*compose, deteriorate, evaporate by the ribbon of sun, light, heat, rain, etc. must
necessarily be stored indoors. Stores/stacks in the open should invariably be
covered with tarapaulinss (covers waterpreof).
Nailing of tarapaulinss to the stacks is bad as it makes holes in the
tarapaulinss, which is meant to be strictly waterproof
As far as possible, stacking of serviceable stores in the open should be
avoided because stacks may be adversely affected by weather conditions..The rain
may damage the stores. The sum may generate sufficient heat especially through
glass to fire certain goods or to fire tarpaulins or oiled sheet coverings. Tins risk is
additional to that of spontaneous combustion.

•NOTES.
** Dunnage is any material built into a stack, to achieve artificial bonding.
Wooden horses, duck boards, skids, aernent blocks, rails etc. are some of the types
of dunnage used in the countty. The wooden horses and duckboards should be
treated with creosote or crude oil before use.
Whatever materials are used as dunnage for stacking they should not be
referred to as "Scrap" as this encourages casual treatment of them in every
respect. If such materials are, in fact, obtained from what would other wise be
scrap they should be specially selected for the work and given careful pmtection
(Preservative treatment).

108
 DUNNAGE,

• Duck liourrls

Woodcrt

SKIDS I BRICK WA I . Ls i or 2 Eig.-4.3

DIGID

109
 3. GROUPING OF STORES UNDER ONE ROOF FORMULA

Only like stores requiring same storage conditions and of same fire risk category.
Should be stored together under one roof.

INSTRUCTIONS: Thus acids, gases and cinematographic stores must always

be stored separately. There am certain chemicals where water should be used in
case of fire, there are other chemicals where water should not be used in case of
fire. These iwo categories. of chemicals must not be stored together.
As a matter of rule only one type or a group of similar types and nature of
stores cin be stored in one building depending upon the fire risk category of each
store. That is to say only such stores or groups of stores can be placed together in
one building which fulfill the following three conditions:-
i) must be like/similarstores
ii) must have same storage conditions &
iii) must have the same fire risk category.

Only when an organization cannot afford to provide separate covered

storage for each group of stores, small quantities of various groups of stores may
be placed in the same building provided dividing walls/traverses are provided in
between the various incaompatible groups of stores. At times an item of stock
itself can be used to serve the purpose of a dividing wall such as fire bricks etc.

• 4. METHOD OF OPEN STORAGE

For open storage, plinths, platforms or hard standings should be provided
and separate bins operated for each type of stores to avoid mixing up,

b) Sufficient space should be provided between every two stacks andsroups

of stacks for ease of access and to avoid fire risk.

110
INSTRUCTIONS: Heavy materials as blooms, ingots, billets, pig iron if stacked
on soft surface may result in tilting or collapse of the stacks built. The strength of
floors 'platforms has to be determined with reference to the desired load. This is
calculated in terms of tons per Sq. Foot/Sq. Meter.
Various types of scraps are likely to get mixed up if not stored in separate
bins. For example high carbon steel scraps/turnings or shavings may have to be
segregated from mild steel scraps/turnings and shavings.
Provisions of open space between every two stacks and groups of stacks is
necessary to avoid spread of fire and to facilitate easy access. In an industrial unit,
long rows of vehicles were parked together. During a wind storm the tire engulfed
the entire lot. Had space been provided in-between every two rows or a number of
vehicles, the loss due to fire would have been much less.

S. WORKING SPACES/LOCATIONING& IDENTIFICATION

(a) WORKING SPACES: In arranging Storage in Racks/Stacks sufficient

space shall be reserved for use as Gangways within each store Building.
Not less than 30 to 40% of the floor area should be reserved as such for
Gangways in a store Bldg.
(b) LOCATIONING: Each building' should be divided into bays and sub-
bays which, should be numbered in alphabetical and numerical order
respectively. Similarly the shelves/Racks and Stacks should be given
running serial numbers each bay or building so that each item can be
traced by its exact location.
(c) IDENTIFICATION: To facilitate identification of stores an
identification label should be tagged with each item/Rack/Shelf. This label
should bear the item code number, the nomenclature and the location.
NOTE: For purposes of identification and complete nomenclature storekeepers should
make use of manufacturers" catalogues.

111
STACKING OF DRUMS

SECIATING
WEDGE
BATTENS

TYPE I

112
HANDLING/STORAGE OF CAST IRO PIPES

113
 6. STACK BOARDS & BIN CARDS

(a) Each stack should have a stack board placed on Top or fixed to the front
of the stack. The stack board should depict item Code number.
Nomenclature. Quantity in stock (Boxes & Quantity packed in each box).

(b) A bin card should be maintained for each item of stock. The bin card
balance must tally with the ground balance at all times".

(c) In large organisations if an item/items is/are spread over more than one
location master bin cards may also be maintained, if need be, centrally
with the I/C Store organization.

INSTRUCTIONS: Stack board is in addition to the Bin Card (which is maintained

for etich Item of stock and for each location. Placed either with the stock or at the
storeman's table.)

** BIN CARD: It is necessary that the balance on Bin Card is always the same as
the stock on ground. It at any time It is discovered that physical balance Is
diffetent from Bin Card balance then Immediately the physical balance is
recorded on the Bin card with date and initials to the officer detecting this
disparity, leaving space in-between the new balance and the last recorded balance
for posting or adjustment voucher for necessary reconciliation.

7. MATERIAL HANDLING

With its available resources each org. should provide mechaniCal aids for
material handling.

INSTRUCTIONS: Material handling costs are an important part of product

costs. An average of 50 Lbs. of materials is handled during manufacture for every
single pound of finished product:largely as the result of repeated handling of the
same item and for this reason material handling alone acbounts for 15 to 25% of
114
labour hours going into a product which are devoted to material handling alone.
Manual handling is expensive both in time and labour. There are many
mechanical aids. to the movement of goods and packaging materials in the
Factories and warehouses and the use of an efficient system of mechanical
handling generally results in economy, reduction of accidents vi:rith consequent
greater safety to operatives and less damage to the goods. The • efficiency of a
storeman is greatly increasedby the use of proper material handling equipment.

8.. CARE & PRESERVATION TO ENSURE .SERVICEABILITY

(a) . FIT FOR ISSUE: Stocks should be preserved in such amanner that each
item in stock is always in a fit for issue** condition when requited.

(b) CARE & PRESERVATION.' Proper care and regular preservation

• treatment should be given to stocks as are likely to deteriorate in long
storage such as perishable and short. Life items; stores susceptible to
• atmospheric .corrosion or biological damage should be treated with
appropriate preservatives at regular intervals besides being providel with
special storage conditions.
t*INSTRUCTIONS: Fit for Issue: There is no point keeping in stock items which
when required for use, are found to be in other than the serviceable condition.

9. FIRST IN FIRST OUT

FIFO: In general and for & all stores the principle of issue from stock
should be on the basis of First-in-First-out.
INSTRUCTIONS: This method necessitates that at the time of merger of fresh
.receipts in stock the last receipt should be placed at the bottom of the stack and
not on the top of the stack in order to facilitate issue of oldest lot first.

115
 10. SURPLUS & WASTE STORES

(a) SURPLUS OR WASTE STORE: Each store organisation should have a

salvage & disposal group located away from stock groups to eliminate
chances" of surpluses or unserviceable stocks finding their way back into
the store godowns to make up for deficiencies in similar items'.

(b) SURPLUSES: Should not be allowed to accumulate but disposed of

Surpluses are as bad as deficiencies. .

INSTRUCTIONS: SURPLUSES OR WASTE STORES: It'may not always be

possible to remove surplus serviceable stocks as have no present/future
requirement nor can be used as substitutes, from the storehouse. In such cases
these surplus serviceable stocks should be segregated and stacked separately
within the same storehouse with a board marked 1:surplus" displayed thereon.
Waste stores are those stores which are generated in the shops/factories or which
have been utilised and have served their purpose and have been condemned under
proper authority. After salvaging any part of the stores as can be reutilised/
cannibalized by the same org. the remaining stores are normally disposed of. All
waste and scraps should be properly classified.
Fresh arisings a tin cuttings/webbing also steel shavings etc. should be
sold on running contract basis because if accumulated over a period they get •
corroded and become (rubbish) steel scrap of less value resulting in loss to the
organization.

116
 11. SECURITY & FIRE PREVENTION
(a) SECURITY OF STORE: Each store should be proteded against damage,
theft, fire and sabotage.

(b) FIRE PRECAUTIONS: Smoking and fire should be restricted and

controlled in all store areas/buildings.

(c) In the case of cotton, straw, petrol, ammunition and chemicals storage
areas, only those steam engines will-be allowed which are fitted with an
extra ash pan' to prevent the dropping of hot cinders on the Railway track
and adequate internal and external spark arresters.

(d) Engines of vehicles should Dot be kept running when loading or

unloading of any goods especially dangerous goods.

12. UNACCOUNTED FOR STORES

At no time mould any stores be lying unaccounted for in the store

house/store areas, with the exception of fresh receipts, which should be kept in a
suspense area/bay (within the storehouse or in a separate building as convenient).
INSTRUCTIONS: If at any time it is discovered that an item is lying
unaccounted for or is in excess of the quantity recorded as Bin Card balance the
first action to be taken by the store incharge is to bring the store on cliarge (that is
to take B.O.C. action) on provisional receipt voucher/document before taking up
any investigation into the cause of this surplus or unaccounted for store.

B.O.0 = Bring on charge r

117
 13. OPENING OF STORE HOUSES FOR AIR CIRCULATION
Each store house should be opened for one hour on every working day for
purposes of cross-ventilation (free circulation of air) except during rains or dust
storms.
14. HANDLING OF DANGEROUS STORES

When handling explosives, Ammo, Chemicals, Acids, Gas Cylinders and other
fragile stores: "Do not drag or drop boxes/cylinders."

15. PACKING MATERIALS

When binning (that is placing in stacks/racks) any metal articles, the

packing material:. loch as wood-shavings, gunny, saw dust etc. should be removed
from it because these packing materials ate hygroscopic, cause corrosion besides
being a fire risk.
INSTRUCTIONS: Protection of machinery and metal equipment such as
finished articles, fittings, component parts and engineering equipment from
corrosion during storage depends on preventing moist air from coming in contact.
with them. Wetting may he due to exposure from the atmosphere by hygroscopic
'substance which may be merely dust on the metal surface, product's of conosion
such as rust are themselves hygroscopic e'en as wood shavings, gunny, saw-dust
etc.
• 16. SHORTAGE & DISCREPANCIES
t
It should be the store managements endeavor to obviate chances of any
shortage and discrepancies in stocks. Although the incidence of shortages and
dolce panicle in stores cannot completely be ruled out, it is nevertheless the
management's responsibility to, minimize the incidence of losses or discrepancies.

118
 17. SELF ASSESSMENT QUESTIONS

Q.1: hr stores the "nomenclature" of each item is necessary for

ordering/accounting and identification. You have seen how nomenclature
of fans is given. Try to give complete nomenclature of the items of stores
around you e.g. chair, table, blackboard etc.
Q.2: Only like stores, requiring same storage conditions and of same fire risk
category can be stored under one roof Now we have two types of
chemicals. One, on which in case of fire water is used and the other on
which, in case of firewater cannot he used. Can these two types of
chemicals be stored under one roof?
Q.3: For Purposes of locationing each building is given a number, then inside,
the building; is divided in Bays and Sub-Bay and then within each Bay
and Sub-Bay stacks or racks are nuinbered and the shelves in each rack are
numbered from bottom to top (so that later on more shelves can be added
on top). Is it con-ect?
Q.4: What is locationing? Give examples to show that you understand this
• system. •

Q.5: What is dunnage? Name a.few types of dunnage used in our country:
Q.6: •What is:
a) Surplus stores?
b) Waste and scrap stores?
Q.7: , What is Bin Card? State its use and method of its maintenance.

119
 18. ANSWERSTO S.A.Os

Q.I: A chair may be described thus "chair wood" (Shisham) with aims and
cane bottom and cane "ck (officers type)" as per provided sketch.
Q.2: No.
Q.3: Yes.
Q.4: See under para 4.5
Q.5: See under para 4.2 (Notes)
Q.6: See under para 4.10.
9.7: See under para 4.6.

120
 .TYPE.& LAYOUT OF STORES BUILDING
& AREAS

( WRITTEN BY: Salah-ud-Din Mir

• Revieited by: 1. Proflaved IqbalSyed •

and
2. MajettRashid

121
 INTRODUCTION

Various categories Of stores require special stone condition and

accordingll y buildings have to be designed to provide special stone conditions in
each case.
Normally store area mould be near Rail/Road Head. It should be enclosed
and guarded.
Generally Speaking a store building has to be as high as pOssible with
large doors (to permit entry of cranes etc.) with floor strong enough to take
desired load, with proper lighting arrangements and with• temperature controlled
and/or automatic sprinkler system (depending on the nature of stores), rodent
proof and with loading/unloading platform facilities.

OBJECTIVES

This unit is intended to apprise students of the need for placing various
types of stores in buildings appropriate to the type and nature 'of stores and the
storage conditions required thereof Besides, when a stole Depot is planned to be
constructed what are the basic factors, which will have to be taken care of.

123
 CONTENTS

1. Siting & Laying of Stores Areas/Depots.

Store House Specifications (Genetal)
SpecifiCations and Additional requirements apropos of
Buildings for Storage of certain Special Stores. 130
Layout plan of a Large Store-House 133
5. Types of Industrial / Stores Buildings. 134
Self-Assessment Questions. 136
Answers to S.A. Questions. 136
 1. SITING 8z LAYOUT OF STORES AREAS/DEPOTS

(A) Where facilities exist stores should preferably be sited in an independent

area (within the factory precincts & close to the main entrance/exit gate) keeping
in view provision for future expansion & Railway Sidings.

(B) Sub-stores buildings/areas may be provided in the proximity of

shops/sections for storage of bulk stocks of items as are peculiar to those
shops/sections. This is done to reduce distances and cost of unnecessary
transportation.

(C) The stores depot/area should be enclosed with barbed wire fencing/
perimeter wall for reason of security of stores.

(D) While two or more gates may be provided as necessary, in the perimeter
wall/ fencing, only one gate is normally operated to control traffic in/out & a
wicket gate is provided alongside for personnel use.

(E) Cluster of green trees provide good protection around stores

buildings/areas against air raids but dry grass and bushes constitute a serious fire
risk which should be avoided.

(F) Consideration should always he given to the safety distances between

various buildings/groups of buildings and between- stores areas and outside
habitation/ Rail/Roads/Chemical Plants/Workshops.

(G) The stores areas should be located on sites considered safe against risks of
inundation due to rains/floods.
NOTE: In case of strategic stores a double (apron) barbed wire fencing is provided with
space-in-between fbr day & night patrol. Also, lights are installed at reasonable distances
along the perimeter. In any case it is good to have a.pathway along and inside of the
entire perimeter wall/fencing for patrol duties.

127
 2. STORE HOUSE SPECIFICATIONS (GENERAL)

In designing a store house/building following basic requirements should be met.

i) Floor should be strong enough to take desired load.

ii) Roof should be as high as possible (24 to 42 feet) to permit maximum use of
storage space that is, volumetric utilisation of space for storage.
iii) Size of building would depend on requirements (that is type and size of
stocks) with due regard to the storage methods and techniives whether
conventional (static racking) or modem (drive in racking or automatic stock
control).
iv) Doom, in case of large storehouses, should be wide enough to allow free
traffic of road cranes and heavy vehicles.
v) Adequate ventilation should be provided.
vi) Number of doom depends on size of the building but it is desirable to have
doors in line in opposite walls. This facilities neat stacking and convenient
gangways/ working spaces.
vii) If a building is not rail served a lean-to platform on the road side is
desirable. The floor/plinth of the building should be as high as a Railway
Wagon's/Road vehicle's floor.
viii) North lights or transparent tiles should be provided on roofs, to permit
adequate lighting.
ix) Only metal doom are recommended in preference to wooden doors.
x) Roofing material should be non-inflammable Sc cardboard/soft-board
ceilings should be avoided as it only adds to fire-risk.
xi) Main switch board should be fixed on the outside of the wall of the building
near main entrance gate. However, adequate number of power points should
be provided for operation of power-operated store handling equipment.

128
xii) Offices of storemen etc: should be outside of the storehouse in an annex or
properly walled if sited within the storehouse.
?di° Providing of 0/14 (overhead) crane gantiy, fixed weighing platform
depending on requirements should be considered when designing a store
house.•
xiv) In very large store houses, a hole in a wall closed with glass and grill is
provided at a suitable point to allow periscopic view of the inside of the
building to the chowkidars who Can peep in during night patrol for any -signs
of fire inside the building.

INSTRUCTIONS
a) It would be advantageous to provide flame proof/concealed lighting inside store
buildings.
b) For termite free buildings professional pest control operators should help the
architects & builders during construction.
The designing & execution of any major store buildings/areas is best left to the
specialists in the field.

129
 3. SPECIFICATIONS AND ADDITIONAL REQUIREMENTS
APROPOS OF BUILDINGS FOR STORAGE OF CERTAIN
SPECIAL STORES:

a) ACIDS: Floor should be cemented and outlets provided for free flow of
leaking acids and to enable water to flow and wash it off into a septic tank
• outside. The metal portion of the 'roof and fittings, electric conduit etc. should be
given periodically a coating of acid resistant paint or the. material used in
• construction should all be acid resistant.

b) CHEMICALS: The buildings should be temperature controlled.

c) TEXTILE AIHD PAPER: The .building should .be rodent proof and
automatic sprinkler system provided. Building should as far as possible be
temperature controlled.

d) TIMBER: The walls should have sufficient openings to •permit free

circulation of air. A drain with perforated steel/cement covers is provided in the
middle of the floor to be filled with, water to Maintain humidity against extreme
temperatures. Automatic sprinkler system should also be fitted in.

e) OILS AND GREASES: The building should be well ventilated and not
exposed to extremes of temperatures. Cement concrete treated with silicate of
soda (water glass) makes a hard impervious surface in which oil does hot
penetrate. Alternatively the floor should be non-slip. Drain leading from the oil
store floor should always pass through an intercepter to prevent oil from reaching
outside drainage system. The site of the oil store shoUld not be near any
manufacturing process with which excessive dust is associated (e.g. coal, coke,
cement etc). Such dust may contaminate the oil alter bffik has been broken.

130
f) PETROL/ AVIATION SPIRIT
i) Semi-underground buildings
ii) Floors or buildings (for the storage of petrol in containers) where
not made of concrete should be of packed earth.
g) CINEMATOGRAPHIC STORES: The building should be situated at
least 20 feet away from other buildings. Again a building, which is occupied as a
tenement, house, dwelling or hotel shall not be used for storage of inflammable
films. Nor should any structure with wooden construction or with artificial
lighting by any means other than electricity be used for storage of films. The
lights should be flame-proof and wiring concealed or in conduits. Buildings with
thick walls and durable roofing provide better storage conditions. Such places
must always be well ventilated. Fire and smoke proof compartments should be
constructed inside the' building, each compartment having ventilation at the top in
direct contract with outer air. Steel doors/windows and air conditioning are
preferable.
h) GASES Store-room should be well ventilated. Lighting for stores
containing combustible gases should either be flame-proof or placed outside the
building. Store-room 'should be fully fire proof and so placed that in the' event of
fire/ cylinders could be removed immediately. No artificial heating is allowed
where compressed gas cylinders am kept. The floor may be of packed earth.
Separate compartments are provided for combustible and non-combustible gases.
i) LIME UNSLAKED: A pit is made into the ground inside a covered shed.
The pit has cement floor/walls protected against seepage of water/humidity. To
maintain lime in unslaked condition the stock in the pit is covered with a 2 to 3
inches thick layer of lime slaked so as to seal/stop contact of lime unslaked with
air.

1) EXPLOSIVES AND AMMUNITION: Buildings are underground

Magazines, semi-underground Magazine or above-ground traversed buildings.
131
For magazines, doors, electric lights are concealed and flame-proof Floor is
covered with linoleum or rubberiod. Di:reconsideration is given to safety distances
between every two buildings or group of buildings depending on qty/ category of
explosives/ainmo stored. The traverses (mounds of earth) around above-ground
buildings for storage of ammo are as high as the eaves'of the buildings/sheds.

Note: (i) Industrial stores buildings are classed as:

a) Permanent
b) Semi-permanent.
• Prefabricated structures are classed as semi-permanent.
ii) The commonly used buildings/prefabs are as follows:-
Permanent: 1) Magazines U/G or Semi UIG
2) North Light Buildings / Sheds.
3) Shell type
4) Folded plate
5) Flat slab
Semi-Permanent
Prefabs: 1) Igloos.
2) Hangers.
3) Nissen Huts etc.
Temporary: Field service huts etc.

132
 2 6

Packing of out-
going Storeq.

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oz
ct, tr4c)5.e,
A,

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<c Ow t
Ca cn CY ca gog

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tao
vi 03 co I 1
165 g
ir7,, o ,
i)

• zz SMRE
KEEPER

TIME
RECEIPT AND
KEEPER
INSPECTION

'he
 - TYPES OF INDUSTRIAL/STORES BUILDING

1. North light 2. Shell Type 3. Folded plate

4. Flat Slab 5. Igloo 6. Hanger
7. Nissen But 8. Lahore Shed 9. - Allahabad Shelter
10. Above ground traversed Bldg. semi-underground
Magazines.

NORTH LIGHT

SHELL TYPE

FOLDED PLATE FLAT SLAB

—L- J —.1—

134
PRE-FABRICATED STRUCTURES

APPROX 90' X 45'

IGLOQ APPROX 250' X 190'

HANGER
DIFFERENT TYPES/SIZES
135
,

6. SELF ASSESSMENT QUESTIONS ,

Q.1 In planning layout of stores buildings consideration should be given to
distances (safety distances) between Buildings. Similarly when stacks are
built in the open sufficient space should be left between each two stacks.
State reasOn. for such action.
Q.2 What are the basic general requirements to be considered when plan ling a
store building?
Q.3 Can the following types of stores be. placed with any other category of
stores under the same roOf they should always be stored under separate
buildings:
Acids.
Gases.
Cinematographic stores.
•
Q.4 What type of a building is required for storage of Oils and Greases? .
Q.5 What factors should be considered when. selecting suitable site for a store
Depot.
Q.6 What are the three of buildings for storage of explosives and ammunition.
Q.7 What is ineant by prefabricated structures? Name some of them,
7. ANSWERS TO S.A.Qs.
Q.1 This is done to facilitate material handling and transportation in/out and
also to avoid damage/loss due to spread of fire from one building or stack
to the other. •
Q.2 pig gates, lighting, cross ventilation, strength -of floor, rail/road siding,
lean to platform, high root provision for overhead crane etc.
Q.3 .No. Each is stored in Separate building.
Q.4 See under relevant paras.
Q.5., See under relevant -paras.
. .
Q.6.. See under relevant paras.
- • 136 -
UNIT-6

WAREHOUSING ORGANIZATION
& CONTROL

Written By: Ah ud-Din Mir

Reviwed by: Prof Javed Iqbal Syed
and
Majad Radbid

137
 INTRODUCTION

• Each Warehousing Department should be centrally controlled. But

location of warehouses may be decentralised so as to place stores nearest to the
user to avoid unnecessary transportation expenses.
The control of warehouses (stores) should not be entrusted to the users
because it would not be possible to check on consumption and stock levels if
stores were in user's custody. The chances of misuse of stocks cannot be ruled
out. •

Central Control has the advantage of expert care and custody.

The warehousing staff should be conversant with type of stores in their
custody and with the preservative treatment required in each case.
Responsibility for charge of stores At each tier should be fixed and
specified in the fonn of written orders and procedures.

OBJECTIVES
This unit gives students the universally evolved and accepted principles of
organizing warehouses in a manner so as to achieve both efficiency and economy.

139
 Contents

1. Status of VC stores 143

2. Infrastructure 143
3. Transfer of charge-Stroeman/Godown keeper 144
4. Transfer of charge-Store officers 144
5. Central command/Decentralised Location 145
6. Security of stores Buildings and Areas. 145
7. Custody of keys. 147
8. Opening & closing of store houses 147 '
9. Detailed charter of duties of store house staff. 151
10. Yard stick for measuring record of performance
of warehousing .(stores) departtitent. 159
11. Self-assessment questions 159
12. Answers to S.A. Qs. 160

- 141
 1. STATUS OF IX STORES •

The store (Warehousing Department) should be headed by an officer

whose appointment should be commensurate with the size and scope of the
department and, as it fits into the scheme of organisational set up of tile concerned
unit. The Officer VC store should be directly responsible to the head the Materials
Management Organisation.

2. INFRA-STRUCTURE
The store Department's Infra-structure is universally of the following pattern:
i) Traffic Group: That is the diVision handling incoming and out-going
consignthents.
ii) Receipt Group: That is the division responsible for quantitative and
qualitative check and documentation of incoming consignments with the
help of inspection department.
iii) Stock Group: That is the physical stockage division responsible for care,
custody and preservation of stocks, accounting and store room records and
their issual distribution.
iv) Stock Taking and Adjustment Cell:
Though stock taking team functions independent of the store head it is,
neverthless, considered a part of the store Deptt.

NOTE: (1) The perpetual inventory record (stores ledger) should be maintained In the central
material (inventory) Control Department which bears independent entity and
constitutes a separate division of the material management organisation. The control
of material control Department is Vested in a separate officer in smaller units,
however. It may be combined Into the responsibilities of the stores' Head.

NOTE (2) The charge of stores stocks is further divided between various stores/Asstt. stores
officers each controlling a distinct group of stores In a, tore building/s and area/s.
The responsibility of actual custody of stocks rests with the store men/god own
keepers who for obvious reasons should be fidelity bonded/security cleared, In the
interest of the organisation in which they serve.

143
 For determining the store personnel at various tiers, following criteria
maybe helpful:
Monthly turnover 2 Crores
to
4 Crimes G.M. or Senior Manager
for Engg: Units •
Size of 50000 items
Inventory or above plus
spares inventory

Over 50% of the above. Sr. Mgr.'or Mgr.

Upto 50% .of the above - Mgr. or Dy. Mgr.
Each godown keener/storeman should hold charge of only one category of stores/godownl

3. TRANSFER OF CHARGE STOREMAN/GODOWNKEEPER

A certificate of transfer of charge is completed when the believing

storeinan with the accuracy of stocks vis-à-vis bin cards. Reasonable time is
allowed for transfer of charge. In large godowns the Manager store may fix a
percentage of stock check and if any discrepancies are revealed a further
percentage and, if results are still unsatisfactory a 100% check is canied out.

4. TRANSFER.OF CHARGE STORE OFFICERS

The relieving officer will satisfy himself that the stores have been
regularly verified and that departmental instructions for their care and
maintenance have been correctly observed. He.xvill obtain "Clearance Certificate"
from storemen/godownkeepers. Besides a small percentage of stores may be
checked in all godowns and the results of the these checks communicated to
higher authorities for approval before taking over charge

144
 S. CENTRAL COMMAND !DECENTRALISED LOCATION
(a) The command or: charge of stores department should be centralised but
the location of stores may be decentralised.
, (b) The Shop Godown/Expense Stores for stockage of shop's requirements
over short periods shall be under shop control, however.
INSTRUCTIONS: Stores peculiar the requirements of a particular a hop/factory
within, the unit may be placed in a building/area close to or in the Vicinity of that
shop/factory. but should remain in the charge Of Central Stores. The objet is to
reduce cost of transportation on account of distance.
NOTE: Any deviation from this rule shall have to have approval of the higher
echelons. Shop godowns are meant only for stockage of stores drawn for shop use
to meet a week's/fortnight's or/and a month's requirements of that shop. Similarly
shop's tools and equipment are maintained on Shop's charge.

6. SECURITY OF STORES, BUILDINGS AND AREAS

In addition to the steps listed above following further security measures should be
taken for all stores/buildings/areas.
(a) Screening of Personnel: The antecedents of all personnel employed in
store organisation should be duly verified through police or the
organisation's own security department.
(b) Material Gate Passes: No store or material should be passed out of the gate
unless accompanied by an authorisation slip or gate pass..
(c) Identification Passes: Personnel entering or leaving the store house should
_
be identified by the gate staff and those employed in the stores should be
issued with identification passes. No unauthorised personnel. Should be
allowed to enter a stbre, visitors and contractors should disclose their
identity and' sign the register kept at the gate for the purpose.

145
(d) Search: Personnel employed in the store houses should be subjected to
-regular or surprise search both at the' time of mustering in/out and during
work, and also, food boxes or brief cases carried into the stores..
All vehicles should be searched in/out. In case of officers/VIP, the gate
staff should taCtfully manage a check/search of their vehicles and without
causing any offence.
(e) Gate Management: Each gate should be, manned. by reliable gate
staff/durwans round the clock.
(1) Contraband Stores: All contraband stores and materials such as cigarettes,
tobacco, matches, lighters etc should be deposited at the gate of
stores/areas or buildings ivith the gatekeeper/durwan on duty,

(g) Surprise/Regular Stock Checks: The storekeeper must himself carry out a
percentage check of his stocks daily and make a record of it in a register.
This check is, in/ addition to the regular/periodical checks of stocks carried
out departmentally or by the accounts stock verifier:
The storekeeper should also occasionally check stores at the time of
issues/ receipts.
Weighting Machines. The department concerned must check all counting/
weighing machines and balances accuracy regularly.
(i) Patrol Duties: During nights and during nonworking hours the store areas
must be checked constantly by the watchmen on patrol duty.

a) Organisation's Monogram Marking/Stamp: All processional tools and

other pilferable items as electric lamps and fittings should be stamped/marked
. with organisation's monogram to serve as deterrent against theft/replacement.

146
 7. CUSTODY OF KEYS
The system of drawal or deposit of keys of the stores buildings/areas should be
foolproof. Normally the keys/locks are numbered and the keys kept in a key
cupboard during non-working hours. The key box is locked and sealed. The key
cupboard should be placed either at the gate or in the main office. Duplicate keys
are either destroyed or retained by the security department of the organisation for
safe deposit.
A proper record of the deposit/drawal of keys is maintained at the
. gate/main office. Only persons duly authorised in this behalf are allowed to
deposit/draw keys of stores buildings/areas.

• 8. OPENING 8z CLOSING OF STORE HOUSES

(a) A responsible person should be detailed in rotation for opening and
closing duty. He shall after opening/before closing take a complete round
of the building/area. Before closing he shall ensure that:

,(i) All personnel working inside the building have been mustered out
and that nobody has been left inside.
(ii) All lights and switches have been put off.
(iii) All doors/windows have been closed and locked.
(iv) All inflammable material such as oily rags, pieces of wood and
packing material as woodwool, wood shavings, saw dust, gunny
and waste paper have been collected in the receptacles provided
which are removed from the store/area before closing.

(b) A store house may have several doors/windows/ventilators. The windows

and ventilators should all be securd with grill, iron bars or expanded metal.
After opening for an hour doors/windows/ventilators for circulation of air,
only one or two doors are left open during working hours, others being
147
 locked from inside. At close of work only one door is locked from outside.
It is desirable to seal this lock so that the following morning the seal can
be checked for any tampering with. The keys are deposited at the
gate/with the 'storekeeper or at the- main office depending., on the
system/procedure in vogue: in an organisation

(c) Mustering In
Stores buildings/enclosed areas will be open 5 minutes before opening
hour in the presence of the incharge of the building and by the staff
detailed for the purpose.
All labours before they are passed in will be searched properly for any
contraband material. It is also advisable that the VC stores detail their
Supervisor to search their respective labourers but where this is not
possible the incharge will himself be present to ensure that the Durwan or
labourer appointed as such carries out search in a proper mariner. The
incharge will then take a complete round of his area in fact he is required
to spend about one or two hours every morning in his actual round of the
bldg/area.

(d) Mustering Out

It is very important that all Godownkeepers check every nook of their
godowns before they leave and sign in token of having done this in a
register maintained by each Officer Incharge. The Officer Incharge •
responsible for the bldg/area will make a round of every nook and comer
of store house personally before the bldg is locked in his presence. He will
then switch off all lights except were specified otherwise. The bldge will
not be closed if the officer has any suspicion about any-thing. In this case
be should have action taken to his satisfaction before the bld'g is locked in'
his presence. For instance, if he finds any cotton rags, waste, he will have
148.
 them removed. If. a stack or heap is dangerously tilted he will have it
undone. Similarly he will ensure that all doors/windows are properly
secured and closed. If any packages are left open with their contents half
in and half our he will see if there is no breech of security in that, and
where packing material is left open it will be removed from there. Any
defects in electrification or building fittings should be reported promptly

Note: In a certain organiiation when shoe boxes were opened during stock verification
many were found empty and without any pairs of shoes. Therefore side of each
box should have a peep through hole.
In another organisation a godownlceeper used to steal mercury by carrying a
small quantity in his pocket daily.

149'
Si Closing Report
Name of individual detailed to close the Section (a) Certified
that before closing Section, I have safisfied my self
1st. That no individual is left within the walls of the Section
2nd. That all doors and windows are securely fastened.
3rd: That all fires and lights have been extinguished with the exception
of and everything left correct.
4th. That no inflammable Materials such as oily or greasy rags used 50tton or
paper of any kind has been left lying about.
5th. That the "Key box" keys have been deposited at the Gate. and that the
interior Keys of the Section have been hung up in Key box inside the
Section.
No. of Keys

6th. That the Keys of all doors, Gate, etc. are correctly labeled.
7th. That Section closed at P.M.
8th. That the fire tanks are fill of water.
9th. That all electric power and lights, gas and water taps are tinned off.
10th. That all arms, ammunition and important finished components are correct
and have been locked up/locks further sealed.
1 1 th. That contents of fire boxes and fire appliances -under my charge are
correct.
12th That all fire buckets and receptacles are filled.
on duty. ,

20 Section.
•
(a) To be entered and initialled by the Head of the Section.

150
 9. DETAILED CHARTER OF DUTIES OF STORE HOUSE STAFF

Detailed Charter of duties of store house staff as incorporated in working

procedure of an organisation is given below
(a) Duties and Responsibilities of Store Holder A Storeholder or an Assistant
Storeholder on stock side is generally appointed to hold charge of a stock
group comprising one or more category of stores and a group of bldgs/areas
as are contiguous or located in one sector of the Factories. The S.H./ A. &
H. Incharge of Stock Group is reasonable for:
i) Organi7ing his stores in a manner that only permissible categories of
stores are grouped together and proper storage condition§ observed for
each category. Where a deviation is required he should obtain written
approval of the Store Head..
Taking all necessary security and fire precautions. He should ensure,
that all stores areas/buildings have adequate first aid fire fighting
equipment, that security measures necessary for protection of stores
are taken and that lighting arrangements exist where necessary. Where
any of the above provisions do not exist he should report facts in
writing to the Store Head.
Making satisfactory arrangements for mustering in/out of his men,
their search at mustering in/out and also surprise search during work.
He must rigidly, control attendance of his men, ensure that they
observe absolute punctuality and that the incidence of leave/absence is
kept to the minimum in his group. .
iv) Making recommendation of sanctioning, if competent, leave of his
men, also recommending increments/promotions. He will recommend
or make stopgap arrangemllts in. his own group. It is necessary that
the S.HA.S.H. must himself allocate labour and transport within his

151
 • group. Each day's work: should be allotted to the men at closing hours
of the preceding day.
Making a report on all leakages of roofs during rain of bldus in his
charge, repair to roads buildings in his areas, defects, in electric, water
and steam installations. He may initiate proposals, plans in this regard.
Opening/Closing of buildings/areas in his charge in his own presence
or if he is not present by another Officer working on his behalf.
vii) Checking items daily for Card balance vis-a-vis ground balance and
locations. The number of items .to be checked depends on the holdings
but he must ensure that all items are checked at least once a year. ,
viii) Ensuring that all the G.Ks, staff and labour under him are discharging
their duties and responsibilities as enjoined by these orders. •
ix) Checking as many issues. by his Godownkeeper as. possible. Also he
will be present at the time of receipt of stores in. his, go down as often
as possible. •
x) Laying down programme of periodical preservation for his stocks and
imparting detailed instructions- and ensuring these are carried out. He
will be responsible for advising his Go down keepers in this respect.
xi) Ensuring that all discrepancies in his stock are personally investigated
• dealt with and adjusted by hint' •
xii) Ensuring that all his stocks are, protected against theft, damage and
deterioration. •
Ensuring that there is no idling in his group.
xiv) Signing all documents; Gate Passes, Adjustment vouchers, Recp and
issue vouchers, sy sheets, routine correspondence, charge-sheets, ask
reports, personnel gate passes, injury reports etc,
xv) He. will deal with au enquiries and audit •-objections himself in respect
of his. group. Maintaining Iventory of all items and equipment- in use
152-
 in his Group such as furniture, typewriters, clocks; bicycles, gravity
rollers, cranes, trellis etc.
xvi) He will deal with all enquiries and audit objections himself in respect
ofThis group. Maintaining Inventory of all items and equipment in use
in his Group such as furniture, typewriters, clocks, bicycles, gravity
rollers, cranes, trollies etc. he will be responsible for maintenance of
Store Handing Equipment placed under his charge for work and their
comet use.
xvii) Indenting for consumable items for his group, to stock these and to
record & control their use.
xviii) Ensuring Pin Cards are correctly maintained and all locations are
correctly entered therein.
xix) Checking irregularities of any kind. He will bring all important matters
to the notice of his superiors.
xx) Ensuring that there are no delays in bringing on charge receipts or the
issue of materials.
xxi) Maintaining, close liaison with Inspection and also shops/sections of
r
his responsibility.
x)di) He will ensure that all transactions are authorised and properly
documented.
xxiii) Issuing duty passes to his men on leaving their place of work for short
periods on duty.

NOTE: Froni the above it is clear that if there is any discrepancy in stock, the Ultimate
responsibility is as much of the Store Holder/Asstt: Store Holder as of the
Godownkeeper, provided however, it is proved beyond doubt that the discrepancy was
due to the sole action of the Godownkeeper himself or is due to factors beyond the
control of the Stock Holder. Similarly in case of theft or fire, the Stock Holder will be
responsible if it is proved that the tire/theft wa for reason of lack of execution of
instructions on his part in respect of his tock Group.

153
b) Supervisor or Chargemen Posted in Stock Group
(i) Duties and responsibilities
A Chargeman or a Supervisor posted in Stocks may be entrusted
with the charge of a Store Bldg/area with oneeor more godowns therein.
The Chargeman/ Super thus appointed is responsible for
Providing necessary assistance in the matter of labour, transport
loading and unloading etc. to the Godownkeepers.
Security of the building area go downs in his charge;
Checking the postings of all receipt and issue documents and
correctness of balances on Bin Cards.
Providing men and materials for preservation and keeping a record
of this periodical preservation treatment.
Ensuring that all stores in. the open area are on dunnage and under
tarapaulinss and stack boards ate in position and locations properly
marked.
(6) Ensuring that buildings /go downs are opened/closed properly and
in time by the G.K. and that' closing is done after due check of the
bldg/godowns for any inflammable materials/articles which
constitute a fire risk.
Ensuring that search of personnel is carried out on passing in/out
and at least once a month a surprise search during working hours.
Checking on the entry of unauthorised persons in bldgs/ areas/
goclowns.
Reconciliation at the time of stock taking.
Comparison of Bin Cards with ledgers.
Ensuring that nothing is passed out of the bldg/area/godown
without proper authority.

154
 (12) Ensure that all buildings / areas go, downsare kept meticulously
• clean and in an orderly manner, That dry grass is cut from
• underneath/around stacks. For this purpose a labourer should be
given a distinct area to clean.
(13) Signing Demand/Beturn Notes when authorised to do so on behalf
of the S. H.
(14) Ensuring that the men in his charge do not idle time.
(15) Keeping a strict vigilance on the attendance/presence on duty of
his men.
(1) Since all issues and receipts will be checked by Supervisor/
Chargemen he will be responsible for surpluses and deficiencies to
his Stock Holder.
(17) He will also perform any other duty entrusted to him.
Godownkeeper
Godownkeeper is the custodian of the stores. The officers senior to him
will share equal responsibility with the G.K. Therefore when the Godownkeeper
is away his duties are performed by his senior. In the absence of the G.K. his
senior will make all issues and receipts from/into the godown. His senior
(Chargeman. ASH and SH) performing these duties in his absence should keep a
special record of all the transactions made in the absence of the G.K.

Duties and Responsibilities

The Godownkeeper is responsible for:
(1) Safe custody of stores i.e. binning, stacking and storage with a view
to ensure that all stocks are arranged stacked and stored properly,
(2) Correct maintenance of Bin Cards and their entries.
(3) Keeping an index-cum-location register for all items in his charge
and keeping it upto date for locations.

155
 Ensuring that the ground balances tally at all times with Bin Card
balances.
Maintaining tally cards for each stack/item where an item is kept at
more than one location.
Assisting the Stock Verification Team in the stock .taking of his
items. He will sign the stock taking sheets in confirmation of the
quantities found and, the stocks checked in his godown. He will
certify that none of the stocks pertaining to items mentioned on the
Stock Verification Sheets or in his " charge have been omitted to be
shown to Stock Varifiers.
(7) Ensuring that all items on his charge are given proper preservative
treatment and are stored in a mamier that these are - immune from
insects, fire, moisture, evaporation, theft, weather, corrosion and
deterioration.
•
(8) Ensuring that no items are lying in his godown unaccounted for or
are unserviceable.
(9) Ensuring that his godown is at all times kept clean of any rubbish,
wastes or inflammable material which may cause fire.
(10) Making sure that nothing is issued from or received in his godown
without proper documents, such as demand notes, R/Notes, Rt/I.Vrs
etc. -
-(11) Receiving all items in. his godown after due check/counting,
weighment and after satisfying himself about their condition etc and
the quantities.
(12) Initiating Danger Level notifications when stocks fall to/below
danger level.
(13) Opening/Closing of his godown.

156
 (14) Preparation of Loss Statemental Expense vouchers/adjustment
documents consequent on conversion losses/evaporation/dryage.
(15) Not allowing Unauthorized people to enter his godown.
(16) Any other duty entrusted to him by his S.H./ASH in connection with
stocks.
NOTE:
From.the duties and responsibilities indicated above it is clear that if there is any
deficiency in his stocks the GK. is generally responsible and he will be required to make
good the shortages. Similarly if the B/C entires or the arithmetical calculations are wrong
he will be held responsible. Again if an item in stock deteriorates or is damaged due to
his negligence or carelessness he will be responsible for making good that loss/ damage.

15.7
(ii) Tenure
With a view to ensure proper and smooth working of stores godowns and
to enable admin authorities to pin point responsibility in case of any irregularities
in the godowns coming to light, a fimi policy and procedure is laid out in that
behalf. The charge of a godown shall be entrusted to a godown keeper who has
attended a course of basic training and after proper stocktaking of the items held
in that godown. Once a godown keeper has been posted to a godown he shall not
be transferred from his charge unless it is necessitated for one of the following
reasons:-
1) That he is completely unfit to manage the godown.
2) that he has been promoted to a grade for which higher responsibility
commensurate with his charge is to be given to him.
That he has spenea period of at least three years in the godown and that he
is considered to be tit for.training in other godowns to enable him to earn
his promotion's or holding a more extensive charge.
4) That he is involved in the irregularities detected in his godown and that his
stay in the godown is considered undesirable.
5) That he is required to be removed from the godown for any security
reasons or for reasons of administrative expediency.
The transfer shall be effected only after. the facts necessitating transfer
have been recorded in writing and approval obtained in writing.

158
 10. YARD STICK FOR MEASURING RECORD OF PERFORMANCE
OF WAREHOUSING (STORES) DEPARTMENT

Inventory turn over and average shelf life.

Labour out put (that is, performance of labourers in terms of per capita
tonnage handled)
iii) Number of stock discrepancies.
iv) Average time taken in issue of stores/13.0.C. action in respect of receipts.
v) Number of fires/accidents.
vi) Incidence of stores not being in a fit for issue condition.
•vii) Stores carrying costs.
viii) Least duplication of effort and reduced paper work (extensive use of
standard* forms).
Total number of consignments received/issued (items and tonnage).

• 1,1. SELF ASSESSMENT QUESTIONS

Q.1 Can any stores be issued and passed out of the Gate of stores deptt on the
•verbal orders of I/C Stores?
Q.2 All personnel working in stores organisations are liable to search. I this
correct? And what are the types of search?
Q.3 What is the infrastructure of stores Deptt? Briefly describe Charter of
duties of each Deptt.
Q.4 What are the duties of:
1. Stores Officer.
2. Asstt. Store's Officer/Chargeman.
3. Storekeeper (Godown Keeper).
5.5 How would you effect transfer of charge of:
1) Stores officers. •

2) Godownkeepers.
159
 12. ANSWERS TO S.A.Qs.
Q.1 No there must be a gate pass.
Q.3 Ms. Traffic: Responsible for collection/taking delivery of consignments
in packages/bdles. and (2) for packing and despatches/
deliveries to outside agencies (3) for disposal of transit
doctunents and transit discrepancies (4) liaison with carriers
and settling claims with then

Receipts: For getting consignments checked quantitatively and

qualitatively. For arranging payment to suppliers. For
receipt documentation. For settling discrepancies with
suppliers for short/defective reCeipts..

Stockgroup: For care and custody of stores and for both internal and
external issues.

Q.5 , Ans. Guide Points:

A handing/taking over certificate is signed in each case. In
case of stores officer a percentage of stocks as decided is
checked and the godoWnkeepers give Clearance certificates
in respect of their godowns. 1 ft' case of godownkeeper a
cent percent check is ' desirable. A list of outstanding cases
of discrepancies, receipts and issues is appended to the
handing/taking over certificate.

Note: For answers to other questions see relevant paragraphs in this unit.

160
UNIT-7

MATERIAL HANDLING
AND
STORE -ROOM EQUIPMENT

Written By: Salah —ud-Din Mir

Reviewed by: 1. ProfJayed Iqbal Syed

And
2. Majed Rashid

161
1
 INTRODUCTION

'Material handling may be defuted as the rationalisation of handling,

moving and storing materials economically and with speed.
The efficiency of a store room is greatly increased by the use of proper store room
and material handling equipment. Materials handling with mechanical aids has,
indeed, many advantages. It is safer, • economical and consumes less time and
labour.

NOTE:-
In manual handling of dangerous goods and fragile store, as acid carboys/bottles,
glassware, gas cylinders and ammunition ands explosive boxes - a golden rule to
remember is "do not drag them and do not drop them".

The use of container traffic (container vessels or NLC inland container service) has
reduced the risk of mechanical and climatic hazards to goods in transit..

OBJECTIVES

The unit will give students an idea of the kind of mechanical handling equipment
the use of which is not only safe but also provides speed and savings in
expenditure.

163
 CONTENTS

1 Definition of material handling 167

2 Principles of material handling 167
3 Handling equipment - Distance-wise 167
4 Types of handling equipment required for store-house 168
5 Maintenance Schedule for the equipment 169
6 Crane operations , 169
7 'Lifting Gear! Appliances 169
8 Co.mpetent persons to operate Lifting Appliances or give signals 170
9 Store room equipment 171
10 Volumetric utilization for space in store buildings 173
11 NLC Trailers 174
12 Formula for Determining efficiency / out-put of Labour 174 ,
13 Self-Assessment Questions 179
14 Answers to S.A. Questions 180

165
•
 1. DEFINITION OF MATERIAL HANDLING

Material handling as already stated is the rationalisation of handling,

moving mid storing materials economically and with speed. Manual handling is
expensive both in time and labour. There are many mechanical aids to the
movement of goods and packing of materials in the factories and warehouses and
the use of an efficient system of mechanical handling generally results in
economy, reduction of accidents with consequent greater safety to operatives and
less damage to the goods.

2. PRINCIPLES OF MATERIAL HANDLING

Materials should be handled in the largest convenient 'Unit-loads' by the quickest

means over the shortest route, in the safest manner and by the 'cheapest methods.

3. HANDLING EQUIPMENT DISTANCE- WISE

The main types of material handling equipment all or any of which could be used
within the available resources/facilities of an organisation are listed below:

Those carrying materials over a fixed path: conveyor belts, gravity, rollers
stands and corners) chutes, monorail, aim elqvators, apron, etc.

Those carrying materials within a limited area: hoists, overhead travelling

cranes, fork lifts, carry lift cranes, lister trucks, yale trucks, and shovel and
bucket machines.

iii) Those carrying materials over a wide area: Trucks, Tractors, Overland
Trailers, Railways, Vessels, Ancrafts.

NOTE:- The handling of material in a store or warehouse should be such that the
maximum utilisation of space is accomplished together with• ease of selection
& minimum effort.

167
 4. TYPES OF HANDLING EQUIPMENT REQUIRED FOR STORE-HOUSE:

Each stores organisation should keep an •adequate number of the following

handling equipment in keeping with its scope of activities:

Shovels and pick axes (for handling of materials as sand, coke, coal, bajri).

Wooden/Steel ramps to be adjusted against railway wagons doors so that

loose material (Saud/Coal etc.) during unloading does not fall into the
railway track.

Stackers, trollies, (jack lift Hydraulic), wheel barrows, self-supporting

mobile ladders, trollies for gas cylinders etc.

iv) Slings (Wire ropes/chains)

v) Unserviceable tyres/wooden sleepers to enable rolling down of cylinders etc

from wagons/vehicles.

vi) Rail/ Road Cranes (call, be hired also).

168
 S. MAINTENANCE SCHEDULE FOR THE EQUIPMENT

INSTRUCTION
Each piece of handling equipment should have servicing• schedule to keep
the equipment in useable shape. For this purpose the equipment should be freed as
arid when required.
Chains/ropes and lifting gear shall be tested and thoroughly examined
before use unless it has been so examined at least once within the previous 6
months.
6. CRANE OPERATIONS

When overhead crane operates above stacks there should be at least 8 feet
clearance between the• top of the stack, and the lowest member (excluding the
lower block and/or hook) of .any crane. The determination of a lowest member
should include the structure of a cab on the crane.

7. LIFTING GEAR/APPLIANCES

Lifting appliance, means a crab, winch, pulley block or gin wheel used for
raising or lowering, and a hoist, crane, aerial cable way or over head runway,
excavator, drag line, etc.

Lifting gear is used for raising or lowering as a means of suspension such

as chain sling, rope sling, ring, link, hook, shackle, swivel or eyebolt.

a) construction:
All chains, ropes or lifting gear shall be of good construction sound
material, adequate strength, suitable quality, and free from patent defect. ,"
b) Test and Examination:
All chains, ropes or lifting gear shall, before use, be tested and examined
for the safe working loads specified.
- 169
c) .Safe Working:
Load Every chain, rope or lifting gear shall be marked in plain legible
figures and letters with its SAFE WORKING LOAD.

8. OMPETENT PERSONS TO OPERATE LIFTING APPLIANCES OR

GIVE SIGNALS

i) A lifting appliance shall not be operated except by a person trained and

competent to operate that appliance. It shall be permissible for such
appliance to be operated by a person who is under the direct supervision of
a qualified person for the purpose of training

A person under 18 years of age shall not be employed to operate any

lifting appliance driven by mechanical powef or, to give signals to " the
operator of. any such appliance.
If a person operating a lifting appliance has not a clear and unrestricted
view of the load or, where there is no load, of the point of attachment for a
load, and of its vicinity, throughout the 'operation, except at any places
where such view is not necessary for safe working, there shall be
• appointed and suitably stationed one competent person to give necessary
signals to the operator. If one signaler is insufficient for the purpose such
additional competent signallers as may be necessary shall be appointed
and suitably stationed.

Note: See answer to Q. 5 of S A.Qs also.

170
 9. STORE ROOM EQUIPMENT

The following shall be the store room equipment:

a) Adjustable Shelving
Manufactured sheet metal shelving adjustable, is now available in scores
of varieties. This shelving is ideal for stores (in preference to wood
shelving which though cheap is not strong enough or durable and poses a
fire risk). The steel adjustable shelving is commonly called 'Dexion
Racking':

b) Slings
Every chain sling or rope sling used for raising or lowering on a lifting
appliance shall be securely attached to the appliance, and the method of
attachment shall not be a method likely to result in damage to any part of
the sling or to any lifting gear supporting it.

c) Secureness of Loads

Every part of a load shall be securely suspended or supported whilst being

raised or lowered and shall be adequately secured to prevent danger from
slipping or displacement.

Where by reason of he nature or position of the operation a load is liable

whilst being moved on a LIFTING APPLIANCE or LIFTING GEAR to
come into contact with any -object so that the object may become
displaced, special measures shall be adopted to prevent the danger so far
as reasonably practicable.

171
 b) Heavy Duty Storage Racks
Made of steel angles/bars/pipes and are solidly built to take heavy loads.

Steel Cupboards/Safes
For precious items as Gold, Silver, .Platinum, Industrial Diamonds,
Precision, Instruments, Soft Solder, Mercury etc.

Dunnages
Wooden horses, duck boards, cement blocks, rails, skids.

•Food Boxes
Special food boxes should not be kept in proximity to or beneath any
chemicals and they should not be in the same room as highly toxic
substances such as cyanides or compounds, which have a strong aroma.
Many food stuffs specially fats readily absorb aromatic gases. "

First aid Fire Fighting Equipment

Sand/Water Buckets, beaters, extinguishers etc.

Tarapaulinses
Covers water proof

Wiring/Banding Machines
Such as Gerard wiring machine and Bandit tools (for binding of
boxes/bales).- Packing & Marking Tools andinstruments, Ink. Paint.

• j) Machines for Metals Cutting

Hacksaw machines, circular saw machines.

Preservatives:
Equipment and consumable items used as preservatives for various types
of stores.
1) Key Boxes:
For safe custody of keys

172
m) Pallets: .
So that loads can be unitized.

• Open Steel Tank:

For preservation of materials bY dipping (as of timber and steel)

o) Bin Card Holden/Boxes:

For maintaining record of Bin Cards.

q) Protective Equipment & Clothing:

As required for the particular stores as gloves rubber, goggles, aprons,
breathing and rescue apparatus, and clothing etc.

r) Weighing facilities as scales; weighing platforms, weigh Bridges,

Balances & Avery Ratio etc.

Hot Weather Equipment:

Surahis/Matkas/Tum bIers.

Winter Equipment:
Storage type heaters etc. Storage type heaters ale used in store houses and
radiant/reflector types inioffices away from 'store

9. VOLUMETRIC UTILISATION OF SPACE IN STORE BUILDING

With storage space becoming increasingly expensive it is desirable to

obtain Maximum value from storage and handling facilities in terms of volumetric
utilisation. Therefore when considering the use of any, storage or handling
equipment it is necessary to think in terms of the volume of available space rather
than the area. In a static racking situation Maximum efficiency is achieved with 60
percent of the available space being used for storage and 40 per cent for gangways
and work areas. Palletisation of stores into unit load gives Saving of time in
handling and saving of space.

173
 11. NLC TRAILERS

In moving stores from one station to another the NLC covered trailers can
be very economical in that packing cases can be done away with For example a
firm in Lahore were receiving wheel drums etc. for tractors frOm PMTF Karachi
packed in wooden crates, which were damaged/broken enroute. This one time
tacking was proving too costly. The firm were suggested to get these wheel drums
without being crated from PMTF in NLC covered trailers secured in the container
by means of packing pieces to avoid rattling enroute.

12. FORMULA FOR DETERMINING EFFICIENCY/OUT-PUT OF LABOUR

When any labour is employed, on loading, un-loading, shifting or stacking

'of boxes/ goods their-output is determined as:

One load each time anything is lifted For examPle, if 8 labourers i'ilone -
day unload a wagon containing 400 boxes total weight 20 tons and they lift it
from inside the wagon, take it to a distance and put it straiahin a stock. then' Pel
capita out put is =20 Tons = 2 1/2Tons.
8. Labourers
But if the boxes are lifted from inside the wagon, then carried to a distance and
placed on the ground at the stacking site, re-lifted and then put on a stack or in the
form of a stack so that each box has been lifted twice and then: twice and then:

174
Fig - 7.1

Fork lift •

175
 Fig — 7.3

Trailers Fig — 7.3

176
Fig— 7.4 . 1. Adjustable Shelving

2. Slackers

3. Trollies

177
Fig — 7.5
Overhead Crane
Power lift, hand operated

178
Per capita out put is -20 Tons x 2 = 5 Tons. per head.
8 labourers
The increase or decrease in output of labourers can thus be determined as above.

. 13. ,SELF-ASSESSMENT QUESTIONS

Q.1 What are the types of racks generally used in store houses? Also say if
,wooden racks are not desirable and why?

Q.2. Name some of the equipment under the following beads:

a) Those carrying materials over a fixed path.
b) Those carrying materials Within a limited area.
c) Those carrying materials over a wide area.

Q.3. What is the best means of protecting goods in transit from damage due to
mechanical or climatic hazards?

Q.4. What does store room equipment normally consist of?

Q.5. When an overhead crane is operated what are the safety precautions,
which have to be taken?

Q.6. Why is mechanical handling of goods preferable to manual handling?

Q.7. For ease of loading of rail wagons the height of loading/unloading

platforms should be as high the floor of Riy wagons. Is it correct?

179
 14. ANSWERS TO SELF-ASSESSMENT QUESTIONS

Normally there are two types of racking.

a) Light adjustable shelves/racks commonly called Dexion racks or
light stores.
b) Heavy duty racks. Wooden racks are not desirable as they pose
fire risk.

Q.5 If stacks are high so that they hinder clear view of things below to the
crane driver then a person with red and green signals has to be posted to
give signals to the driver.

It shall M ensured that the distance between top of stacks in the crane
gantry and the lowest vessel of the crane is not less than 8 feet.

Q.7. Yes.

Note:- For answers to other questions see relevant paragraphs in this unit.

180
UNIT -8

STACKING

Written by: Salah-ud-Din Mir

Reviewed by 1. ProfJaved lqbal Syed

And
2. Majed Rashid

181.
i
 INTRODUCTION

Stacking is resorted to in the case of goods as are unsuitable for handling into
bins, racks 'and other containers.

NOTE:
It is Important that safe load for every floor should be known:Leaning of materials
against walls is prohibited. Stacks must not be bunt within 18 inches of a wall or within live feet
of a rail track.

OBJECTIVES

This unit explains how stores should be placed in a manner that there is no risk of
any damage/accident during stacking/destatking. Further the arrangement and
disposition of goods is done in manner that they are presentable, countable and
accessible.

183
 CONTENTS

1. Factors in Planning for building of Stack 187

2. Definition 187
3. Shapes of goods vis-a-vis Stacks 187
4. Types of Stacks 188
5. Safety consideration & conditions to be fulfilled 189
6. Special instructions for specific types of goods 190
.7. De-Stacking 194
8. Two-Bin system 195
9. How to keep check on stacks in the open against pilferage? 195
10 Tarapaulinses 196
11 Stacking (Illustrated) 197
li Self-Assessment Questions 200
13 Answer to S.A Questions. 200

185
 1. FACTOR IN PLANNING FOR BUILDING OF A STACK

All stacks should be firm, countable and accessible and. raised on dunnage The
following factors should be considered at the time of planning for stacking:

a) Strength of floor.
b) Type of dunnage requited.
c) Method of stacking.
d) Handling of material.
e) The routing of material in and out and to provide safe means of access for
& lingers, storekeepers, labourers etc.
f) The lighting of the area.
g)' The height to which a stack can safely be built so as to make maximum
use of the space available.
h) Spacing or safety distances betWeen each two stacks. The factors effecting
the size and forms of stacks are the quantity and the area of the space
available and the size, shape, bulk, weight, type & rigidity of the articles:

2. DEFINITIONS

Stacking is the art of building up goods & materials to form a self-

supporting pile.

3. SHAPE OF GOODS VIS-A-VIS STACK

The shape of the goods or packages to be stacked has a great bearing on

the type of bonding used. When one dimension is appreciably greater than the
other two, it will be possible to use natural bonding i.e. to secure stability by
interlocking the articles themselves. In other circumstances it will be necessary to

187
introduce other materials (e.g. battons etc) to prevent movement of the articles
stacked, this is known as 'artificial bonding'.
Generally it will be found that some shapes, although appearing awkward,
do lend themselves to interlocking and to being built up into stable self-
supporting stacks.
Some goods cannot be bunt up at all without frames, rests, bins or other
means of restraint. The use of such supports considered to be the "racking" and
not stacking of goods.

4. TYPES OF STACKS

'The different types of stacks may be classified as follows:

Beehive. A stack usually rectangular in shape. The stores are placed in such a
way as to leave small opening at regular intervals in each layer, which
gives the stack die look of a beehive.

Block. A stack which is continuous anti of compact construction.

Bonded. A stack in which the articles are interlocked.
Column. A stack comprised of single article placed one above the other.
Square. Any stack, other than a column, with all its sides vertical. The term
"square" does not refer to the shape of the base.
Pyramid. A Stack in which the plan area is reduced in every succeeding tier
regardless of whether it finally reaches an apex or not.
Stepped. A stack in which two, three or more adjacent tiers have the same area
and each succeeding group of tiers has a smaller area than the group,
on which it is set.. Triangular. Stacks which are in pyramid or Stepped
form on two opposite sides and vertical on the other two sides or ends.
Lean to. Stacks which are in pyramid or stepped forin on one side and

188
 vertical all the other three. The term does not mean that the stack
actually leans against a support.
Pillar A series of self-contained square stacks built close to each other.

5. SAFETY CONSIDERATIONS AND CONDITIONS TO BE FULFILLED

(a) A clear space should be left between the top of the stack and the ceiling.
When overhead crane operates above stack stacks should at least be 8 ft.
clearance in between the top of the stack and the lowest member of any
crane.

(b) Free access with firefighting material must be maintained to all stacks.
The access provided should be sufficient to accommodate such
firefighting equipment without completely prevent the movement of
persons.
•
(c) Materials which should not be allowed to come into contact with water
must be completely isolatedtrom goods goods on which water can be used
in the event of fire. The isolation of such, materials must be so arranged as
to preclude risk of contact by flooding

(d) When placed in the open for unavoidable reasons, stack of packed highly
volatile solutions oils and cylinders of compressed gases should be shaded
from the sun. But for gases, tarapaulinses or any other covers should not
be used in direct contact with the cylinders as protection against the sun.

Tarapaulinses should not be used for securing only, but if protection from
rain etc. is necessary they can serve the dual purpose. Ropes, nets should
•be secured to independent anchorages.

189
(0 The growth of grass and weeds around and beneath stacks in the open
should be watched and eliminated to reduce fire risk.

(g) For acids, oils and certain chemicals steps should be taken (if an
impervious, floor has to be used) to ensure that spillage will, as far as
possible be confined to the immediate area. This should be done
structurally by compounding the area or alternatively by laving the floor
with a good fall and adequate drain off to a neutralising. separating or
stor8lle chamber, whichever is most appropriate to the nature and value of
the contents. If a compound or a neutralising chamber is not provided,
arrangements should be made' for spillage to be rendered hamiless quickly
by the most appropriate means e.g. neutralization or dilution.

- Corrosive and poisonous substances should not be stacked in circumstances

likely to lead to pollution of public drains. The local authority should be consulted
where such a risk is believed to exist.

6. SPECIAL INSTRUCTIONS FOR SPECIFIC TYPES OF GOODS

BAGGED GOODS: The first tier should be so arranged that the bags can
spread, and the same should be done in succeeding tiers.
ii) CARTONS: Careful consideration must be given to the height of the stack,
and to the weight of the stack and to the crushing-effect on the lower tiers.
CASES (BOXES).- Consideration must be given to the size, shape and
strength of the case in relation to the weight of its contents.
iv) -COILED WIRE: Coiled material may be stacked with the coil in the vertical
or the horizontal plan, orby a horizontal interlocking method. The choice of

190
 method will normally depend mion the size of coil, the handling equipment
used.
v) COILED STRIP STEEL: The height to which coil of strip steel can be
stacked horizontally depends upon the diameter of the coils, the cross-
sectional area and the condition of the material i.e. whether hot or cold
rolled. The larger the diameter and the thicker the coil, the greater the height
to which the stacks can be built with safety. Hot rolled strip may be stacked
to a greater height than cold rolled strip of the same dimensions. In the cold
rolled state the smooth surface and the presence of oil renders the coils more
• likely to slide on each other, whereas hot rolled material is dry and the.
presence of scale on the surface provides friction which helps to keep the
stacks stable.
The stacks should always be placed in bearers (sole frames) to keep the
• materialclear-of the floor and to make provision for lifting the stack.

,vi) DRUMS AND CASKS (INCLUDING CYLINDERS:) Consideratiommust be

given to the material & of which the drums are ffiade and to the.strength Or
weakness of the particular shape e.g. plain cylindrical, corrugated,
reinforced, plain barrel forth etc.
Also to be considered are the sizes of the Drums etc., the weight of the
contents, if any, and whether the contents are fluid or solid. (The term thrid
covers powders as well as liquids).
Press ire imposed on the lower members of the stack is naturally affected by
the height to which if is desired to stack. If these lower members are laid on
their "round" the effect of pressure might cause the bottom tier to run away
if not securely checked.
Build wedge into each end of each run Of drums on the floor and build the
second tier from the center towards each end 10 as to settle lower drums

' 191
 against the wedges. Vessels under pressure (e.g. Gas Cylinders) should have
their vales Protected from collision.

vii) SHEET MATERIAL' (FIAT STACKING): Polished, bright and greased

metal. Sheets are very prone to slide. Sliding may occur at any level the
stack.
Sheets having a width of 18 inches or less should not be stacked higher than
three times their width. Others may be stacked safely upto four times their
width.
It is desirable to shield the sharp corners of sheet metal in stacks, 10 as to
reduce the risk of injury if person knock against them..

viii) SHEET MATERIAL (EDGE-ONSTACKING): Brittle materialS are less

likely to be broken when handled edge up and this method of stacking suits
the system of handling.

ix) STEEL TUBE, BAR, ETC:

a) Small Size: Regular stocks of smaller sized tubes, bars etc. should always be
provided with suitably constructed racks. The construction of these racks must
take into account accessibility, to facilitate safe handling at all times. Users of
larger quantities will rind it advantageous to construct special bays in their
storage areas. A bay may be simply constructed by sinking substantial posts
into the ground or by fastening the posts securely to bearers laid on the floor.
b) Large Sizes: Large diameter tubes should be stacked in the same way as drums
Heavy section bars should have the first tier laid on notched bearers, or
secured by wedges.
x). TIMBERS: Stacks 15 feet wide. Varying in length from 20 to 30 feet and with
heights upto 20 feet. Can be built securely.
Careful attention should be given to wedging up between logs and bearers.

192
xi) COAL STORED IN BULK: If coal is to be stacked in large quantities for mom
the a few months the following precautions should be taken:-
a) Heaps should not exceed 12: feet in height and should preferably be limited
tn8 feet.. If the, latter height is not exceeded the risk of over heating is
. practically non-existent.
b) Temperature rods should be placed vertically in the heaps at every 20 yards.
They should be felt at intervals of a day or two. And if any rod has got too hot
to hold (1200F or thereabouts) the heap should be saturated with water. If this
does not cause the temperature to fall, that part of the heap should be isolated
and used immediately.
This temperature. rod method will be found very useful but the use of die human
nose can be very valuable also. As the slow combustion of coalS has its own
Unmistakable smell. Easily detected by any person with an average sense of
smell. ,
xii) OTHER DANGEROUS SUBSTANCES: All metallic powders should be
considered dangerous and be carefully stacked apart from possible sources of
contamination.
Highly inflammable goods, should be kept in 'small quantities in fireproof
construction. Petrol. Cellulose solutions, carbide of calcium, celluloid, and
explosives must be stored in coinpliance with. The appropriate statutory
regulations.

193
 7. DESTACKING
De-stacking is largely the reciprocal of stacking processes or should be. It is a
matter of concern, however, that the majority of accidents involving collapse of
stacked materials occur during the process of De-stacking. The prime cause Of
this is haphazard removal. Workers, if uncontrolled or poorly supervised, are
liable to remove goods in a manner to suit their own convenience.

(1) DANGER OF UNSYSTEMATIC DE-STACKLNG

Even with a comparatively low stack from 5 to 7 feet high it is possible to work it
entirely at one side from top to bottom until it has been reduced to a thin wall
which will collapse.

(2) PRECAUTIONS
The general rules for De-stacking are:-
(a) One person only should be responsible for the manner in which the
stack is reduced.
(b) The stack should be taken down tier by tier;
(c) If a crane is used, the slings should be made up as near to the centre of
• the staek as possible or on exceptionally large stack, sufficiently near
to the centre, to allow the workers ample clearance between the sling
load and the edge of the stack;
(d) Dunnage should be collected as it is released, if the area of the stack is
large..

(3). ASSOCIATED HAZARDS

The fall of a person working On top of a stack may be due to hipping, movement
of goods underfoot, or loss of balance when handling goods near the edge of the
stack. Falls may also occur when gaining access to the top of a stack or when
climbing down from it.
194
(4) SAFE ACCESS
Proper means of access (ladders, inoving platform etc) should be provided and in
no circumstances should personnel be allowed to clamber up or down the sides of
a stack..

8. TWO.BIN SYSTEM
Stacking under two-bin systeni could be resoiled to in situations specially where
item cost is low and usage high as for example, nuts & bolts in a machine shop
store. This system involves physically separating the stock into two bases, the
second0 of which contains the it-order level stock (average lead time
consumption plus safety stock). Stock is
Normally issued from the fist Bin and when this is empty an order is placed for
replenishment of stock as it falls to below reorder level. The second Bin is then
used until the ordered stock is received at which point the full re-order lever
quantity is put in the Second Bin and the remaining in the first Bin and the above
sequence of actions is repeated.

NOTE: Some times all stock for an Item is kept in a single bib with the order level stock
partitioned off or packed in a carton. Sometimes a re-order level is indicated by a line
painted round the biSide of the bin, when this becomes visible an order is placed.
The reorder, level method reacts well to upward changes in demand but does not easily
identify the situation where demand is dropping and unwanted quantities of Stock are
being held.

9. HOW TO KEEP CHECK ON STACKS IN THE OPEN AGAINST

PILFERAGE?

i) Each stack in the open is nicely built and a layer/line of white lime or paint
marked round the stack so as to enable spot any pilferage or quantity removed
there form.
195
 ii) I/C store should take a complete round of stacks in the open both at opening
and closing hours to see that all stacks in the open are covered with tarapaulins (to
avoid damage due to rains) and are in proper shape/order and have not been
tempered with.
10. TARPAULINES
Tarapaulins are a costly item and their accounting and preservation is the
responsibility of each user group. It is emphasised that use of tarapaulins has to be
made carefully to avoid damage to the tarapaulins. When covering stacks, care
should be taken so that ends of astacks do not pierce the tarapaulins. For safe
custody each tarapaulins- should be stencilled with the monogram of the holding
unit. The record of receipts/issues should be maintained in a register form. The
movement of tarpaulins should similarly be recorded • against receipt/issues
maintained in a register form. The movement of tarpaulins should similarly be •
r recorded against recipient's signature in the same register, even if it be for a short
period. It is not wise to save tarpaulins by stacking them, they should be put to
proper use because no stores should be left in the open uncovered as are liable to
deteriorate: When damaged, tarpaulins should at once be got repaired.

196
 I I I

BONDED

IL 1
Fig 8.6

SQUARE

Fig 8.7

BLOCK

Fig tg

198
 And when unserviceable due to fair, wear and tear they should be
reported/presented to condemnation board with full history of life, usage etc.
1) Stacking in the Open
A stack should be raised on Dunnage and covered with a tarpaulins in the manner
illustrated below

A" Tun:aline

Pegs
Dunnage (Cement Blocks)

Boxes in the stack)

- ._ , ...,..
.,," .. i
mh
t %14--- - IN
all [ ei
./ •
ti.
1 ..

Fig 0.4

Tarpaulins is tied to pegs/poles fixed around the stick by means of

ropes/string. On top of stack wood pieces etc. are provided so that tarpaulins does
not tear off by piercing of the edges to the stacks.

199
 12. SELF ASSESSMENT QUESTIONS

Q.I. What conditions should be fulfilled in building a stack?

Q.2. How should sheets (Ste6I or of non-ferrous metals) be stacks?
Q.3. What is meant by "Stacking"?
Q.4. What is stack board?
Q,.5. Name various types of stacks.
Q.6. Stacks are built with facilities for destacking in yiew. Discuss.
Q.7. What factors are considered at the time of planning for stacking?

13. ANSWER TO S.A QUESTIONS

A stack should be firm countable and accessible. It should be built to a

afe height so that de-stacking in facilitated.
Q2. See under head sheet material (Flat) stacking.

Note: For answers to other questions refer to relevant paras in the unit.

200
UNIT-9

•CARE & PRESERVATION

OF
STORES

Written by: Salah-ud-Din Mir

Reviewed by: 1. Prof Javed Iqbal Syed

And
2. Majed Rashid

201
 INTRODUCTION

The Storekeeper (Pc warehouse) is required to keep stores in his charge in

a serviceable condition. For this purpose he must ensure that prOper storage
conditions are provided to each type of stores and suitable preservative treatment
is giving to prolong the life of stock wniie in storage.

OBJECTIVES

This unit introduces students to the techniques of care and custody of each
type/description of stores & to the scientific Preservative methods applied to them
with reference to the obtaining environmental and climatic conditions.

203
 CONTENTS

1 Store House Appropriate to the Category of stores ' 207'

2 Cam & Preservative Treatment 207
3 Ferrous Metals — Rust Prevention 208
4 Removal of Protective 210
5 De-rusting 210
6 Protection of Ferrous Metals/components' 210
7 Packed in preservation (PIP) 211
8 Non-Ferrous Metals 211
9 Abrasives 212
10 Cinematographic stores 212
11 Storage/Preservation of chemicals 214
12 Classification of Chemicals by Hazard Prosperities 216
13 Plastic stores and Nut Buttons etc 217
14 Paints 217
• 15 Paper & Textile 218
16 Rubber Goods and LeatherGod is 218
17 Electrical Stores 218
18 Cement 218
19 Cotton Balses 219
20 Timber 219
21 Packing Material 220
22 Refractories 220
23 Oil & Greases. 221
24 Ammunition & Explosives 223
25 Petrol 224
26 Self-Assessment Questions 225

205
(
 1. STORE-HOUSE APPROPRIATE TO THE CATEGORY OF STORES

No store should be placed in a building, which does not Itlfil the storage
conditions appropriate and applicable to that category of stores.

2. CARE & PRESERVATIVETREATMENT

Following care and preservative treatment is required for the various

categories of stores during storage.

(1) STEELS: For purposes of storage and accounting steels are divided in three
groups each requiring different preservative treatment:-
(a) STRUCTURAL OR MILD STEELS: Paint is the best preservative but
is too costly. Therefore, coating of used, engine oil only need be given
frequently. Before oil — applied the dust etc. which has settled on the
steels should be removed.'
(b) TOOL STEELS: Being costly material, it is essential that great care be
exercised in the binning and the preservation of tool steels. Normally
all Tool Steel Material is 'given a colour coding fly the manufacturers
or by the storing department so as to avoid any chance of mix up. It
happens that material to the same specification produced by the
various steel mills through different manufacturing processes re-acts
differently in heat treatment, and therefore, each supply although to the
same specification should be stored separately manufacturer-wise.

(c) PRODUCTION STEELS: All sections of steel of various specifications

required for the production of any stores and equipment should be
treated as a separate class for the purpose of storage. This applis to
manufacturing concerns only. Since steels are collusive a coating of
light engine oil should be given frequently, Where rust has appeared,.
207
 the• material should be derusted, cleaned and oiled for further
preservation.

(2) MACHINE SPARES: With all machines, vehicles and plants normally
one or two years' requirement of spares is ordered on the advice of the
manufacturers. These are generally non-inter-changeable parts and
components and are stored in small, quantities, and their range is always
large. The best way to store them is Vehicle Mechanical Plant-wise. They
are generally packed in preservation; if not, they should be preserved
properly. All steel items should be treated with general service grease or
mineral jelly. Each item must be tagged with identification label, which
should give the name of the components and manufacturer's part catalogue
reference number. Belting and bearings though classed as spares are often
grouped separately as common use items.

(3) HAND TOOLS AND MEASURING INSTRUMENTS: Great care is

required in the preservation of measuring instruments which are likely to
lose their accuracy on account of dust, rust or mishandling. These are
cleaned gently with soft cotton and treated with mineral jelly periodically
unless packed in preservation.

3. FERROUS METALS- RUST PREVENTION

Atmospheric corrosion of metal surfaces specially in the tropical areas needs

effective protective measures and considerable expense. By atmospheric
corrosion is meant - corrosion produced under ordinary, conditions of exposure to
the atmosphere in which we live and breathe. Unfortunately the most corrodible
metals include some-of those of the greatest importance to industry particularly
most ferrous metals, iron, plain carbon it steels, and most alloy steels except those
specially made to be corrosion resistant. It is said that ordnance stores such as
208
 Rifles and Ammunition sent to tropical areas with high atmospheric temperatures
and high humidity in the early stages of the last World war, were often found to he
so colluded as to be unusable.
The protection of machinery and metal equipment such as finished
articles, fittings, component parts and engineering equipment during storage is the
. responsibly of the storeman. The preservation of the surface of the metals subject
to such corrosion depends on preventing moist air from coining in contact with
•them. Wetting may be due to exposure from the atmosphere by hygroscopic
substances which may be merely dust.on the metal Surface, products of corrosion
such as rust are themselves hygroscopic. The wood shaving, gunny, sawdust and
other Material in which metal articles are often packed are also hygroscopic.
The application of an impervious coating to the metal surplice is an.
effective means of .protection against corrosion. Petroleum' products have been
•employed for application of this kind. Although coatings used are commonly
classified as 'temporary' as .are effective for short periods and "permanent" such as
metallic coating of painting, very few can properly be regarded as penmanent By
contrast, however, a that of paint though intended to.be effective as long as
possible only confers protection for a linnted period and must be renewed sooner
or later.
The protectives available may be classed as strippable, soft or hard. The
strippable pmiectives which form a thick transparent rubber like film are valuable
for treatment of equipment with surfaces highly finished hut they are very
expensive and are normally given by the manufacturers themselves. Oily, soft and
hard coatings form the main range of temporary protectives. The surfaces to be
treated should be cleared of all traces of moisture, dirt, rust or other
•

contamination. There are several methods of application namely dipping, spraying

or brushing. Other methods of application include sloshing or flow coating, that

209
is, pouring protective oils, fluids or molten compounds over the metal part or
pouring them into enclosed space so as to coat inside surface.

NOTES: (1) Petroleum base protectives are of course inflammable and special care and.
precautions against fire etc, must be taken in using them.
(2) It should be borne in mind that freshly, cleaned metal Surfaces are Extremely
vulnerable to corrosive attack, a protective should, therefore, be applied as soon as
possible after the surfaces have been cleaned.

4. REMOVAL OF PROTECTIVES
Removal of the protective coating may not be necessary for a storeman. But when
need be, removal can be paisley carried out by siping, with or without the aid of a
solvent or by conventional methods such as solvent or alkaline cleaning or vapour
degreasing.

5. DE-RUSTING
Use of solvents, emery paper etc. may be expensive for 'heavy material such as
strips. rods, flats etc. The cheapest way is to dip the material •in open tanks in a
solution of 90% water and 10% molasses (Gur-ka-shera)• for 2-3 days, then •
remove the material from the tank and rub gently with cotton, sawdust or river
sand. For effective results the solution should be kept in closed drums for a
fortnight to mature and mix thoroughly before being used in open tanks.

6. PROTECTION OF FERROUS METALS/COMPONENTS

For structural steels, a coating of used engine oil periodically would be cheap and
convenient. Painting is expensive. For machined parts grease G.S. and for costly
components such as measuring instruments etc. mineral jelly should be used. For
arms the metal portion should be dipped in a heated solution of "Shell oil vitriol
33," 90% and Bees Vox 10%. For bright finished steels any light machinery oil
can be used.

210
 7. PACKED IN PRESERVATION (PIP)
Small delicate and valuable opponents of steel are now being packed in
preservation, such as:
Tips Carbide
Measuring Instruments
Bearings etc.
They are given a thin coating of preservative /, a petroleum base
jelly/compounds/solutions/which form a thin film on the surface. This is called a
strippable preservative because it is given a small cut and taken off/stripped off
when the component is required for use. It serves almost as permanent protection
against rust unless damaged or removed.

8. NON FERROUSMETALS
These are broadly grouped as follows:
Copper and copper alloys e.g., nickel silver, manganese bronze, aluminum
bronze; gunmetal, tin bronze, copper nickel alloys; brass. Zinc and Zinc alloys
e.g. Maiak. Lead and lead alloys e.g. lead antimony. Soft solders, solder and
brazing alloys. For storage and binning under each metal . and metal alloy, the
arrangement should be by sections e.g. ingots, plates, sheet and strip, tubes, rods,
bars, wires and special sections. These sections are further segregited by their
specification/composition classification such as Bras 60/40 or 70/30 gun metal
88/8/4; 86/7/5/2.

NOTE: Although non-ferrous metals are generally characterised by good resistance to corrosion
these metals If unsuitably stored will be open to corrosive attacks in the form of tarnishing. This
applies to the storage of mat-rials at all stages whether in the form of sheets, tubes, wires, rods, or
smell finished or finished parts Tarnishing is frequently caused by an oxide or supplied layer on
the surface. Tarnishing is mostly encountered during the hot, damp summer months when the risk
of condensation on the metal surface is particularly great Packing consisting of cardboard, paper
or other material, which is hygroscopic and has a high moisture content or contains impurities may
also increase or accelerate tarnishing. Lack of hygiene and ventilation also increases the effect of
tarnishing.

211
 9. ABRASIVES

There is a wide range of abrasive stores. The arrangement of abrasive stores and
ledger has, therefore, to be made under various groups/headings e.g.
(19 Wheels.
Plain wheels, straight cup wheels, taper cup wheels, cut off wheels,
disc wheels, saucer wheels, recessed wheels etc.
(2) Mounted points and wheels.
(3) Segments.
(4) Lapping compounds.
(5) Emery/Glass paper and cloth sheets, tapes, belts etc.'
(6) Sharpening stones.
(7) Polishing mops and materials.

The wheels should be stored in barrels in saw dust packing or if stored loose,
these should be placed on ends and not in layers i.e. one on top of the other as
pressure exerted on bottom layers can cause cracks. Long storage is also
undesirable. Emery and glass paper or cloth sheets and belts are likely to be
affected by moisture.

10. CINEMATOGRAPHIC STORES

Sensitized drawing and printing paper and particularly cinematographic
films and other celluloid articles are known as short life items .- that is items
which have short serviceability life and deteriorate in long siorage. The must,
therefore, be used up within their serviceability period. The ideal conditions for
storage are a dry atmosphere; a maximum and minimum thermometer should be
bung in the storeroom and temperature checked twice everyday to ensure that it
does not exceed safety limits. Storage of films needs particular attention. To keep
humidity within desirable limits, dehydrating sabstances like silica gel or !used

212
calcium chloride could be used. Films should be inspected monthly for surface
acidity, opaque patches (or) visible signs Of deterioration. Acidity' can be tested by
means of service blue litraas or congo red paper. If acidity is detected in any
place, the articles should be isolated and sentenced unserviceable.
Films should be kept in closed, metal boxes placed on irdn shelves. In no
circumstances should boxes containing films be placed on the floor, dragged or
stacked higher than the ventilator.
Care must be taken to prevent the deterioration of films through the action •
of rust. Therefore, inboxes in which films are packed fOr long periods should have
cardboard lining. Tinder other conditions films should be kept carefully wrapped
in tissue paper.
Each compartment of the building should not hold more than 8,00,000 feet
or 400 lbs of film. Average amount of film opened for inspection or repair must
not exceed 8,000 feet (25 lb) in the positive joining rboin or 5,000 feet (25 lb) in
the negative cutting and editing room.
Small cuttings of films should not be scattered on. floor but collected and
placed in receptacles provided for the purpose. Condemned films should be burnt
at a safe distance or at least 100 yards from any building or property with ample
fire appliances being provided for the operation. In the 'film store building
•adequate first aid fife appliances including at least one, blanket to be kept damp
have to be provided at all times. The, inner doors of the building must be self-
closing and close fitting and the external door marked "Inflammable"
cinematograph stores".

213
 11. STORAGE IPRESERVATION OF CHEMICALS;

(Chemicals pose special problems of theirown which arise because of

their corrosive; toxic, readily perishable, inflammable and explosive
characteristics. It will be useful to make a distinction between bulk handling
which will involve large quantities of the material for which there will be no
facilities available in the store, and small quantities handling which will be mostly
in containers like drums, carboys, Winchester bottles, cylinders etc. The bulk
handling is normally done by plant personnel who are expected to he well-versed
in that trade, while containers handling is done by stores). ,
Chemicals used in Industry, Laboratories come in the following three
physical forms:-
(i) Solids (ii) Liquids (iii) Compressed gases,
i) SOLIDS: The non-perishable solids which do not deteriorate by the action
of sun or rain are stored in big heaps in the open either in bags or as such.
The typical examples are coal and sulphur. But the substances, which are
likely to decompose, deteriorate, evaporate by the action of sun light, heat,
rain etc. are preferably stored indoors. All hygroscopic and deliquescent
substances must be stored in such a manner that ingress of moisture and
most moist air is prevented. They should be packed in airtight containers
and maintained as such.
ii) LOQUIDS: Bulk quantities of most of the liquids are stored in tanks
which might be (i) buried underground if the liquid is highly volatile and
inflammable, or (ii) semi-buried in case of moderately volatile liquids and
(iii) surface tanks for non-volatile liquids.
Liquid Chemicals in small quantities are brought to stores in drums, car
boys, and Winchesters. Drums should be set on clean dunnage and the
stores well separated so:) that it is possible to get at any type Of material

214
 without disturbing other materials. Carboys should be stacked in single
layers. Drums and barrels are preferably stored in racks. Drums which
• contain corrosive materials should be stored upright with the bungs up so
that it is easy to get to the bung and release any gas that might have
accumulated.
COMPRESSED GASES: Normally gases are compressed into thi0c steel
• cylinders, which are, provided with a pressure regulator and valve. To
avoid damage being done to valve or its accidental opening intransit, a
safety cap is provided on the cylinder head. In storage the cylinders should
be kept in a cool room, away from direct sun-light and hot pipes. Great
emphasis is put on keeping the cylinders cool since rise in temperature wid
increase the pressure of the gas inside causing release of gas which, if
inflammable like hydrogen and acetylene, will be liable to create fire
hazard, or if it is toxic like ammonia and chlorine will inflict people
exposed to it. In handling gas cylinders, one must never hammer their
valves or cocks. The salety lever must always be kept on in screwed
position. Full and empty containers should be kept apart, and full and
empty notices displaced to prevent confusion and mistakes.
Oil or greases will ignite violently in the presence of oxygen and if the
latter is under pressure an explosion may result Cylinders and fittings
should be kept away from a sources of contamination such as oil barrels,
overhead shafting, cranes or belts.
Care in Handling:
• Cylinders should not be allowed to drop or come into violent contact with
one another. Cylinders shall be so conveyed as not to project beyond the sides or
ends of the vehicles. Adequate means shad be taken to prevent cylinders falling
off the vehicle. They should not be loaded loosely as otherwise they may come
into violent contact when the vehicle moves. They should not be lifted with
215
 magnets, and chains should not be used for slinking. A rope may be used to lift
one cylinder - never more than one at a time - provided-it is correctly adjusted to
prevent slipping. If more than one cylinders have to be handled by a crane, a
properly designed- cradle with chain suspension should be used.

12. CLASSIFICATION OF CHEMICALS BY HAZARD PROPERTIES

a) Corrosive Materials:. .
• The chemicals, -which will attack their containers and corrode them,
•escaping out to atmosphere are called corrosive materials. They will react with
hurnanskins and cause burns. Great care has to be exercised in the receiving and
storing-of contsive materials as little neglect can result in serious mishaps. Use
special equipment and protectiye clothing for handling acids:
b) Inflammable Materials:
• Those materials, which are liable to catch fire under ordinary conditions
are called inflammables. dombustion.nonnally takes place between.the vapours
or finely jmwdered combustible material and oxygen. Relatively speaking
combustible. gases are the easiest to ignite and hence strict precautions are.
necessary to, ensure against their leakage. The combustible matetials particularly
liquids and guess Must be stetted in separate buildings..
t):. Toxic Materials:
Such chemicals- must not be stored in the same room as acids. Generally
speaking, materials which are Toxic or which decompose into Toxic Components
due to contact with heat, moisture, acids or acid -fu.mes,ahould be stored in a cool,
well ventilated place, out of direct rays of sun, away from areas of high fire
haw' and be periodically inspected. .
Potistms:
May cause death when taken, in small quantities, as such it is essential that
they be handled with care. One should avoid touching them with •bare hands.

216
Whenever any issues are made, one should wash his 'hands thoroughly with a
proper detergent. Substances, which fall under this category are iodine,
compounds of arsenic, antimony, mercury, lead and barium etc. They should be
all stored in a specified place in the room labelled poisons.
e) satidking agents:
Compounds which can supply oxygen to a chemical reaction are called
oxidizing agents: They are carriers of oxygen, which is an essential requirement •
for fire. Some of these compounds will require heat to part with their oxygen
while others will give it at room temperature: So if a powerful oxidizing agent is
stored side by side with a combustible one and by chance they mix, they can.start
tires and explosions.
The 'golden rule is to keep all inflammable materials away from the area
where oxidizers are stored: The storage- area should be kept cool, ventilated and
should be fire-ptoof. Since oxidizing agents supply Oxygen, normal fire-fighting
equipment is ineffective. Hence with oxidizing agents it is be.s1 to keep the fuel
away.

13. PLASTIC STORES AND NUT BUTTONS ETC.

These are •liable to damage by rats and should, therefore, be placed in vermin
proof buildings/almiralis etc.

14. PAINTS:
Paints are short life items and deteriorate in long storage. Paints should be
stirred and druths rolled periodically and kept upside down for short periods
provided there is no leakage. Paint stocks should be kept under shelter always and
should not be exposed to the sun. Drums should be stenciled with the date last
rolled.

217
 15. PAPER & TEXTILE:

For paper and textile" temperature controlled rodent-proof storage is desirable.

16. RUBBER GOODS AND LEATHER GOODS'

Such as tyres, tubes, gloves, aprons etc. A coating of French talk should be
given frequently. Items of rubber deteriorate in long storage. Dark, cool and dry
storage is necessary. Leather goods: soft leather should be treated with dub in and
where hardness is to be maintained with soap yellow.

17. ELECTRICAL STORES:

There is a wide range of electrical stores and for accounting and storage these are
broadly grouped as:
i) Cables vi) Capacitors
Electronics vii) Industrial Light Fittings.
Electric Motors •viii) Conductors, and
iv) Switch Gears ix) Electric lamps etc.
• v) Transformers
All electrical stores must be protected against dust, dirt, oil and moisture.
. Battery separators are liable to crack and should be stored in a wet condition.
Torch cells become inactive in long storage. When electrical motors are stored
over a long period it is best to give these motors a run periodically. Empire cloth
which is oil impregnated and is supplied in Rolls dries up in long storage,
therefore, this cloth should be unPacked rerolled with a lining of paper to avoid its
sticking together or drying up of the cloth in storage.

18. CEMENT:
To be stacked on dunnage (duck boards) not more than seven high and under
;shelter always. Some factories are stacking 10 high to facilitate unit of accounting

218
but this height in stacking is not desirable aS it can result in more damage to
bottom layers.

19_ COTTON BALES -

To be stacked not more than two deep on wooden horses so as to allow free
circulation of air, height 3 to 4 bales. Ample space should be left between every
two stacks each two deep (that is of two rows side by side).

20. TIMBER
Logs are stored in a water pond of which water is replacecktrequently. Or
these may be stored in the open on dunnage under paulines and ends of logs
sealed with a solution of bitumen 50% and creosote oil 50%.
Timber planks or sleepers if stored in the open should have ends sealed as
above and placed on dunnage under paulines.
Timber planks are stored on skids in a building which has openings in the
walls and a water drain in the middle of the floor to fill with water when during
summer humidity is very low as otherwise cracks will develop in the timber
planks.
21. PACKING MATERIAL

Good storage is best achieved under cover in dry and cool atmosphere with items
properly stacked or placed in shelves, racks or bins, as convenient. Temporary
protection can be provided by the use of tarpaulins where covered
accommodation is not available. The tarpaulines should be secured at each comer
by means to ropes & wooden pegs or angle iron or iron bars to ensure that they
are at least one foot dear of the ground and not in contact with the sides of the
stack Tarpaulines should be stretched rightly enough to prevent ;he formation of
hollows or: depressions which would allow. the accumulation of water or other
deleterious matter, but not so tightly as to cause puncturing by the corners of the

219
stack. Special precautions are necessary when storing inflammable, toxic or

otherwise dangerous.materials e.g. when certain cleaning materials aru stored for

any 'length of time, periodical inspection is necessary to ensure that deterioration

of materials is not taking place. The points to look for are:

a) Ageing of materials, especially those with limited life, which can ibe avoided
b) A 'First in' First out' system be Infestation.

c) Perishing of rubber.

d) Overheating of stacks due to dampness or lack of ventilation.

e) Springing and leaking of containers.
Containeis should be protected from dust, which rapidly .cau s rusting.

Metallic materials, even though they may be galvanised lacquered, tend to

discolour and deterioraruif stored under damp conditions. Reels shoulb be stored
I
in racks. Paperboard is.best kept in a cool, nomial atmosphere. It .naust not be

allowed to become thy and•brittle or wet and pulpy. The temperature bf the' store

room should not exceed 70°F and the relative humidity should be betwjeen 50 and

80 Percent.
To, minimise' the risk of 'spontaneous combustion, jute cloth or slicks should

not be stored in' large solid massesnor should a stack be. built to a excessive

height. The Material should not be allowed to become damp, or: ildew will

develop. ,
Note : Wood boxes are hi yen anti dentine preservatiSe treatment.

22. REFRACTORIES
High temperature resistant materials such as fire bricks, insulation bricks,

silica bricks, Maanasite, ganister,,. dolomite, tireciay, quarzite etcare termed

Refectories. Normally these items are

' required for furnaces. As the sharpness of

the carders of refractor-9 bricks is a very important requirement, the bricks. need

special treatment and care in handling. The stacks should be carefully built to
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 avoid any damage to the stores. The refractories Should never tome in contact
with water.

Note: Same care and .treatment should be given to acid resisting, bricks or tiles, which
though not termed as refractories have nevertheless the same significance in usage as the
refractory bricks.
23. OILS AND GREASES
t
Oils and greases can be seriously affected by exposure to extremes of heat •
and cold. This applies especially to certain greases, which are liable to suffer
separation of oil when stored under excessively wann conditions. In extreme cold,
oils of the coMpounded type are liable to beCffec•ted by congealing of the fatty
components;

(a) Bulk Storage: -

Certain•nSeris of lObficating oils handle the product insufficient quantities
to justify reception in bulk by road, rail, or lighter. Storage tanks on site are
usually'under-groinid and delivery from road or rail wagon is effected, either by
gravity or by means 'of pumps, uging 'flexible base betWeett the' tanker discharge
outlet and the storage tank inlet or trump suction:floses should be kept clean and
closed
. at
, the ends when not in use. In case where one hose is used for different
'0. • • t',
grades, it should be care. fully drained between operations. Where the grade
following is quite dissinfilar from its 'predecess•or:it Maybe neceSsary to mush the
deliveiy,ho'se.'thôroüghly before using it ?again..!
'Storage' tanks of Inbe oils should be emptied and ileanbd- periodically. It is
a good rule to clearlait stOrage tanks evety.6-12 Months, regardless,of thatype of •
- oil stored. If the itade tstOfed iiT1 iI rank iS-to• -be. replaced by another it may be..
necessary to•clearl•autt the tank:before !making the change.. GalVaiiised storage
tanks shotild not be-Used because' 'certain oils .may canse a Chemical reaction
'during prolonged stbrage,on the tank 's protective coating.
2.21
(b) Open Air Storage
LARGE DRUMS: Large dnuns of oil should always be stored on their
sides or bilges. Wooden dunnage should be used to keep them clear of the ground
and prevent rusting of the under sides. Drums should never be stacked directly on'
a surface containing clinker, as this is particularly corrosive to metal. The chums
at each end of a stack must be securely wedged to prevent movement, Regular
uispection should be carried out with a view to the detection of leaks and to make -
sure that the identification markings remain clear and legible. If for any reason
drums have to be stored on their ends, they should be covered with tarapaulinses.
Failing this, they should be tilted over at an angle in order to drain away water
from the bungs. If external storage is likely to continue for a long time, the
provision of a shelter/roof over the stacks should be considered.
(c) Small Containers,
The smaller lubricants packages, drums, pails, wooden cases, cartons and
so on are less resistant than large drums to the effects of weathering and should
always be placed under cover without delay. In cases where temporary
arrangements have to be made for open air storage, it is most necessary that these
packages should be placed on wooden dunnage to keep-them clear of the ground.
They should always be covered with tarpaulines or other means of protection
against rain. Because of the greater risk of deterioration through weathering,
regular inspection is essential.
(d) Indoor Storage:
Indoor storage calls for no particular precautions, except the observance
of the usual routine checks against possible deterioration and the maintenance of a
system of stock 'rotation as a safeguard against the accumulation of old stock.
Where space is limited and the quantities of lubricants handled justify it, the
provision of drum racks or palletised storage should be considered. The object of
both these storage aids is to enable drums to be stacked at higher levels and thus
222
 save, floor space. Drums racks are preferable where a number of different brands
have to, be stored, as individual drums are accessible without disturbing adjacent
drums.
With either racks or pallets it is, of could, necessary to have lifting gear to
get the drums into position. This can consist of a drum stacker to hoist drums on
the rack, or a forklift truck for palletisedstorage. If quantities do not justify
Provision of such equipment, the ordinary power-operated or band-operated chain
block on an overhead gantry or rail can be used.
When the quantities stored do not justify either of these arrangements,
drums can be stored either in single layer or in tiers with wooden battens between
the layers but three layers is the maximum. Even with three layers the drums on
the top layers are difficult and sometimes dangerous to handle and layers should,
if possible; be limited to two. Wooden ramps should always be used for removing
drums from an upper layer.

24. AMMUNITION & EXPLOSIVES

The ammunition and explosives for defence services are stored and
transported in accordance with the rules and the instructions issued by the inter-
services explosive Storage and transportation committee, Ministry of Defence. As
regards commercial explosives the instructions are laid down in Explosives Rules
1940.. The possession, storage and transportation of explosives are strictly
governed by these rules. Explosives cannot be moved without a licence on Form
'G' from the D1C. of the district concerned. Each consignment should be covered
by a pass in form 'H' in transit. When transported by rail only powder vans should
a
be used. It should be borne in mind that there is no second chance with
ammunition and explosives. Therefore, no one should meddle with explosives or
ammunition unless he is qualified to do so. Only competent and qualified people
should be employed on handling and transportation of ammunition and
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explosives. Ammunition and explosive boxes' are always appropriately marked
and a Government explosive group classification label affixed thereon. A golden
Rule to remember is "do not drag or drop boxes containing ammunition or
explosives".
Ammunition and explosives only stored in specially designed uildings or
magazines located at s,afety distances from Roads, Rails and habitations. Full
security and fire fighting arrangements are necessary. A red flag is fixed on
vehicles carrying explosives or annnunition. The building/magazines containing
explosives and ammunition also must have boards, to give this indication. Boards
are fixed fifty feet away on all the four sides of Ammo. Buildings/magazines or
on top of the! traverses. Storage & handling of defence explosives AMMO. is
governed by AMMO, & Explosives Regulations. •

25- PETROL
Petrol will be regarded at all times is a dangerous explosive. Storage of petrol in
containers in -Semi-underground buildings will be arranged to ensure the
maximum ventilation and, where possible will be at least 150 feet from main
roads and Main any place where, fires or other open dames • ma)7 exit. Empty
petrol containers •often contain petrol vapour, which may be highly explosive.
This state may exist for several weeks and must be guarded against.

NOTE: Smoking should be prohibited in all areas and structures- where petrol,
ammunition or other dangerous stores am stored. In fact smoking and fires should be
restricted and controlled in all stores areas/buildings. (see chapter on 'fire Precautions).
When smoking is permitted an adequate number of receptacles of ample size should be
provided for all cigarette ends, pipe has used matches eti:. Smoking and the carriage of
matches, lighters and smoking materials must he forbidden inside the enclosed area.

In the case of ammunition only and petrol storage dump areas only those steam engines
will be allowed which are lilted 'with an extra ash pan to prevent the dropping of hot
cinders or the track and adequate internal and external spark arresters..

224 •
Steam engines should not be allowed under any circumstances inside any
Explosive Store areas. Explosives am stored only in underground or semi
underground Magazines. Railway personnel should not be allowed to throw
smouldering ashes from item engines, inside any stores area.

26. ASSESSMENT QUESTIONS

Q. • What preservative treatment is given to?
a) Leather (haul & soft)
• b) • Timber Planks
c) Rubber. goods.
Q. What storage conditions am requited for?
a) Chemicals
• b) Textile & Paper
c) Cinematographic stores.
How to protect from rust?
a) Steel items as Beams, .MS .bars and M.S angels etc.
•b) Non ferrous meals.
Q What is meant by "PIP? Illustrate your answer with examples.
What do you know about storage of?
a) Paints
b) Acids
c) Gates
Note: For answer see relevant paragraphs in the preceding unit

225