WAREHOUSE OPERATIONS AND ACTIVITIES

Receiving and issuing of supplies

Receipt is a stores management function responsible for physical handling of goods or

shipment entering into an organization from outside sources (suppliers) or within sources
(production department and other stores within the organization
The quantity and quality of the goods has to be checked before the items are handed over for
storage or to end user.

1. Receipt from suppliers

Goods arrive from suppliers by different modes or types of transport such as by hand, post
road rail or air, the receiving of goods or shipment from an outside source has two main
aspect i.e. checking for quantity of goods delivered of which the storekeeper has a primary
responsibility and checking for quality. Quality inspection is mostly the responsibility of the
technical personnel of the organization unless the materials involved are general where the
storekeeper can confirm the quality by use of sample

2. Times of delivery
The suppliers would have been communicated the times during which deliveries can be
made. This can be through the order or a separate delivery schedule

3. Checking for the quantity

a) Before unloading the goods from the vehicle or any other carrier the receiver must
confirm that the consignment is for that point of receiving, that is done by marrying
up suppliers advice note or delivery note and the carriers’ consignment note with the
corresponding copy order to see that there is no disagreement.
The area allocated specifically for receiving goods within the warehouse is referred to
as the receiving bay
b) When the documents are confirmed to be in agreement the receiver can then make
sure that the quantity and description, corresponds with what has been advised, that is
done by weighing, counting or measuring.
Appropriate equipment such as weighing bridges, scale and tape measures are used
where a consignment consist of one or more full loads in lorries or railway wagons
the check is best done over a weigh bridge
The tare weight (weight of empty vehicle) is subtracted from the gross weight (weight
of the vehicle plus its load) to get the weight of the load. The law requires all railway
tracks and load carrying vehicles to have their tare weight painted upon them.
c) The shortages found missing or damaged goods have to be reported immediately to
avoid claims being barred.
The carrier or representative of the supplier has to endorse witnessing the shortage or
damaged goods.

4. Goods inward record ( Receipt Register)

This record is kept to enter all receipts made in a day to avoid losing track whether the
transactions have been completed. The brief details contained for each consignment are as
follows
 i) Data
ii) Consignor
iii) Method/mode of transport
iv) Vehicle number
v) Brief description of goods
vi) Goods received note number

These records can be keyed into the computer directly where an organization is
computerized. If manually kept they are referred as log books.

5 Good received Information

Once goods have been checked for quantity and quality and have been accepted then the
information may be keyed directly into the computer or a GRN may be prepared for each
delivery.
The following information will be given
i) Date of receipt as on log sheet
ii) Consignor
iii) Consignors advice note number
iv) Order number
v) Vocabulary number
vi) Description
vii) Quantity received undamaged
viii) Number and type of packages
ix) Method of transport
x) Damages/shortages – Report number (if applicable any delivery in excess of the
quantity ordered
xi) Store keepers identity
xii) Inspectors identity

The information is then forwarded to accounts payable section, purchasing department, user
department and inspection department.

Quality Control or Verification

Organizations which have adopted quality assurance scheme, quality circles, right first time
initiative have reduced time for inspection since it becomes everyone’s concern to both the
supplier and the buyer firm.

1 Sampling Inspection

 Where large consignments are received and 100% checking for every batch will not be
possible during the receipt time, it can be arranged that a 10% sample is inspected and if no
defective item detected then the whole batch is accepted and if detected then whole batch will
be rejected.
The acceptance by sampling is appropriate where
 Inspection involves destructive testing
 The cost of accepting a defecting item are not prohibitive
  The materials arrives in large batches
 It’s possible to take a timely random sample
 It’s economically feasible consistently to identify materials as acceptable or not.

2. Inspection by warehouse officer/storekeeper

The receiving officer may himself carry out inspection for quality if the item involved are not
of technical nature, those of technical nature will need to be handed over to the relevant
technical expert for inspection.
It’s important that appropriate instructions are issued making clear to all concerned as to
which items are to be inspected by store keepers and which ones are to be inspected by the
technical staff.

3. Inspection by technical staff

Inspectors who are duly authorized to inspect technical items are fully empowered to accept
or reject materials and endorse inspection certificate accordingly in some instances an
inspection committee is formed to take up that responsibility and they all endorse the
certificate.
Its important that goods requiring technical inspection are segregated in a separate part of the
warehouse and they are not to be issued or made available for issue until they are cleared by
the inspection committee and or technical department.

4. Rejection
For rejected items the inspecting officer may either sign the appropriate space on the goods
receipt note (GRN) or may state reasons for rejection on the rejection certificate if there is
one normally prepared.
In either case, the receiving officer will inform the purchasing department and may hold on
the goods awaiting the outcome of the negotiation with the supplier.

Issue and Dispatch

The service given by the warehouse department to other departments becomes effective at the
point whereby the warehouse officer makes issues of goods and users will naturally judge the
efficiency of stores organization by the standard of service provided to them.

Issue note
An issue note is the formal document which will have to be signed in the appropriate column
by an authorized person to allow for withdrawal of goods from the stores. The name of the
issue note will vary from one organization to another. Among the names used are; stores
requisition, requirement voucher, stores indent, issue ticket, stores order, demand note, kit
Marshall list , picking list, stores schedule etc.

To confirm the person who has authorized the issue note, the store keeper has to maintain in
his records full details of the names, designation and specimen signatures of all persons
empowered to approve issue notes.

Authorization of issues
Stores in stock represent money and should not be misappropriated wasted or improperly
used. For this reason issues cannot be made indiscriminately and before goods can be
withdrawn from a store there must be some authority for the transaction. This may be in form
of an electronic authorized /signed document, a verbal instruction or a routine of
arrangement.
The normal method is to use an electronic issue note as only persons empowered to approve
issue notes would be able to issue these to the stores. In some circumstances it is desirable to
restrict the authority of different levels of management within certain financial limits. In a
similar way authority may be restricted for certain types of materials to officers in specific
departments, for example only the chief electrical engineer or the foreman electrician being in
a position to demand cable or electrical fittings, and the garage foreman being the sole
authority for motor vehicle spares.
Where there are scheduled issues to production or any other form of regular issues, the
authorization is to be undertaken by the production control department by electronic
requisition.
In some circumstances it is convenient to hand over stores simply on a spoken request by a
known colleague, without the presentation of any written document. This is normally done
only for items of comparatively small value or free issue.
Whatever method of authorization is employed, it should be appropriate to the everyday
needs of the organization
Identification of requirement
Provision is made on issue documents for the description and stores code number of required
items to be quoted and this information is entered by the user who prepares the document in
the first place. In practice, however it often happens that the details given are inadequate or
even inaccurate, and experienced storekeepers must therefore, be provided with copies of
vocabularies, spare-parts lists and catalogues so that they have the means of identifying
requirements without relying entirely on memory. Clearly, electronic requisitions largely
dispense with these problems.
Goods demanded are not always available and, when this happens the storekeeper may be
required to suggest suitable alternatives. To do this effectively, the storekeeper must be
thoroughly familiar with the materials and have some general knowledge of the production or
operational processes in the firm.
Timing issues
So as to avoid delay in a busy storehouse, there will be a routine to provide for smooth and
even flow of work. Arrangements may be made for issues to some departments to be handled
in the morning and some in the afternoon; workers requiring stores may be instructed to
attend at the storehouse only during certain hours and so on. This should not be overdone,
because it must be remembered that the watchword is service. The storekeeper should try to
meet the convenience of users, and restricted times of issue should be applied only to avoid
uneconomical peak loads of work in the storehouse, and to prevent waiting time on the part
of those sent to collect materials.
Generally material will be withdrawn from stock and exchanged for a duly authorized
electronic document, the name of which will vary depending on the nature of the organization
and the type of issue.
Some of the names used are:
Store requisition
Requirement voucher
Store indent
Issue ticket/note/voucher
Store order
Demand note
Kit/marshal list
Picking list/note
Store schedule
Methods of issuing stores for internal use
Issues must be organized to correspond with the needs of the enterprise and several different
methods may be employed in one concern at the same time for various kinds of stores. For
example, materials and components for the production shops can be supplied in accordance
with prearranged schedule to meet the planned output, tools and gauges can be issued to
machine operators on a replacement system, and special equipment used by fitters and
electricians on maintenance jobs dealt with on loan basis.
Some of the methods in common use are described below:
 Issue on request
This is the simplest method, and there are three variations
1. Immediate issues on presentation of an issue note by hand.
2. Issues made after the receipt of an issue note by post.
3. Immediate issues on verbal request only.

Issues on request
Method 1
The traditional form of issue procedure is where the user comes to the storehouse and present
a properly authorized issue note or similar voucher giving details of what is required. The
storekeeper then selects the items wanted and hands them over in exchange for the document.
Issue notes may be prepared in any number of copies to suit individual needs but the
following is typical:
  Copy No. 1 (original) Handed to storekeeper, then passed to the stock records section
for entry in the quantity records; then to the store accounts section to credit the stock
control accounts and debit the cost code chargeable
 Copy No. 2 Handed to the storekeeper and retained by him as his evidence of having
made the issue.
 Copy No. 3 Retained by the user department as evidence of the demand.
Considering the information shown in the illustration in detail, the following points are
worthy of note:
Serial number; this is for the purpose of controlling the documents. Examination of the
numbers, after action in the stores office, will immediately indicate if any are missing from
the sequence thus providing a check on vouchers lost or misplaced. At the same time, if
queries arise after the issue has been made, the issue note can easily be traced by its number.
The serial number may be inserted by the storekeeper but, alternatively, the notes can be
automatically pre-numbered before they are supplied to the using departments. In this latter
case it will also be possible to check that the users have presented all their vouchers up to
date in the proper sequence and, if not, they can be asked to account for any discrepancies.
This prevents issue vouchers being transferred from one person to another or otherwise used
improperly.
Job number or cost code number; it is the duty of the user to provide this information.
When the issue notes arrive in the stores account section, they are sorted into job or cost code
order, and the value of the material is charged to the appropriate job number or cost code.
This is the basic mechanic of material costing.
Vocabulary number; this is the stores code number and is used to identify the goods
accurately. The user is normally expected to insert this number but where he or she neglects
or is unable to do so, it is for the storekeeper to see that it is recorded.
Issued by; this space is for the signature or initial of the storekeeper making the issue. In the
event of any subsequent query it serves to indicate who dealt with the transaction, but it is not
always considered necessary, especially if a receipt signature is obtained.
Posted to stock records; this provides for the initials of the storekeeper or clerk to confirm
that they have entered on the stock record or computer file the appropriate details from the
issue note, and its purpose is to check that the posting has, in fact been made.
Received; here the recipient of the goods should sign to provide evidence of receipt. As
mentioned above if this space is completed, it may not be necessary for the storekeeper to
sign the issued by’ section. Conversely if the storekeeper signs their part, a receipt may not be
required.
Classification summary; the information given here shows the numbers of the stock control
accounts to which the values of the items appearing on the document are to be credited.
Place; if the stock records are kept in quantity and value, this amount is entered by the record
section. If the records are in quantity only, the value is normally calculated by the accounts
section.
Issues on request method 2
Under this arrangement the issue note is sent in by hand or post by the demanding department
and the physical handling over stores takes place later, either when the user calls for them at a
prearranged time or when they are loaded by the storekeeper for delivery. The store house
staff have adequate time available for selection and marshalling of the materials and
recipients have the advantage that they do not have to wait while the storekeeper finds and
assembles whatever is required. The method is most convenient when the consumer is at
some distance from the storehouse. It is also useful where the list of requirements is lengthy
or complicated as, for example, with spares for machinery overhauls.
Issue on request method 3
In the case of issues on verbal demand, a person requiring stores calls at the issue counter and
states their requirements. The warehouse officer then selects the items wanted and hands
them over. A procedure of this kind is normally employed only for items of comparatively
small value which are required at short notice such as hand tools, nuts and bolts, cleaning
materials, lubricants emery paper and other consumables. The storekeeper would be expected
to know all callers by sight and would not, therefore, make any issues to a stranger without
some inquiry. In most instances around the world, these are now carried out electronically.

Scheduled issues to production

In mass production concerns, with the cooperation of the production control department or
some other technical planning office, production materials are issued in quantities and at
times to correspond with the manufacturing programme. The goods concerned are usually
collected into a marshalling area in the first place. Thereafter they may be dealt with in
several different ways.
 Collected from the warehouse by the production department
 Delivered by the warehouse staff to the point on production lines at which the process
of manufacture is to commence
 Transferred into ‘open-access’ stores within the production shops. Open-access stores
are storage areas on the shop floor which are not enclosed and are fitted with bins or
racks containing materials which are taken and used by production personnel without
documentation.

Allocated issues
In accordance with manufacturing schedules, some materials may be received on a
programmed-delivery basis and kept for use only on the production line for which they have
been purchased. This is done to make sure that there will be no interruption of production and
the storekeeper will check that issues are not made elsewhere.

Capital Issues
Where the replacement of capital goods is a normal day-to-day feature, or where a capital
development or reconstruction programme is in operation, special attention is usually given
to the control and recording of the issues of capital material from storehouses. Instructions
are given about the authorization of such issues, and stock records (including bin cards, if
any) are marked to show that the items concerned are reserved for a particular capital project.

Delivery and collection

 In respect of all internal stores issues, the instructions should make it clear whether goods are
to be delivered by the storehouse staff, collected by the user or handled by some third party
such as the transport department. If there are restrictions about stores opening hours or
particular times for issue, or if any advanced notice is required by storehouses before issue
can be made, the circumstances should be made known to all concerned.

Bulk issues
Sometimes called free issue are made in set agreed quantities to designated departments.
Following issue from the stores this material is normally placed in an open-access location in
the user department so that staff can simply draw their requirements as and when they arise.

STOCK CONTROL AND INVENTORY

Introduction

Stock control, otherwise known as inventory control, is used to show how much stock you
have at any one time, and how you keep track of it.
It applies to every item you use to produce a product or service, from raw materials to
finished goods. It covers stock at every stage of the production process, from purchase and
delivery to using and re-ordering the stock.

Efficient stock control allows you to have the right amount of stock in the right place at the
right time. It ensures that capital is not tied up unnecessarily, and protects production if
problems arise with the supply chain.

Types of stock
Everything you use to make your products, provide your services and to run your business is
part of your stock.

Stock levels depending on type of stock

There are four main types of stock:

1. Raw materials and components

Ask yourself some key questions to help decide how much stock you should keep:

 How reliable is the supply and are alternative sources available?

 Are the components produced or delivered in batches?
 Can you predict demand?
 Is the price steady?
 Are there discounts if you buy in bulk?

2. Work in progress - stocks of unfinished goods

Keeping stocks of unfinished goods can be a useful way to protect production if there are
problems down the line with other supplies.

3. Finished goods ready for sale

You might keep stocks of finished goods when:
 demand is certain
 goods are produced in batches
 you are completing a large order

4. Consumables
The type of consumables you will use will depend on your type of business, but could include
fuel and stationery. How much stock you keep will depend on factors such as:

 reliability of supply
 expectations of price rises
 how steady demand is
 discounts for buying in bulk

How to control stock movement

The usual approach to the control of stock is the control of inputs to the stores, the stock
controller in most circumstances will have little, if any, jurisdiction over outputs. Irrespective of
the stock control system employed, the stock controller must consider the following points as
well as those mentioned in connection with the extent of stockholdings when determining the
rate at which materials should be taken into stock.

i) Unit of issue – To control by quantity, the first step is to establish the units of quantity. A
suitable unit of issue is fixed for each item of stock held and this unit should be
employed consistently in all receipts, issue, recording and provisioning procedures.
ii) Probable requirements – It’s always necessary to form some estimate of future
consumption. Past performance as indicated by the records is a very good guide. The
stock controller needs regular and effective contact with all user departments, and to be
aware of planned activities.
iii) Availability of supplies – To regulate input of materials effectively, the stock controller
must know what delivery period is likely to be required by supplier of the commodities
for which he is responsible. He also needs to liaise with purchasing office to obtain
advice on the current state of the market and forecasts of future prospects regarding
delivery times.
iv) Frequency of delivery – The geographical location of the source or the nature or bulk
of the material affects the size and frequency of deliveries
v)Price discounts for quantities – Price is naturally very important and, if substantial supplies
are regularly required, the buyer will seek to make bulk purchases, wherever possible, to
get the cheapest unit price. The stock controller can play their part by organizing their
demands in such a way as to take advantage of the situation.
vi) Seasonal fluctuations – In some businesses, production is related to harvest times or
weather, for example fruit canning or clothing manufacture, and the input of materials
has to be arranged accordingly.

Provisioning

Provisioning is the process of determining in advance requirements of materials, taking into

consideration existing stocks, delivery times and rates of consumption so that the amount of
stock in hand at any time will in accordance with the stock control policy.
The two major questions arising in any provisioning activity are
i) When to order
ii) How much to order
When these questions have been answered in respect of any particular commodity, the
provisioner usually prepares some kind of provision demand document, showing the quantity
and delivery required, and passes this to the purchasing office to take the appropriate buying
action.

Approaches to control

Although there are many systems for the control of stock, both manual and automatic, there are
really only two basic approaches on which these systems are based. Reordering will either take
place when stock fall to a predetermined level, or according to the situation discovered when
levels are reviewed on a periodic regular basis. The two approaches are commonly called the
action level approach and the periodic review approach

1. The action level method

The basic method of controlling stock by quantity is by means of fixing for each commodity,
stock levels which are recorded in stock control system and subsequently used as a means of
indicating when some action is necessary. There are various kinds of stock level, but the
fundamental controls are minimum, ordering, hastening and maximum levels.

i) Minimum stock level – Is the amount expressed in units of issue below which the stock of
any given commodity should not be allowed to fall. When the level is reached, it
triggers off urgent action to bring forward delivery of the next order, and it’s sometimes
called the danger level. In fixing a minimum, the main factor to be taken into account is
the effect which a run-out of stock would have upon the flow of work or operations.

ii) Re-order level – Is the amount expressed in units of issue at which ordering action is
indicated in time for the material to be delivered before stock falls below the minimum.
Two main factors are involved in deciding the ordering level; first, the anticipated rate
of consumption and , second, the estimated actual availability of goods in store after
receipt and inspection i.e. the lead time

iii) The hastening stock level – Is the amount expressed in units of issue at which it is
estimated that hastening action is necessary to request suppliers to make early delivery.
It is fixed between the minimum and the reordering levels.

iv) The maximum stock level – Is the amount expressed in units of issue above which the
stock should not be allowed to rise. The purpose of this level is curb excess investment.

Review of stock levels

In order to keep abreast of changing conditions after stock levels have been established in the
first instance, they should be carefully reviewed at suitable intervals, e.g. quarterly, monthly
or even weekly, and adjusted to meet any changes in the circumstances.
2. Periodic review approach

This involves examining either the physical stock or the stock records for a particular class or
commodity at regular intervals and taking simultaneous action for all the items requiring
 replenishment. This may be done at intervals of one month, three months, six months, one
year or whatever other interval is found satisfactory in practice.
Visual approach to control
There are several visual methods of control which still find application in the modern
warehouse despite the widespread adoption of sophisticated computer-based methods. The
‘two bin’ system is a useful and straight forward approach depending on the use of two
separate storage containers, one in current use and another in reverse. When the current
container is exhausted, the second container, which is usually sealed in some way, is brought
into use. The act of starting on the content of the second container triggers the reordering
process, and when the new stock arrive they are placed in the vacant first container which is
then sealed, the contents becoming the new reserve.
Stock security
Keeping stock secure depends on knowing what you have, where it is located and how much
it is worth - so good records are essential. Stock that is portable, does not feature the business'
logo, or is easy to sell on, is at particular risk.

Thieves and shoplifters

A thief coming in from outside is an obvious threat. Check the security around your premises
to keep the risk to a minimum. In a shop, thieves may steal in groups - some providing a
distraction while others take goods. Teach your staff to be alert and to recognize behavior like
this. Set up a clear policy and make sure staff are trained in dealing with thieves.

Offering to help a customer if you are suspicious will often prevent a theft. Avoid using
confrontational words like 'steal' if you do have to approach a suspected thief, and avoid
getting into a dangerous situation.

Protect your stock

 Identify and mark expensive portable equipment (such as computers). If possible, fit
valuable stock with security tags - such as Radio Frequency Identification tags - which will
sound an alarm if they are moved.
 Don't leave equipment hanging around after delivery. Put it away in a secure place,
record it and clear up packaging. It is a good idea to dispose of packaging securely - leaving
boxes in view could be an advertisement to thieves.
 Carry out regular stock takes.
 Put CCTV in car parks and other key locations.

Theft by staff
Theft by employees can sometimes be a problem. To prevent this:

 Train staff about your security systems and your disciplinary policies and procedures.
Training about the cost of stock theft will help, as many people aren't aware of the
implications for company turnover and job security.
 Set up procedures to prevent theft. Staff with financial responsibilities should not be
in charge of stock records.
 Restrict access to warehouses, stockrooms and stationery cupboards.
 Regularly change staff controlling stock to avoid collusion or bad practice.
 Unwanted Materials and Equipment
All unwanted materials and equipment must go through Salvage for disposal or reuse.

1. Complete a Disposal/Salvage Form Some items may require a Radiation Survey or

handling by Waste Management. Follow the directions on the disposal/salvage Form.
2. Labor Pool can assist with pickup of items and delivery to Salvage. Submit a service
request
3. Keep items in a secure location until collected do not leave in the hallway
Contact Salvage for more information or to coordinate large cleanups.
3. Prepare a disposal plan for items earmarked for disposal.

Trash and Recyclables

Use designated green containers for mixed paper, bottles, and can recycling. Use appropriate
containers for other waste. Additional trash and recycling containers are available through
Facilities. Submit a Service Request

Labor Pool can assist with collecting empty moving boxes, and taking materials to trash or
recycling containers

Hazardous Materials
Excess or unwanted hazardous materials (chemicals, cleaners, paints, etc.) are handled by the
Waste Management Group

Obsolete Scrap and Disposal

 Surplus Stocks: These are materials which have no immediate use or at least in the
foreseeable future. They have accumulated due to faulty planning, forecasting and
purchasing. Sometimes, they may have accumulated since they are standard bought in
quantities only and not in loose form where they would be more expensive. In short,
surplus stocks are the items which are in excess of their requirement. 
 Obsolete Stocks: They are those items which are not damaged and have economic
worth but are not suitable for the company's specific operations. For example, the
spare parts of machines that have been phased out. Changes in product design,
technological advancements, rationalistic, food and drugs whose effectiveness has
lapsed over time, wrong codification etc. are some of the reasons why obsolescence
occurs. As the name implies, they are non-moving items of the inventory. 
 Salvageable Items: These are items which cannot be used for the original purpose
but out of which certain parts may be removed and used either with or without
rework. For example, the motor of a spoil air-conditioner may be used for other air-
conditioners. While removing, theses motors should again be regularized as spares for
inventory purpose. 
  Reclaimable Items: These are items which have worn out by use but their life can be
extended by some specialized processes. An example is worn out items which can be
retreaded. Before reclaiming items, their extended life should be properly determined
as sometimes reclaiming is expensive and the extended life is not commensurate to
the cost incurred. 
 Scrap    : This is another term which is used to describe material not useful to the
organization (sometimes, used also for obsolete and surplus items when these are not
useful to the organization). Scrap can be defined as the residue from a construction or
manufacturing process which cannot be used economically within the organization.
Typical scrap material in the construction industry are empty tins, drums, and packing
material etc.    

Obsolescence

An item is said to be obsolescent when it is going out of use but is not yet completely
unusable, for example, let us suppose that a logistic firm has been running trucks of model
XYZ, and it is decided that in future all replacement vehicles are to be model ABC from
different manufacturer. From the date when this is announced, most of the spare parts in stock
for model XYZ become obsolescent. This does not mean they are immediately worthless,
because they can be used for repairing the trucks to which they belong as long as these
models are in service.

On the other hand, the number of XYZ trucks maintained will decline as time goes on, and
they will all eventually be disposed of.