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CHAPTER-7

INVENTORY MANAGEMENT
Introduction

0701. BN inventory of naval stores is maintained in two places on board and in

NSD. Due to space limitations ships hold only essential stock of goods and spare
parts to meet operational maintenance requirements. Depot stock is maintained as
back up of ship board inventory. The primary source of NSD’s inventory planning is
ships’ allowances of naval stores i.e. ship’s warrants. Accuracy of NSD’s inventory
depends on the correctness of ships’ inventory planning.

Determining Depot Inventory

0702. It is neither economical nor available space will permit holding inventory of
whole range of naval stores. Therefore, inventory should be planned. Steps in
planning inventory should be as follows:

a. Step-1. Prepare WH wise CAL taking data from ships’ warrants. Data
as recorded on ship’s warrants i.e. WNS {F (NS) 1}, WOSEF {F (NS) 2} and
SAL {F (NS) 3} are to be compiled on a prescribed format known as CAL. An
abridged example of the CAL format is given in Annex D to Chapter 5. CAL
indicates:

(1) Item by item ship’s quantitative requiremtn.

(2) Item by item area wise total quantitative requirements.

(3) Item by item total quantitative requirements in BN.

b. Issue Control at NSD shall prepare and update CAL.

c.. Step-2. Determination of requirements as mentioned above helps

warehouses to calculate maximum and minimum stock level to hold in the
WH. Determination of maximum and minimum inventory level shall depend
on:

(a) Criticality of stores

(b) Procurement lead-time

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(c) Availability

(d) Storage space availability

(e) Consumption pattern

(f) Context to back up ships’ spares requirements

Planning, Projecting And Reviewing Ships Naval Stores Requirements

Ship’s Warrant

0703. Planning ship board inventory begins with the determination of ship’s
requirements of naval stores. Individual requirements are then compiled in NSD to
determine BN requirements of naval stores known as Consolidated Allowance List
(CAL). Ship’s requirements are to be recorded on following three documents
generically known as warrants:

c. Warrant of Naval Stores (WNS) {F (NS) 1} (Annex A to Chapter-5)

a. Warrant of Ship System/Equipment/Fittings (WOSEF) {F (NS) 2}

(Annex B to Chapter-5)

b. Spares Allowance List (SAL) {F (NS) 3} (Annex C to Chapter-5)

WNS {F(NS) 1}

0704. These are the stores which are neither an element of ship
system/equipment/fittings nor their spare parts but are required for their up keep,
ship’s husbandry and crew habitability, facilitating crew activity (e.g. cotton rugs,
scrubbing brush, sanitary brush, mop, glass cleaner, soap, detergent, metal polish,
varnishing material, paint, painting gears, ropes, grease, lubricant, navigational
instrument and gear, RIGGING, flags and buntings and so forth.) Ship’s shall
prepare three sets of WNS and forward to NHQ (DNS) for approval WNS. NHQ
(DNS) shall retain on copy and send one copy each to NSD and ship. Some helpful
sources in identifying requirements are:

a. Rigging Warrant

b. Paint Scheme
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WOSEF {F(NS) 2}

0705. WOSEF {F(NS) 2} contains the record of ship board system (e.g. Fire Control
System, Propulsion System, Missile System etc and their units like engine, gearbox,
shaft, propeller in propulsion system; Equipment (e.g. Gyro, Sonar, Speed Log,
Communication Equipment etc) and Fittings (e.g. Anchor) which come along with the
ship through new construction or off-the-shelf buy.

SAL {F(NS) 3}

0706. SAL {F(NS) 3} contains list of spare parts, components, sub-assemblies and
their authorized ship board stock for operational maintenance and depot stock as
back up of ship board stock i.e. the stock of spares, components, sub-assemblies in
NSD. Functional relation between ship’s stock and depot stock is shown in the figure
below. In this functional (logistical) relation, it is the ship who determines items and
quantity required to be maintained on board and the quantity to be held in the depot
as its back up. Such determination shall be based on 3 years requirements (item and
quantity). Three year’s quantity is divided into ‘on board stock’ and ‘depot stock’. For
example; a ship has determined the 3 years requirements of a ‘seal’ to be 60 in
number. Now the ship decides to keep 30% (18 in number) ‘on board’ (this quantity
is also depot’s minimum inventory level) and 70% (42 in number) in the ‘depot’ (this
quantity is also depot’s maximum inventory level). Thus:

3 Years Requirements = On board Stock Quantity + Maximum Depot

Stock Quantity.

3 Years Requirements - On Board Stock Quantity = Maximum Inventory

at Depot

On board Stock Quantity = Depot’s Minimum Inventory Level

The ratio between ‘on board stock’ and ‘depot stock’ is variable at the discretion of
ship/establishment/organization because some ships may not have ideal storage
facilities on board.

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Figure 7.1: Functional Relation between ship’s Stock and Depot Stock

Ship’ Stock
Demand

Supply

Depot Stock

Preparation of Ship’s Warrants

0707. WNS {F(NS) 1}. Ship/Establishment shall prepare two sets of this document;
one set for NSD and one set for ship. WH wise customer catalogue is the most
useful source of information to prepare this document. This has made the
preparation of WNS so simple. A customer can view complete list of supplies in BN,
download the catalogue on the intranet or collect soft copy from NSD, select the
essential items and delete non-essential items and insert quantity requirements
(quarterly). WNS of similar class or type of ship can be useful guide in preparing
WNS.

0708. WOSEF {F(NS) 2.

a. New Ship Construction. Ship builder shall prepare two sets of this
document for BN. Procurement Directorate shall assign this responsibility to
ship builder through contractual agreement. BN Project Team Leader/Project
Officer, if so nominated, shall validate this document by endorsing his
signature. BN Project Management Team shall assist ship builder in preparing
this document but has the responsibility to ensure that the ship builder
prepares a complete document. Both the sets are to be sent to NSD Ctg for
review. CO NSD Ctg after necessary correction and shall endorse approval
retain one set on board and send another set to the ship’s CO. CO NSD Ctg
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shall ensure that information from this document are fed into the data base as
required by NSD’s IMS.

b. Ship: Off-the-Shelf-Purchase. The Commanding Officer is

responsible to prepare two sets of this document through a committee within
90 days of taking over the ship. The Commanding Officer shall validate the
document and send both copies to NSD Ctg. CO NSD Ctg shall endorse
approval after necessary review and retain one set and send another set to
the ship’s CO. CO NSD Ctg shall ensure that information from this document
are fed into the data base as required by NSD’s IMS.

c. New Purchase of Equipment. For new purchase of system/equipment

like fire control system, early warning system, engine, radar, generator etc;
the ship for which the item is purchased shall prepare two sets of this
document after installation of the system/equipment on board forward one
copy to NSD and insert another copy in ship’s folder of F (NS)-2. CO NSD
shall review the document to ensure ship has recorded information as
required by IMS and shall ensure that required information from this document
has been fed into NSD’s IM data base.

0709. SAL {F(NS) 3}.

a. New Ship Construction. Ship builder shall prepare two sets of this
document for BN. Procurement Directorate shall assign this responsibility to
ship builder through contractual agreement. BN Project Team Leader/Project
Officer, if so nominated, shall validate this document by endorsing his
signature. BN Project Management Team shall assist ship builder in preparing
this document but has the responsibility to ensure that the ship builder
prepares a complete document. Both the sets are to be sent to NSD Ctg for
review. CO NSD Ctg after necessary review and shall endorse approval retain
one set on board and send another set to the ship’s CO. CO NSD Ctg shall
ensure that information from this document are fed into the data base as
required by NSD’s IMS.

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b. Ship: Off-the-Shelf Purchase. The CO of the ship is responsible to

prepare two sets of this document through a committee within 90 days of
taking over the ship. The CO of the ship shall validate the document and send
both copies to NSD Ctg. CO NSD Ctg shall endorse approval after necessary
review and retain one set and send another set to the ship’s CO. CO NSD Ctg
shall ensure that information from this document are fed into the data base as
required by NSD’s IMS. Following guide lines may be applied while preparing
SAL:

(1) Reference to SAL of similar machinery on board other ship.

(2) Crew experience in the field of maintenance works.

(3) Historical data on similar machinery

c. New Purchase of System/Equipment. When BN Project

Management Team is not nominated (for new purchases like fire control
system, early warning system, engine, radar, generator etc) the OEM shall
prepare two sets of this document and deliver along with the store to NSD.
Procurement Directorate shall assign this responsibility to the OEM through
contractual agreement. Storing WH in NSD shall, within 07 days of receipt of
stores forward both sets to concerned directorate at NHQ for validation.
Directorate shall validate and send one set to NSD Ctg and one set to the
ship within 20 days to ship/establishment where the equipment is installed or
will be installed.

d. While preparing SAL, the out dated concept “Just in Case” must be
avoided. This concept only contributes to build up excess inventory and
multifaceted problems in inventory management.

Inventory Operation: Inventory Movement.

0710. Inventory movement occurs due to following reasons:

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a. Receipts and issues are the principal causes of movement of inventory.

b. Reallocation of storage within the warehouse.

c. Inter warehouse transfer

0712. All movements of inventory items in a warehouse are recorded on F(NS) 15

(paper or electronic). How well this is done depends on the use of good stock
classification and coding system.

Inventory Operation: Receipt of Stock

0713. Receipts add to inventory balances in warehouse or storage location. The

following cycle shows how receipt of stock occurs in depot. NSD’s Inventory
Manager (CMD) must plan receipt of goods.

Figure 7.2: Inventory Operation

Notification of Goods Receipt of Copy of

Received Contract/Purchase Order

Storage in the
Warehouse

Inspection Notification

Delivery to Depot

Inspection

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a. Receipt of Copy of Contract/Purchase Order. With the receipt of the

copy of contract or purchase order CMD should read the whole contract.
He/she should plan in advance the delivery and receipt. The documentation
from the supplier enables the correct stock code to be identified (under which
the items will be received and stored). The information also enables the CMD
to confirm in advance the dimensions, storage and handling requirements.

b. After receiving the copy of contract/purchase order CMD should draw

plan to receive stores in the depot. He has to study all contracts and plan
cataloging of all stores in the contract. While studying he has to:

(1) Identify information lapses in the contract document that are

essential for inventory management. For example, study of an
equipment contract revealed following:

Item Qty Pertinent Questions Action by CMD

Oil 1  What type of oil? Clarify doubts
barrel  What is the grade? from procurement
 How much (liter) in a barrel?
 What is its equivalent directorate well
product? before delivery
Grease 1 kg  What is the grade?
 What is its equivalent takes place.
product?
Brass 50 No  Is it something that is used
Washer to wash brass?
 Is it washer made of brass?

(2) CMD has to ensure before delivery of goods whether the items
are already in the depot inventory list:

(3) If the Item(s) is (are) already in the depot inventory list:

(a) Confirm the item has IMC and structured name.

(c) Allocate storage WH.

(4) If the item is identified to be new purchase or replacement

purchase then:

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(a) Follow codification procedure to add the item(s) in the

inventory with structured name and IMC.

(b) Consider the dimension/volume and weight of the item to

nominate storage location and keep handling equipment ready

for immediate use.

(5) Activities mentioned above shall be done through cataloging

division.

c. Inspection Notification. Supplier can give notice to CINS to inspect

goods at designated premise. Local purchase goods are inspected at depot
premise by depot’s inspection committee.

d. Delivery to Depot. Following the issue of inspection note, the

delivered goods are moved to their corresponding storage locations. CMD is
to ensure that the supplier has complied delivery conditions.

e. Notification of Receipt. Delivery receipt {F(NS) 52} is issued by the

receiving depot and dispatched to concerned agencies.

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