What is Store keeping accounting? Types of store keeping and Objective of store keeping

What is Store Keeping?
What is Store keeping accounting? Types of store keeping  and Objective of store keeping?

Store keeping

Meaning of store keeping

Store keeping is a specialized and important function of materials control that is especially concerned with the physical storage of goods. The storekeeper is responsible for safeguarding and keeping the materials and suppliers in proper place unit required in production

. It is service function and the store keeping is the in-charge of store keeping. He is the warden of the service and the store and maintains a record of all movements of materials. Storekeeper is in fact a connecting like between planning and the production department. Purchase control must be effective stores control to avoid losses from damage, deterioration and carelessness.

Objective of store keeping

Store keeping involves handling and recording of materials. Following are the main objective of store keeping:

i. Effective use of available store space.

ii. It avoid over and under stocking of materials.

iii. Efficient and economical receiving, handling and issuing of stores.

iv. Protecting goods stores against fire, loss, theft, and obsolescence.

v. Ensuring adequate and timely supply of store under proper requisition and authorization.

Types of stores

Although there are various types of store, following are the commonly used by manufacturing company. Basically, there are three types of store as follow:

• Centralized stores

• Decentralized stores

• Centralized stores with sub-stores.

Centralized stores

If there is only one store to receive and issue materials to all department of a concern, such store is called entertained stores. In this type of store, all materials are kept at one central store. Materials are received by and issued from stores department in centralized stores. This type of store is used by most of the manufacturing company. The main objective of centralized store is to purchase and issue all the materials required by the entire department.

Advantage of centralized stores    

i. There is a better control over store under centralized stores since all the material are stored centrally. This enables effective supervision of stores.

ii. There is minimum investment since it is not necessary to establish separate store for each department.

iii. Centralized stores achieve economy die to less administrative and supervision costs.

iv. The layout of stores can be made simple and scientific.

v. It helps to gain expertise in store management.

   Disadvantage of centralized stores

i. There is a very high risk under centralized store in case of theft, fire etc.

ii. It increases transportation cost because of the distance to other departments.

iii. It also increases the materials handing cost.

iv. It requires high supervision cost.

v. It needed more space for storing materials.

Decentralizes stores

This store has been emerged due to disadvantages of centralized stores. It is a just reverse system of centralized stores. Under this system of store, there is an independent or separated store in each department. Each department has to make a separate store for recording the materials en each department. Each department has to make a separate store for recording the materials they required. It is not so popular because it requirement more cost to set up a separate store in each department.

Advantages of decentralized stores

i. Internal transportation cost can be saved.

ii. Material handling process is rapid in this system.

iii. Controlling systems is more better.

iv. Loss can be minimized in this system.

 Disadvantages of decentralized stores

i. More storekeepers are needed.

ii. More cost for staff and administration are required.

iii. Each department needs separate location for store.

iv. More investment in needed.

Centralized stores with sub-stores

In this store, the implores system of stores is used where each sub-store is given some beginning stock. In big organization, the central store is far from production department and due to which transportation cost increases. To reduce the cost of handing and transportation, a sub-store is maintained nearby production department. Sub-store is managed by central store. Sub-store gets materials from central store.

Advantages of central stores with sub-stores

i. It facilitated for control and supervision.

ii. It solved the problem of space availability.

iii. It reduces the transportation cost.

iv. There will be minimum loss in case of accident.

Disadvantages of central stores with sub-stores

i. Store control is being difficult and complex.

ii. Fixed cost will increase due to extra staffs.

iii. Required more investment is stores.

iv. Stock checking will be time consuming.

Location of store

Place is also known as location. So location of store means the place where the store is situated. While selecting the location of store, purchase department must be careful in various facts. Because location of store at proper place helps to minimize the cost of handling materials. The layout of the store must be considered. The store should be divided into racks which should be future sub-divided into small spaces. This space is knows as bin.

Factors to be consider for selecting location of stores

i. It should be located at a central and safe place.

ii. It must be located near to production department.

iii. It must have enough space to keep the purchase materials.

iv. It should be easily accessible to the other entire department.

v. It must be equipped with enough bins and racks.

Storekeeper

Storekeeper is a person appointed for taking care of store. He is in-charge of the store and responsible for the control of store. Normally, all the big manufacturing concern appoints a storekeeper. He has a important role in store keeping. The storekeeper must have some technical knowledge and experience is store routine. Except this, he should be trained, honest, loyal and responsible. Storekeeper is also called store manager or store superintendent.

Duties and responsibilities of storekeeper

A storekeeper should be responsible for the following functions:

i. Avoiding damage and deterioration of goods.

ii. Providing security against loss, fire and accident.

iii. Performing checking function on work completed.

iv. Protecting against the consequences of non-availability of materials.

v. Recording and receiving of materials in store.

vi. Classification and codification of items which is received by store.

vii. Prohibited unauthorized persons from entering inside the store.

Store keeping procedure or store routine

After receiving materials by receiving or store keeping department, store keeping has to perform various activities relating to materials. It is known as store keeping procedures or store routing under store routine, following procedure has to be done:

i. Classification and codification of materials.

ii. Recording of materials received

iii. Issuing of materials

Classification and codification of materials

Classification and codification of materials facilitates prompt identification of the materials in storage when they are being issued to production departments. All items in the stores should properly be classified and codified. Goods which are received by store must be scientifically classified and coded.

Classification of materials

As per the nature of materials, it must be classified in various groups of goods. Materials are classified to make issuing, storing and identifying materials easily and quickly. So materials are first classified on the basis of their nature and types. It may be classified as construction materials, consumable store, spare parts, lubricating etc.

Codification of materials

After classification of materials in various groups, they are codified again. Coding means to a numbers or distinctive symbols to a specific materials of stores with a arrangement for prompt identification. It is procedure for assigning symbols for each item in properly with proper arrangements to facilitate storing. The symbol allotted to the materials is known as 'code'.

They are three method of codification of materials:

a. Alphabetical: alphabets are used for codification of each group of material e.g. A, B, C…

b. Numerical: Numbers are used for codification of each group of materials e.g. 101, 102…

c. Alpha-numeric: both alphabets as well as numeric are used for codification of each group of material e.g. A-101, A-102…

Advantages of classification and codification of materials:

i. It helps to maintain secrecy of materials.

ii. It facilitators to locate and identified the materials.

iii. It avoids duplication of multiple names of materials.

iv. A coding system helps in the maintenance of mechanized accounts.

Recording of materials received

After classification and coding of materials, next step on store route is recording of materials received by store department. Following are the two system of material recording received by store:

• Bin card

• Store ledger

Bin card

Bin card term used o symbolize the place or shelf or rack or pigeon-holed or even a big room where materials are stored and the card attached to the bin or tag hung up there is known as bin card. Bin card shows quantitative details of receipts, issue and balance of materials in the bin. This card also shows the maximum level, minimum level and re-orders level of the materials. It helps the storekeeper to control materials. Bin card is used by the storekeeper to keep only quantities record for all items of materials in store remember that, it does not record the value of materials.

Store ledger

Store ledger is maintained by costing department. This ledger shows the information for the pricing of materials issued and the money value at any time of each items of store. Store ledger contains and account for every item of stores and makes a record of the receipts, issue and the balance, both in quantity and value. It contains the name, part number of the items, and bin number.