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Stores'
Systems and Procedures
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To have
effective control and proper accounting of materials , a
professionally managed Stores has the following main
functions :
The details of system and procedures applicable in all
the functions are as below :
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RECEIVING
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Materials Status at Receiving |
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Materials in the Receiving department are
segregated into several categories, based on
their quality control status and destination.
Procedures in receiving must provide for storage
and transport of material in each category. The
major categories of materials are :
Awaiting inspection
– This category consists of material that has
been received and is awaiting inspection before
being moved into stock.
Acceptance upon
certification – This category
consists of material that may be accepted
pending certification.
Rework – In
this category are materials that are defective
and must be reworked. |
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Return –
This category contains materials that are
defective and will be returned to the supplier
for credit or replacement.
Materials to be tested
– This category consists of materials
which have been received and are awaiting
delivery to the using/testing department. |
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STEP WISE RECEIVING PROCESS :
Open Purchase Order wise file, once P.O. is
received.
Maintain Railway Receipt Register, Consignment Note
Register, Inspection Request Register, Rejection
Register and other relevant documents viz.
individual P.O. wise file, advance document file,
shipping documents, Guarantee Certificate and
inspection certificate, challan etc. and to feed the
relevant data into the computer.
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Receiving reports/documentation – Receiving keeps
records of all deliveries, and notifies the involved
parties, including accounts payable, purchasing, and
the end users. If the operating systems for the
business are computerized, then data for each
receipt is entered into the system, and linkage to
the purchase order and accounts payable files can
occur automatically. Reports of receiving activity
can be generated as needed.
Manual documentation may
also be kept. Normally, even in a computerized
business, copies of the bills of lading and the
packing slips are retained in the receiving files.
Receive/collect material, make cash payment towards
freight and demurrage including transportation
charges. |
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Unloading , checking of
quantity (checking the shipment) :
The process for receipt of a shipment includes
unloading the shipment from the delivery vehicle,
verifying the shipment with the delivery, and
signing the carrier’s bill of lading. Number
discrepancy should be detected at this stage,
where the quantity reflected on the bill of lading
is not what is delivered. These should be detected
and reconciled before the driver leaves. Once the
bill of lading is signed, count errors are much more
difficult to resolve.
Unpacking / opening of
packages and inspecting
: The next step in the
process is to check the open order file to verify
that receipt is a legitimate one, and to verify the
quantity due.
Feed data like D.B., P.O, challan etc. in computer
and generate the goods received
intimation/inspection certificate for sending it to
the indentors / users.
If a shipment is found to be incomplete, it should be so noted by
recording the amount actually received. This action
will reflect a partial receipt of the P.O. quantity,
and leave the line item open for receipt of the
balance. If there is no internal documentation for
the material received, it is classified as pending
or "in suspense” until its status is resolved.
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Material received may be unpacked and inspected
either in receiving or by the using department. The
same procedures for reporting and managing damaged
apply in either case. Obvious damage will probably
be detected in the receiving department. Concealed
damaged is usually detected when the container is
unpacked.
Lodging of Claim for
Discrepancy :
As soon as damage is detected, the carrier should be
notified and a claim for recovery filed. The carrier
must be promptly notified of the damage; agents of
the carrier have the right to inspect the damaged
goods. This means that as soon as the damage is
discovered, the material must immediately be set
aside and not disturbed. The carrier’s agents will
want to inspect not only the damaged goods, but also
the packing and the box in order to determine the
cause of the damaged. Photographic proof showing the
damage is a good safety measure, especially if the
goods are perishable.
Lodge preliminary claim for
any discrepancy such as non-receipt,, partial
receipt, damaged and missing items.
Procedure for the return of
goods to suppliers :
If goods are received and rejected, they are
normally set aside in a segregated area until
disposition is arranged. If the goods are to be
returned to the supplier, procedures for shipment
should include reopening the purchase order for that
quantity of material, and arranging for the
collection of freight charges from the supplier.
Arrange packing, forwarding & dispatch of
rejected consignment back to the party.
Obtain short/damage certificate from carriers
and forward the same to claim section of Finance for
on-ward transmission to underwriters.
Follow-up and do necessary chase-up with the
carriers, underwriters, suppliers for quick
clearance of cases pending with them.
The F.O.B. point on the purchase order determines
who will pursue the damage claim with the carrier.
If the goods are purchased F.O.B. Origin, the
buyer’s organization owns the goods in transit and
must pursue the damage claim. If the goods are
F.O.B. Destination, the supplier owns the goods in
transit, is obliged to pursue the damage claim, and
owes the buyer immediate replacement of the goods,
since the purchase order is not fulfilled.
At the end , once the goods are accepted on
inspection generate the necessary document (Goods Received Note)
for the good accepted and update the record
accordingly.
Handover the material to the Custody Section / Indentor
whichever is applicable. |
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RECEIVING SYSTEMS:
In a computerised environment, the use of bar coding
to complete the receiving transaction makes the
process simpler. Suppliers affix a bar code label to
the packages which is electronically read at the
receiving dock, and this action automatically
updates the computerized system with all the
information contained in the bar code.
Issue regarding the
separation / integration of Purchasing and
Receiving:
Auditors examine the roles of purchasing, receiving
and accounts payable to verify separation of the
functions. Independent verification of material
receipts is considered one means of protection
against internal fraud, since it becomes more
difficult to falsify |
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records or steal merchandise if several people
are involved in the series of transactions.
However, it is necessary for purchasing and
receiving to work closely together. Purchasing
manages suppliers, and both buyers and suppliers are
measured on delivery performance. Suspending a
delivery or creating a backlog of work so that
receipts are not entered promptly, can create
delivery performance information that is not
reflective of a supplier’s true performance.
Procedures for Receipt ,
Inspection and Acceptance of Service Purchases :
The receipt of services is normally not done by the
receiving department but by the end user. Formal
notification of “receipt”must be given so that the
accounting function is authorized to pay the
invoice, and so the Supplier understands that the
customer considers the service complete. Contracts
for a service should be accompanied by a clear set
of instructions and acceptance criteria, so both the
supplier and the customer have the same
understanding of what completion entails. When the
supplier believes the work is finished, the customer
normally inspects it and either agrees or disagrees.
When both agree, then the customer creates a
receiving transaction that closes the order and
authorizes payment. All end users should have a
formal procedure for accepting and receiving a
service so that consistency is maintained. |
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