Disposal of materials in Stores


In the course of running an Organisation, particularly a manufacturing unit there arise


some defectives ,surplus and obsolete items.
These items not only have significant economic value they also occupy valuable space. It requires efforts to clear off spaces and free the blocked money to be used as working capital.

The activities viz. identifying, ,segregating and finally selling off such items is usually referred to as disposal.

There are different categories of disposable items :

1 Obsolete-Surplus-Non-moving.
2 Unserviceable
3 Waste arising out of production.
4 By-products
Disposable item have no use and thus need to be removed from the premises. These are often sold out through the following method :
  • Tendering
  • Fixed price sales
  • Contracts
  • Online Auctioning through Ecommerce portal


Under Tendering, a Tender catalogue is prepared which contains the detailed list of the items earmarked for disposal such as description, unit , quantity and location within the premises etc. The catalogue is sold to the prospective buyers, who submit their best offer in a sealed envelope, on a fixed date.

All envelopes are opened at a stipulated date and time in presence of the Tenderers. Comparative statement of quoted rates is prepared and those lots where the Highest bid , known as H1 bids are within a specified percentage of the acceptable price , called Reserve price, are sold.

Under Fixed Price Sale, material is offered for sale at a fixed price decided by competent authority. Interested vendors can lift material after depositing payment at the fixed price.

Under Contract system of disposal, contracting is done with prospective buyers who lift the materials within a given period at a pre-decided value. For items arising in huge quantities like slag, fly ash etc. long term contracts are entered into with parties for lifting total quantities of such arisings.

Under Online Auctioning through an E-commerce portal, called Service provider, the disposable lots are declared to the general public by uploading the Auction Catalogue on a popular website offering for sale through the Internet. In India , portals offered by companies such as Mjunction is highly popular and more and more such auctions , also called Forward auctions are conducted through them.

Each vendor who shows a willingness to participate in the forward auction for the declared items, by submitting the required EMD, is given a unique user name and password, through which they can access the online auction and bid for the eligible lots.

The bidding for the given lots implies increase in bid value by each bidder till the time bidding stops at the highest


value for the given lots. After completion of auction, the Service provider submits lot-wise H-1 bid report to the seller. The H-1 bids are compared with the lot-wise Reserve price and those lots which are within a specified percentage of the reserve price are sold.
Sale Orders for sold lots are issued in favour of the highest bidder (H1), asking them to deposit the lot value. On receipt of lot value, Delivery Order is issued in favour of the highest bidder, who then lifts the sold lot within the stipulated time.


Read on ...more Stores topics

Inventory Control
Stores relationship with other Functions
Advantages of a Centralized Store
Responsibilities of Stores
Store Planning and Layout


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