store & purchasing inventory of acl
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A
Project Report
On
Stores Procedure And Valuation
InAmbuja Cements Limited
Unit: Bhatapara
Submitted in the partial fulfillment of Requirement
Of
Pt. Ravishankar Shukla University, Raipur (C.G.)
ForPost Graduate Diploma
In
Material Management
Session 2009-2010
Guided By Presented By
Prof. B.P. Agrawal Rahul Kumar Sahu
Dept. of Commerce
Kalyan Mahavidyalaya
ACADEMY OF MANAGEMENT STUDIES
KALYAN MAHAVIDYALAYA
SECTOR 7, BHILAI NAGAR
DURG (C.G.)
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CERTIFICATE
This is to certify that Mr. Rahul Kumar Sahu is a
Bonafide Student of Post Graduate Diploma in
Material Management of Kalyan Mahavidyalaya,
Bhilai Nagar, has completed Project entitled
STORE PROCEDURE AND VALUATION in
partial fulfillment of the requirement for the
award of Post Graduate Diploma in Material
Management under my Guidance and
Supervision.
It is further certified that this is his original workdone under my guidance and I wish him all the
success.
Date: Mr. B.P. Agrawal
Professor Kalyan
Mahavidyalaya
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Acknowledgement
I take this opportunity to express my sincereindebtness to Shri B.P. Agrawal (Professor inDepartment of Management, KalyanMahavidyalaya) whose Encouragement and
Goodwill enabled me to complete this Project.
I am also thankful to Mr. Arvind Upadhyay (G.M.Materials) of M/s Ambuja Cements Ltd., Unit:Bhatapara. Who had been kind enough to permitme and encourage me in collecting the data andinterpretating the same to complete the Projectwork.
I am also thankful to all the staff of StoresDepartment of M/s Ambuja Cements Ltd. for theirkind co-operation in completing this Project.
Rahul Kumar Sahu
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INDEX
S.No PAGE
I PREFACE
II AKNOWLEDGEMENT
III INTRODUCTION ON INDUSTRIES
IV INDUSTRIES TYPES
V INTRODUCTION OF THE CEMENT
VI INTRODUCTION OF COMPANY PROFILE
VII INTRODUCTION ON THEME OF PROJECTVIII CLASSIFICATION AND CODIFICATION
OF STORES
IX INVENTORY CONTROL
X ACCEPTANCE OF EXCESS SUPPLY STORES
XI PURCHASE REQUISITION AND
RECEIVING
XII PREPARATION OF RECEIPT CUMINSPECTION ADVICE (MRN)
XIII CLEARANCE OF TRANSPORTATION BILL
XIV BIN CARD
XV ISSUES
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XVI INPUTS FOR EDP FROM STORES
DEPARTMENTS (SAP)
XVII OUTPUTS FROM EDP
XVIII REPORTS AND RETURNSXIX CONCLUSION AND SUGGESTIONS
Ambuja Cements Ltd
History of Ambuja Cements Ltd.
Ambuja Cements Limited was set up in the late 80s. The cementindustry presented an opportunity of steady growth and ethical
competition to the promoters.
However, a decade later, it became one of worlds most efficient
cement companies producing the finest cement in the world at the
lowest cost. While adhering to the most stringent international
pollution-control norms.
Today, Ambuja is the 3 rd largest cement company in India, withan annual plant capacity of 16 million tonnes including Ambuja
Cement Eastern Ltd. and revenue in excess of Rs.3298 crores.
More importantly, its plants are some of the most efficient in the
world. With environment protection measures that are on par with
the finest in the developed world.
But the companys most distinctive attribute is its approach to the
business.
Ambuja believes its most valuable assets arent cement plants.
They are the people who run the plants.
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This unique vision is encapsulated in the companys homegrown
philosophy of giving people the authority to set their own targets,
and the freedom to achieve their goals.
Its called I can
This simple vision has created an environment where there are no
limits to excellence, no limits to efficiency. And has proved to be a
powerful engine of growth for the company.
As a result, Ambuja has consistently raised the bar in all aspects of
the cement industry. Be it transportation, plant efficiency, brand
building or human resource development.
Take a look:
First plant set up in record time
When Ambuja set up its first plant in 1986, the accepted time
period for installing a plant was 3 years.
Ambuja did it in less than 2 years. And with a significantly lower
capital expenditure.
In 1993 the company went a step further and bettered its own
record. Ambuja's second plant was installed in a mere 13 months -
the quickest time for setting up a one million tonne cement plant.
A whole new way of transporting cement
In the early 90s, almost all cement in India travelled by rail or
road. And in bags. A mode that involves deterioration of both, thequality and volume of cement.
In 1993, Ambuja Cement set up a complete system of transporting
bulk cement via the sea route.
Making it the first company in India to introduce bulk cement
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movement by sea. Others followed and today, about 10% cement
travels by this new route.
The facility comprises: A dedicated port at the Gujarat plants,
capable of berthing 40,000 DWT vessels, three bagging terminalsat Mumbai, Surat and Sri Lanka, and seven special bulk cement
vessels.
This capability has enabled us to supply fresh cement to many
coastal markets domestic and international.
Branding a commodity
Cement is a commodity, sold largely on price. Ambuja Cementwas the first company to create a brand out of cement and
command a premium.
It was also the first to introduce a special cell, providing technical
services to consumers and masons. Today, this has become the
norm in cement marketing.
The trick of course was to provide a consistently high quality of
cement, backed by excellent service. This was reinforced by astrong dealer network.
The result is that customers are ready to pay 2-3% premium for
Ambuja Cement for the value they receive. Ambuja Cement is the
top brand in Western, Northern, Central and Eastern India.
Exports
Ambuja Cement exports almost 17% of its production in a verycompetitive international environment. For the last ten years,
Ambuja Cement remains Indias highest exporter of cement.
This has been possible for two reasons
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One, the quality of cement matches the best in the world.
Two, the dedicated bulk cement transportation capability at our
Gujarat plant.
The Environment
From the outset, Ambuja has believed that a cement plant cannot
flourish at the cost of the environment. Thats why it adheres to the
most rigorous international environmental norms.
The pollution levels at all its cement plants are even lower than the
rigorous Swiss standards of 100 mg/NM 3.
At the Gujarat plants, surface miners have been employed to
scrape the surface of the mines. Thus ensuring that all the mining
is totally blast free. There is no noise or air pollution.
Similarly at the Himachal Pradesh plant, Ambuja has employed
techniques that have made mining absolutely safe and pollution
free.
Not surprisingly then, the company has consistently won awards
for its pollution free plants. Awards as prestigious as the National
Award for Outstanding Pollution Control and The Eco-Gold Star
of Tata Energy Research Institute (TERI).
Corporate Social Responsibility
In 1991, the company set up Ambuja Cement Foundation to trigger
all-round development of the people around its cement plants. TheFoundation decided to traverse the difficult but more productive
path of helping the people to help themselves. With great
dedication and commitment, the foundation energized the local
people to participate and own their development process. It became
a facilitator and catalyst, rather than a one-time fund provider. It
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developed easily replicable and sustainable modules for water
management, sustainable agriculture and healthcare.
All this effort in discharging its social responsibility has earned the
company recognition across Asia.
Milestones
Building of a cement plant in record 13 months.
2.8 kilometer conveyor belt running through three hills was
constructed in just 9 months.
Introduced a completely new system of transporting cement inIndia the bulk cement transportation by sea.
Introduced complete blast free limestone mining by using the
surface miner in limestone mining for the first time in India.
Created water reservoirs in used up mines and raised the water
table in arid areas.
Our plants have achieved the lowest pollution levels comparablewith the most strongest Swiss standards.
Recognition
National Award for commitment to quality by the Prime
Minister of India.
National Award for outstanding pollution control by the
Prime Minister of India.
Eco-Gold Star by TERI Best Export Award by CAPEXIL.
Award for Corporate Social Responsibility by Business
World FICCI
International AwardFor Rural Development by Asian
Management Institute (AIM)
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company is in a position to sell its excess power to the local state
government.
Ambuja cement is the first company to introduce the concept of
bulk cement movement by sea in India. This resulted in speediertransportation and brought many coastal markets within easy
reach. Ambuja Cements has a port terminal at Muldwarka, Gujarat.
It is an all weather port that handles ships with 40,000 DWT. The
port has a fleet of seven ships with a capacity of 20500 DWT to
ferry bulk cement to the packaging units. The company has bulk
cement terminals at Surat, Panvel, and Galle. The Surat terminal
has a storage capacity of 15,000 tonnes and Panvel terminal has a
storage capacity of 17,500 tonnes. Both the terminals have bulkcement unloading facility. The port at Galle, 120 km from
Colombo, Sri Lanka, handles million tonnes of cement annually.
Major Achievements of Ambuja Cement
Most profitable cement company in India.
Lowest cost producer of cement in the world.
Its environment protection measures are at par with the best
in the world. The pollution levels at all its cement plants arelower than the rigorous Swiss standards of 100 mg/NM3.
The only cement company to be awarded with the National
Quality Award.
First cement company to first to receive the ISO 9002 quality
certification.
Received ISO 14000 Certification for environmental systems.
India's largest exporter of cement.
Received Best Award for highest exports by CAPEXIL. First company to introduce the concept of bulk cement
movement by sea in India.
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DEFINATION
Storekeeping refers to the safe custody of all the items of the
Materials Stocked in the stores room for which The Storekeeper
Acts as a trustee. This means that the Materials carried into the
store are to be stored in the store room in such a manner that
The possibility of their being stolen or damaged due t fire or
any other caused is reduced and
They can be easily located and issued whenever required for
use in and outside the store room. Store keeping thus may
mean Physical Storage of materials carried into the store
room in a scientific and systematic manner with a view to (i)
saving them from all kinds of damages, and losses and (ii)exercising over all control over their movement
(A) OBJECTIVES
The main objectives of store keeping are
Minimization of cost of production:-
The main aim of storekeeping function is to minimize the
cost involved while providing efficient and effective storekeeping
service over and above the cost of materials required for
production are the cost of storage itself. Since this cost directly and
indirectly influence the cost of production. The objective is to
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reduce them to their minimum so as to reduce the cost of
production.
Providing efficient service:-
It provides service to the organization by
Make available a balanced flow of the right quality and
quantity of raw materials equipment etc. within least possible
time
Providing maintenance materials, spare parts, general stores
and other materials
Receiving from production unit and issuing to the sales unitthe finished products.
Establishing Co-ordination:-
Stores Department has to be closely linked with Materials
Control Department Inspection, Design, Maintenance, Finance,
Accounts, Purchase, Sales, and Transport etc. This above said
department are interdependent and stores in dependent on each ofthem for its day to day operations. Thus establishing Co-ordination
is one of the important objectives of stores department.
Advising Management:-
The advice of the stores manager to the management is of
greater significance. His advice to the management with regards to
physical verification, inspection, replenishment, disposal of scraps
etc. is one of the immense help for plans and policies.
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STORES PROCEDURES
FUNCTIONS:-
The following are the functions of the stores department
1. To make purchase requisition for general consumables items
to replenish this stock in other words, to replenish properly
the stock of the materials which falls in the control of Stores
Department.
2. Collection of materials from Railways, Garages and PostOffice etc.
3. To receive Stores, Arrange for inspection and after certifying
the quality of the materials by user making a Materials
Receipt Note in the ERP System.
4. To keep a close watch with the Consumer Departments
Purchase and Quality-control for quickly sorting out all
outstanding issues regarding demand procurement, quality,
rejection, replacement or return of the Materials.
5. To issue Materials against Material issue requisition Slipmade against Plant Maintenance order or plant process order
made by Authorised Officials.
6. To keep a close watch on the quality of the finished product
given by sub-contractor.
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7. Ensuring proper custody, preservation, control and
accounting of the Materials.
8. Timely Feeding of all the documents in the ERP System,
Analysis of the output and reporting the inventory position to
different levels of Management.
IMPORTANCE:-
Storekeeping has attained greater importance in todays trade
and commerce due to the highly industrialized world. Without
efficient store keeping in this age of cut throat competition and
multiply product, No industry or company can maintain favorable
position if its cost of production is not kept at the minimum level,
there is not a regular flow of products in the market and it is not
ensuring the same quality, if not an improved one, at a
comparatively cheaper rate, Here storekeeping plays an Vital Role.It ensures against falling down of quality and high price by
maintaining itself economical and efficient with the increasing
specialization in industries extension of the use of atoms to
production more and more technical advancement is about to
come. This will give greater responsibilities than what is has
shouldered till now.
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ORGANISATION
GM (Materials) exercise over all control of Stores and Purchase
Department. He is assisted by Manager and other Executives for
discharging the above function at central stores and sub-stores.
The activities in the stores Department are divided into the
following groups.
Receiving and Shipping
- Materials collection
- Receipt Inspection
- Receipt Documentation
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CLASSIFICATION AND CODIFICATION OF STORES
A Systematic classification and codification of Stores Materials are
essential for easy and correct identification of items. Condition isessential when computerization of store inventories is introduced.
Classification of Stores
The entire Materials used in Ambuja Cements Ltd. is have been
classified into 18 main groups, according to segment family and
class first two digit of comprises, have been codified in the seriesfrom 1 through 8, these Materials Group are as follows
01. Mill Stores
02. Consumable
03. Steel
04. Electrodes & Gases
05. Electrical
06. Erection Tools and Tackles
07. Bearings08. Lab Equipments and Accessories
09. Drawing and Survey Equipment
10. Mess and Office Equipments
11. Welding Machine and Accessories
12. Tools
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13. Machine Shop Machinery and Spares
14. Foundry Equipment and Spares
15. Transformer, EOT Cranes and other Electrical Equipment
16. Vehicle Cranes, Tailors, and Misc. Materials Handling Devices
Materials Master Data
All the relevant information about the Materials is complied inMaterials Master Data, it is unique and uses in all the transaction
of the materials, such as for purchasing of materials, issuing of
Materials to user and for maintenance activity, it contains all the
information of the Materials such as
1. Materials Groups to which groups Materials belong
2. Status this denotes status of the Materials such that for the
Materials blocked for procurement Z-1, for obsoleteMaterials Z-2, for Hazardous Materials Z-3, for Insurance
Materials Z-4
3. Purchasing Groups all the Materials which are required for
Production Activity for any Specific Plant has their Specific
Purchasing Groups, this purchasing Groups are responsible
for their Procurement.
4. Materials Type for Fuels it is denoted by, HFUE, for
consumables it is denoted by, HCON, for Spare Parts it is
denoted by HPAR, for Semi finished Product it is HSEM, forFinished Product it is HFIN.
5. MRP Controller it denotes the Materials Requirement
Planning Controller who controls the Replenishment of the
Materials Stock.
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Material Codification
All the Materials of the Inventory have been codified with the
series from 1 through 8 such that
1. for Raw Materials
2. for Energy, Fuels
3. for Spares parts
4. for Wear parts
5. for Packing Materials
6. for General Consumables Materials and Services
7. for Project Materials
For opening of new item code or any new material user Dept. give
requisition to Stores Dept. they check details for inserting in the
Materials Master and sends it to the Code opening Dept. they feel
all the relevant data in the Material Master and opens New Code
and intimate Stores Dept.
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INVENTORY CONTROL
The Primary Objectives of Inventory Management are:-
1. To minimize production loss due to shortages of Raw
Materials, Stores etc.
2. To keep down working capital investment in inventory
carrying charges, obsolescence and other losses.
Thus planning and programming of Materials are the Primary and
by far the most important part of Materials Management work.Disappearance of planning and programming, or if the planning
and programming are too rigid or too slack, can result in buying
too much or too little. It also results in Numerous petty rush
purchase which tend to inflate the prices, involves extra
transportation cost and increased work all around surplus and
shortages may hand in hand in an enterprise in which inventory
management is not satisfactory.
Inventory control is the conscious efforts exercised by theManagement to secure optimum holding of inventory. Inventory
control therefore, embraced the functions of classification and
codifications of inventories, standardization, fixing the levels of
holding in different stores groups, indenting optimum quantity
locked up investment and disposal of surpluses.
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Inventory varies according to consumption. One can not say that
an inventory in high in low except in relation to annual or
anticipated consumption.
Inventory management has financial as well as technological
significance.
TOOLS OF INVENTORY CONTROL
There are several tools of inventory controls which we shalldiscuss.
ABC ANALYSIS
ABC Analysis will carried out once a year at beginning of the
financial year. This is an analysis of items of value of annual
consumption. The following is the classification for ABC Analysis.
Annual value of Consumption Category
Rs.10,00,000 and above A-1
Rs.1,50,000-10,00,000 A-2
Rs.75,000-1,50,000 B-2
Rs.25,000-75,000 B-2
Rs.25,000 and below C
The above analysis excludes job items
ABC analysis can be done with the help of computer this analysis
would be a useful guide for purchase and inventory policy.
Fixation of levels of stock holding periodic review and up dating,
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stores verification and simplification of routine work and
preparation of budget.
HML ANALYSIS
HML analysis ins made on the basis of High, Medium and low
values of individual items.
The above analysis helps in identifying high and medium items for
purpose of control in regard to the custody storage and also
keeping attack over its consumption. This analysis can be made
with the help of the computer and would be useful for stores
control.
In the present ERP system SAP we have this provision to do HML
analysis for the same.
EOQ CONCEPT
In order to keep the purchasing cost and the inventory carrying
cost at the lowest level, it would be necessary to order optimumquantities.
NON-MOVING ITEMS
In the present ERP systems the computer gives a statement of Non
Moving items. This needs to be examined in consultation with the
shop. So that items not required may be disposed off.
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BIN CARD
For taking control of materials issue and receiving manually Bin
Card is used it is a individual register or the concerned materials
each and every receiving off material that is MRN and issue in
inserted in the Bin Card, return of the materials form user is alsoinserted in the Bin Card, the stock of the materials shown in the bin
card is same as the stock shown in the EDP.
Prior to the invent of the EDP Bin Card was an important tools of
inventory control, as it keeps the trend of transactions of the
materials all the analysis regarding materials was done on the basis
of data given by Bin Card.
Prior to the invent of the EDP Bin Card was an important tools ofinventory control, as it keeps the trend of transaction of the
materials all the analysis regarding materials was done on the basis
of data given by Bin Card.
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But now in the age of computer Bin Card is used only to keep the
track of materials receiving and issue and return as well
A typical Bin Card is given in the annexure -
.
ISSUE OF MATERIALS
This is an important function of stores to issue materials the
following are the issues made by Stores Departments issue section
1. Goods issue for Cost Centre.
2. Goods issue for Order.
3. Goods issue for Project.
4. Chargeable Goods issue.5. Stock Transfer
6. Issue to contractor accountable basis
7. Goods issue to loan
Now we shall give in brief why materials are get issued by user as
1-GOODS ISSUE FOR COST CENTRE
To differentiate it from other type of issue the transaction type osuch issue is 201, under such issue, materials are issues or cost
centre in the existing ERP system each and every departments have
their specific cost centre and in such type o issue the value of the
materials are goes corresponding cost centre mostly general
consumable materials are issued under this type of issue.
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2-GOODS ISSUE OF ORDER
For each and every type Maintenance activity in Plant we have tocreate a plant maintenance order for which the movement type is
261, this plant maintenance order comprises all the relevant
information about this particular activity of plant maintenance,
under any circumstances of requirement o goods issue, materials
are issued under this movement type.
3- GOODS ISSUE FOR PROJECT
When we issue materials for any activity or maintenance for
project of against assets then, to differentiate these activities to
other type o issue we use a different type of movement type 241
under such type issue of materials all the cost of the materials goes
to corresponding assets number for which materials have been
issued.
4-CHARGABLE GOODS ISSUE
Whenever there is any requirement to issue materials to any
subcontractor who does not entitled to get materials issued for the
particular activity then we issue the materials under such type of
movement type 921 in this type of materials issue the whole cost of
the materials goes to contractor account later this amount is
deducted.
5-STOCK TRANSFER
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Whenever materials are required by any other plant in the
company then to take into account all such transaction we use a
movement type 301,311 this movement type transfer the materials
stock at that particular plant or company.
6-ACCOUNTABLE ISSUE
This is similar to that of goods issue under chargeable basis.
7-GOODS ISSUE LOAN BASIS
Whenever there is required to issue materials to any subcontractor
or contractor for any maintenance activity and these materials or
equipment will later be return by him then under this
circumstances we issue good and insert this particular transactions
in our loan register for which movement type 923 is used.
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Acceptance of Excess supply Stores
The excess Materials after the completion of work may return to
stores through exactly the same procedure of issuing items or thispurpose user have to get modified the plant maintenance order,
suppose materials had been required for any plant maintenance
activity, and after the completion of such activity, and after the
completion of such activity rest materials are return to stores or
this purpose procedure is exactly the revert process to that of the
process of materials issue.
Such that if materials had been issued under plant maintenance
order then, now those materials now be returned by movement
type 262. Because the issue movement type is 261 similarly if
materials had been issued with movement type 201 or 921 then
now these will be returned by movement type 202 and 922
respectively, later these materials are placed at their appropriate
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storage locations and all the information about the returning of
materials by user is fed in the Bin Card of the materials.
When we issue the materials the stock of the materials gets reduces
and similarly when we accept return materials the stock increases.
Purchase-Requisition
Purchase requisition as the name implies, this is the request made
by user for any type of purchase o any materials, services and all
the purchasable thing which will be required for any maintenanceactivity of the plant or production activity of the plant or
organization, we can classify purchase requisition made by user in
1- purchase requisition for materials and 2- Purchase-Requisition
for services.
Now we shall first look on Purchase-Requisition for Materials.
1-Purchase-Requistion for Materials
Purchase-Requisition for Materials can now be classified into a-
purchase requisition made by Materials requirement planning
itself, and b-purchase requisition which we have to raise now we
shall briefly describe this.
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A-Purchase Requisition made by M.R.P.:-
We shall first discuss about Purchase requisition made by materialsrequirement planning for this purpose we have to briefly describe
first what Materials Requirement Planning is
As we know we have a lot of materials in our inventory some of
them often required and some may not the materials which are
often required should have adequate stock in each and every time
for this purpose its order and reorder point should be appropriately
determined by the fact that how often these materials are required,in our inventory in Ambuja Cements Ltd. All the materials are
classified in the code digit 1 thorough 8, the materials which have
code number with the series 1,2,3,4,5 & 7 have their specific
materials requirement planning which are set according to the type
and uses of the materials and determined by economic order
quantity and inventory carrying cost so that the optimum stock o
the materials should always exist whenever the stock of the
materials reaches the reorder point the specific MaterialsRequirement Planning according to the Requisition made by use r
automatically crates a Purchase Requisition for that materials, this
Purchase Requisition now have to passed by the corresponding
materials controller then passed to Purchase Department who now
creates Purchase Order for the materials determining the source of
supply for that materials.
How MRP Crates Purchase-Requisition:- As soon as user crates
any requisition to get the materials issued from stores, theconcerned MRP determines the stock present as we know for the
specific materials the economic order quantity and inventory
carrying cost is set through this tools MRP determines the required
qty. then if the stock is not sufficient then it creates a purchase
requisition.
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We may pointed out through above discussion that the
procurement o such materials are done through this process that is
to crate purchase requisition for such items we have to create a
requisition of such items through this process MRP ensures theavailability of materials.
TYPES OF MRP:- There are different types of Materials
Requirement Planning namely
1-V-1:- all the materials that have such types of materials
requirement planning whose stock are reviewed daily by the
Materials Requirement Planning.
2-PD:- Materials that have this types of MRP whose purchase
requisition is created by the MRP only when any plant
Maintenance order is created and for this Maintenance this
Materials will be specifically Required.
B- Purchase Requisition Made by user:-
As we have discussed above that the materials that have the
materials code number in the series 6 and 8, do not have materials
requirement planning, the materials that have materials code with
the series in digit 6 are general consumable items for which any
safety stock does not required that means there are the materials
whose stock does not affect at all the maintenance activity
therefore the purchase requisition for these items are created
manually whenever the requirement of these items are feels.
C- Purchase Requisition for Project or Capital Items:-
The Purchase Requisition for capitals assets or project is created
manually according to the list of Indents and the Preparation of
Purchase order is same as that on Normal items.
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D- Purchase Requisition for new items:-
Whenever there is requirement of new items whose code does not
exist then we have to decide first under which group this materialswill belongs after determination of materials group we creates
purchase requisition for such materials manually in this case in the
purchase requisition we have do quote it as non stock materials
which should be of standard quality and also while creating
purchase requisition for such items the description should be
specific so that purchase can read it carefully and required type of
procurement can be made.
If this materials will be required in future also then user have to
open for it the new items for which they apply in the given format
which include all the relevant information about materials.
INFORMATION TO BE GIVEN IN THE PURCHASE-REQUISTION
While creating purchase requisition we have given some
information that we have to fill up some field given in the purchaserequisition now we briefly describe all these
First of all we have to describe the materials description if we
indent for new items because all the materials which have their
code number need not required this description, then we comes on
account assignment category here we define where the total cost of
procurement purchase requisition here we define where the total
cost of procurement of the materials goes here we may define itcost centre, asset or asset under construction code then we fill the
materials group then purchasing organization then we fill the
requisitioner then we define the concerned materials requirement
planning controller and also the approximate value of materials
along with suggested source of supply.
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A typical type of purchase requisition is given in the annexure.
RECEIVING
All the materials are received centrally by Stores Department, for
this purpose in the Stores Department there is a separate section
called Receipt Section, the main responsibility of Receipt Section
is to check the consignment with reference to purchase order,
Inspection, Weighing, Counting, according to the Lorry Receipt
Number and Measurement as soon as the materials reaches the premises of the Organization or factory the security in-charge
checks it and gives a number to the Lorry or Materials called
internal Gate Pass Number then the consignment goes to
weighbridge and first weight is taken then consignment goes to the
stores Department, the receipt section in charge then inspect the
material count is measure it as per the purchase order and the
invoice and lorry receipt number after satisfying with the quantity
and to some extent quality of the materials, receipt section in-
charge prepares a materials receipt number and place the materials
at the Inspection Section at their appropriate place the Materials
Receipt Number is prepared by the movement type 103 through
this movement type the materials goes to the blocked stock then,
receipt section in-charge intimate the user of this. User can also see
the status of their Purchase Requisition which gets updated through
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each and every transaction. User come to Stores inspection section
after satisfying with the quality of the materials they put their
signature at the invoice of the material then receipt section in-
charge takes the materials in the stock through movement type 105
and shifts the materials in the issue section if the materials isrequired immediately then they issue it. One copy o materials
receipt number is sent to accounts department and one is taken in
the stores or record. Now if materials are rejected by the user then
receipt section in-charge immediately creates a Rejection Memo
cum outward Gate Pass through movement type 122. If the
materials are received which is less then the quantity indicated in
the invoice then receipt section in-charge creates a Shortage Memo
and informed the concerned Vendor, receipt section in-charge alsolook into account that the excise Gate Pass is original or not which
sent to the excise Department or Modvate claim. They also look
for the Warranty Certificate and all the relevant documents so that
we can claim at the time of any such circumstances.
MODE OF RECEIPT
The materials are received by the stores by the following means
a) By Rail
b) By Road
c) By Post
d) By Loan
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DISCREPANCY REPORT
Any damage, breakage, shortage, surplus, etc are immediately
intimated to the supplier through Purchase Department in the form
of Discrepancy Report the Stores Department shall also take a
discrepancy report certificate from the carrier.
MATERIALS RECEIPT NOTE
As we know as soon as the stores Department get the materials,
they have to take it in the stock, so that user and all the concerned
person may see it and use it at the time of requirement. For this
purpose we have to create materials receipt note in the computer or
electronic data processing unit, as we have discussed earlier after
the inspection of the materials at the receipt section the materialsare placed in the inception section and immediately creates a
materials receipt note with movement type 103 with this
movement type materials type materials goes to the blocked stock,
and user comes for inspection after satisfying with the quality of
the materials they put their signature in the invoices of the
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materials then stock after that materials comes to the inventory,
then if required user creates Accounts Department and one is kept
in the stores for record.
A typical MRN produced by EDP is shown here.
MATERIALS TAGGING
As soon as we create the materials receipt not for the materials we
can create a tag for the materials in the MRN, and then we tagged
all the materials, we can print out tag for all the materials for any
MRN, a typical tag print out is given in the Annexure-
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Here the tag is for MRN 50001685903 and for the Materials code
6080000005781for which the Bill location is 55000 and the
Storage Location is General Stores.
CLEARENCE OF TRANSPORTATION BILL
All the relevant information regarding the received materials are
comprises in the MRN of the materials, it also included the freight
charges for the materials when the MRN of the materials goes to
the Account Department for getting payment to the concerned
Vendor, right then the Transportation Bill is also cleared.
Therefore the getting payment Transportation Bill of the Materials
MRN is the main source.
Figure given the below show this-
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SERVICE ENTRY SHEET: - Whenever the any services isrequired the respective person have to create a Maintenances Order
for this purpose against this plant maintenance order a Purchase
Requisition is generated for the respective services which contains
all the relevant about the services which is required when the
services have been finished then to enter all the relevant
information regarding this services and to pay the service provider
a Purchase Order has been made and against this Purchase Order
this Service Entry Sheet is created, this Services Entry Sheet ispassed by the respective head of the department of the user and
then goes to Account Department, they pay the service provider as
per Purchase Order the Diagram given below show the schematic
diagram and step to step procedure about this Business process.
1. CREATION OF SERVICE PURCHASE REQUISITION