[PDF]Inventory Department Enlarged Scope For Stores Function

Inventory Department - Enlarged Scope for Stores Function


By BSMurthy

Materials management is about the functional integration of purchase, storage,
and issues that involves planning and control of the material needs of an enterprise.
Since all the three activities are independent, yet interdependent, they need to be
harmonized for achieving overall functional efficiency. But the hitch lays in the halo of
the purchase activity entailing glamorous prominence that the other two lack. This
aberration is attributable to the functional characteristics of purchasing as well as to
the positional prerogative the department enjoys in an organization.

Functionally, as the purchase activity involves interaction with willing vendors, the
buyers come to occupy the centre stage of the materials management arena. Besides,
the cerebral scope the purchase activity entails, which besides providing buyers the
opportunity for the flourish of thought and expression in file-noting and letter writing
also affords them an ego satisfaction the circulation of their signature in the same
entails. Moreover, the purchase function being the nerve center of the materials
activity, it provides the up-to-date overview of every aspect of the material position to
the personnel manning it, thereby making it the most sought after by every other
department. This apart, the working atmosphere of the purchase office, manned as
such by relatively better qualified personnel, acquires an amount of sophistication,
which imparts a sense of elan to the department.

But the division of work, as it exists in most organizations, merely confines the
stores function to the receipt, accountal, and issue of materials, thereby making it
lacking in glamour, a poor cousin of the exalted purchasing function. While in some
larger organizations, the distribution, an allied function, too is brought under the
purview of stores management, yet that fails to bring in any ego addition to the store-
wallas. However, though co-related to the stores activities, the inventory planning and
control, rarely, if ever, is integrated with the stores for the latter is either looked after




by an independent entity directly reporting to the top management, generally through
the production department, or is loosely associated with the purchase department.

However, the materials management relay team comprises of the inventory
planning, purchasing, stores, and distribution personnel with the baton being the
materials requisition. No gainsaying that every member of a relay team is as important
as the rest for winning the race for the strength of the team is only equal to the
weakness of its individual performers, and so are the functional efficiency quotients of
various materials management aspects. Thus, it is imperative that all the four
functions of the material management setup as cited above have to be rationally
organized so as to achieve the desired overall efficiency to help serve the organization
to its full potential.

It must be appreciated that the materials management concept is among the
youngest in the managerial arena, and generally speaking, it has yet to acquire its
optimal shape. Even in those organizations where the concept is put into practice, it is
mostly a case of bringing the purchase and stores functions under the materials
management umbrella, leaving the inventory planning and distribution outside its
gamut. This is attributable, on the one hand to the lack of managers capable of
handling all the four functions together and on the other to the reluctance of the top
managements to take a bold, yet rational, step in reorganizing the related functions of
the materials management under one department.

Be that as it may, in the present setup, functional convenience demands that the
materials head has to operate from the organization's administrative quarters.
Needless to say, the purchase office too, for operational efficiency and customer
convenience, is essentially positioned under his administrative wings. However,
stores, for optimal serviceability, have to be invariably setup nearer to the production
and servicing sections of the unit, generally away from the purchase office. This
practical impediment of the stores layout distances it from the materials management
hub that centers around the materials head. By the same token, the physical proximity
of the purchase department to the materials head, besides its functional closeness to
him, brings in its wake, a sort of emotional nearness as well. All these combine to
make the purchasing activity the blue blood affair of the truly while-collared.

What with the systems and procedures having been laid out for the receipt,
accountal and issues, an element of routine inevitably crops up in the stores function
that is in contrast to the freshness of approach and the challenge of uncertainty
associated with the purchasing work. And that makes it worse for the personnel
manning the predominantly clerical nature of the stores function. Moreover, the
availability or non-availability of a given material in which the stores has no role to
play robs the stores job the sense of participation in inventory management. Even the
routine documentation, however well designed it may be, tends the stores job to be
monotonous, whereas the very nature of work lends variety to the purchasing
process. Besides, as the stores personnel have to deal with materials procured by the
purchase department in whose working they have no say, it, so to say, is akin to
babysitting for someone else's child.

The retention, even now, of the traditional name for this function - stores - at a
time when functionally appropriate and trendy nomenclature is being adopted for
various other organizational activities, in a way illustrates the general nature of
neglect of this function. A traditional buyer has come to be regarded as an exalted
purchase officer, a salesman is respectfully referred to as marketing executive, a
factory hand assumes the designation of an operator of some sort, but a storekeeper
is still a storekeeper. And this, in spite of the fact than an appropriate word -



inventory - which broadly describes stores activity is available. All these factors
combine to make the stores function the less attractive of the materials management
activities, which tend to discourage the talented to opt for a career in it.

It is the aim of this piece to propagate the concept of an inventory department as a
means of enlarged stores function so as to make it more challenging and rewarding
for it to assume greater importance. Since the ego value of designations on the psyche
of the individuals in an organization cannot be ignored, we shall begin by suitably re¬
designating various posts of the department that is after rechristening Stores as
Inventory Centre. Accordingly, we shall have Inventory Manager for Stores Manager,
Inventory Officer for Stores Officer, Inventory Assistant for Store Keeper, with of
course, the prefixes of junior, senior etc., as per the required rungs in the
departmental ladder.

That is not all as that amounts only to cosmetics. The inventory department,
headed by inventory manager, under the administrative control of the materials head,
should be tasked with inventory control in conjunction with the operational heads.
Needless to say, as this enables the inventory to share the materials management
table with the purchase manager, such a functional reorganization of the materials
management would accord enhanced importance to the former. It must, however, be
clarified that this is not meant to belittle the importance of the purchase function in
any way, but the idea is to enlarge the stores function in its scope, content and
importance.

Understandably the nucleus of the inventory department continues to be the
stores, nay inventory centre, where the vital material functions of clearance receipt,
inspection, accountal and issue are performed. But in order to have a coordinated
control of inventory, the inventory planning and control function needs to be
integrated with the inventory centre, where the basic material data is generated.
Besides, giving a go by to the duplication of inventory effort in multiple departments,
this measure gives an element of management aura to the inventory department, as
increasingly the inventory is being monitored electronically.

Likewise, the distribution network including sub-inventory centres should be
brought under inventory department for effective control and equitable utilization of
the inventory. However, in organizations where multipoint material needs exist,
requiring sub-inventory centres, attaching the same to the concerned departments
leads to the loss of control on the integrated flow of available inventory. This can only
be avoided by bringing the sub-centres under the control of the integrated Inventory
department with the necessary logistics for redistribution of materials whenever
needed.

In order to remove the feeling in the inventory personnel of having no say in the
selection of vendors, and to involve them in this vital aspect of the purchasing activity,
vendor analysis should be brought under the purview of the Inventory department.
Vendor analysis, as we know, is the scientific method of evaluating the performance of
the company's suppliers on certain parameters that are vital in judging the overall
economics of a supply relationship with them. In fact, the inventory centre is well
placed to carry out such an exercise as most of the required data inputs for the
analysis emanate from there itself. As the suppliers list is prepared based on the
vendor analysis, it thus imparts a sense of participation in the purchasing activity in
the inventory personnel, and helps in removing the feeling of 'no say' in the selection
of vendors.

As was already discussed, there is a necessity not only to make the inventory
department more wide based internally but also to accord it external exposure in



some measure so as to reduce the monotony and lend variety to its functioning.
Towards this end, it is desirable and indeed logical to bring in the activities connected
with the follow up and expediting of the purchase orders on one hand and the
settlement of the rejection cases on the other under the Inventory department.

As it is the Inventory department which has the first 'feel' of the overall inventory
scenery, it is better placed to decide the timing for expediting or even for rescheduling
the deliveries from vendors. This dual authority imparts as much importance in the
vendors' esteem to the Inventory personnel as traditionally is the case with the
purchase personnel. This just about fulfills the ego needs of the inventory personnel
without inconveniencing the vendors in any way, save an additional call on the
Inventory department.

The inventory centre's jurisdiction over the rejection cases will further enhance its
importance in the eyes of the vendors, and gives rise to an equally important external
PR opportunity for the Inventory department as is the case with the purchasing
department. This apart, it is only but logical that the inventory centre should have an
important say in dealing with the rejected material as it is the custodian of the same.

Reorganizing the inventory department on the suggested lines will go a long way in
not only bringing in dynamism to the function, but also meets the esteem needs of
especially the stores, nay inventory, personnel. Besides, such a move will help remove
the existing imbalances between the purchase and stores functions that are heavily
loaded ion favour of the former. A fair balance between the two divisions of the
materials management can be achieved in this way, which results in the all round
development of the function. Moreover, this way, job retention, so essential for job
enrichment, can be achieved without giving rise to the feeling of discrimination in the
minds of the material management personnel.