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

Documents

Store & Purchasing Inventory of ACL