Page 278 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes 13.3.1 In-bound Logistics: Stores, Material Handling and Receiving

A critical part in supply chains that involve manufacturing is getting all the required parts and
raw materials in the right sequence, the right quantity, the right quality and the right time to the
manufacturing and assembly plants. Transportation and warehousing are a big part of most
inbound logistics chains. In large manufacturing units, these are often very complex activities.
Inbound logistics is one of the most neglected segments of the supply chain. Supply chain
organizations are generally focused on managing outbound logistics, and marketing departments
have identified different logistics requirements for the finished goods segment. Similarly,
purchase departments have a set of requirements for inbound raw materials, etc.
With the common adaptation of just-in-time (JIT) manufacturing methods, it pushes managers
to aim for achieving lowest inventory models, often at the expense of higher inbound
transportation costs. It is this inherent conflict in balancing JIT manufacturing practices with
inbound logistics and transportation needs that manufacturing or retail organizations need to
address.
Stores

An organization usually has different types of stores such as Raw Materials Store, Processed or
Semi-Finished Materials Store, Finished Goods Store, Yard Store and so on. Storage is an essential
and most vital part of the economic cycle and Storage Management is a specialized function,
which can contribute significantly to the overall efficiency and effectiveness of the materials
function.
The art of storekeeping is largely that of optimizing the use of resources to meet actual needs in
an efficient manner. Stock taking is an integral part of Stores function. Efficiency of Stores
function is measured by the number of times the stocks have turned over. That is how much time
material spends in the Warehouse.
The lesser time the stock spends, the better is the efficiency of the stores function. Money is a
scarce resource and once it is converted into materials, it is useful only when the materials have
reconverted back into money. This is the essence of stock turnover. It is an indication of the
agility of an organization.

Figure 13.3: Schematic of Stores Activities

Purchasing Production
Maintenance
Stores-Activities

RM Spare parts
components Maintenance Gen.
tools Stores
equipment
HUB
Receive & Issue Accept & Store
Finished Product Scrap & Discarded
Material

Distribution Marketing Inventory Control

A schematic diagram of stores activities is given in Figure 13.3. Service being the most important
objective of Stores it is obviously desirable to provide that service in the most economical
manner. Usually Stores Managers in the past were more concerned about the service levels than

272 LOVELY PROFESSIONAL UNIVERSITY