In some factories where the parts manufactured are small in size but great in number, they are stored reg ularly between successive operations in order to per mit inspection as to both quality and quantity. Such storerooms, however, are usually a part of the inspec tion system, and these parts, strictly speaking, are not finished parts till all work on them is completed and they are released from the custody of the factory fore man and deposited with the storekeeper.
5. Administration of stocks and stores.—The store room, therefore, may care for three classes of ma terial, namely, stores, or raw material which is to be fabricated, and hence called also direct material; sup plies, or indirect material; and finished parts of prod uct ready to be assembled into completed product. In many cases all three classes of material are handled by the one department. But in large enterprises it may be an economy to organize separate departments to handle each class. Thus, in large reduction works the ore which is to be reduced might be cared for by one stores system while the supplies necessary for re pairs might be handled by a separate and distinct stores system. It will be noted that in large enter prises of this kind the item of supplies may be very large and the issuing of material should, in conse quence, be carefully guarded.
In some enterprises which manufacture only a few kinds of product, but a large number of each kind, practically all parts may be stored in a finished-parts storeroom and drawn thence as required for assem bly. The finished-parts storeroom then becomes of greater importance, and may be managed independ ently of the storeroom for raw material. This ar rangement is sometimes found in factories producing machine tools.
Technically the stockroom should carry only com pleted products, but in many cases it may carry a large stock of finished parts in order to supply repair parts to customers. In such cases, however, the finished parts so stocked are treated as finished product, whereas their status in the storeroom is somewhat dif ferent, as will be seen. Obviously, the best method of administering the storerooms and stock rooms will depend on the character and size of the enterprise. In general, as industrial plants increase in size it be comes necessary to separate functions which can be managed collectively in a small enterprise.
The accountant and the cost keeper are interested, therefore, in the following transactions in connection with the purchasing and the fabricating of materials: (1) Purchasing of material (2) Receiving, recording and storing of raw ma terial (3) Issuing of direct and indirect material to the production department (4) Recording progress in manufacture (5) Recording and storing finished parts (6) Recording and storing complete finished prod uct.
6. Material requisitions.—It is obvious that the character and quantity of the materials needed de pend directly upon the needs of the enterprise, and cannot, in general, be specified by the purchasing agent, who is too often simply an expert buyer, tho, as previously, noted, successful buying may require considerable technical knowledge. Where the mate rial values are important, therefore, the purchasing should be conducted with great care. The material purchased for most enterprises is, as before explained, of two kinds, namely, material which is to go directly into product, or direct material, and supplies such as coal, oil, waste and the like, that do not go directly into product, yet are chargeable against production. The relative value of these two classes of material will depend on the industry. In some general manufac turing industries the indirect material may be a small part of the purchases and the authority for requisi tioning it may be delegated to the storekeeper, the summarized accounts of the indirect material pur chased serving as a check upon the quantities used. In other industries, operating on a large scale on cheap direct material, the indirect material may be a very important item and the authority for issuing requisi tions on the purchasing agent may be limited to more responsible officials.
In the case of a shop which does repair work prin cipally, the material requisitions would most natu rally originate with the foreman or superintendent, since, in general, he alone would know what is needed. Where the factory is building new work involving the making of drawings and engineering requisitions, the material requisitions would most naturally origi nate in the engineering department. In many other cases the order department originates the requisitions, basing them on the drawings and specifications, or similar information. Requisitions made out in the engineering department are, however, likely to be than those made in another department less familiar with constructive features of the work.