STORING MATERIAL 1. Storeroom methods.—A good cost system is im possible without a good storeroom and good storeroom methods. Such a storeroom will have a place for everything, and everything will be in its place. All stores will be guarded against theft or unauthorized use as carefully as the cashier guards his cash. The writer is well aware that such detail is often considered a waste of time and money, and while it is true that there are isolated cases where the supplies are so few or so cheap that it will hardly pay to keep a store keeper, it is also true that such cases are infrequent. It is a rare instance where a stores system will not pay good dividends.
The exact method of storing materials will, of course, vary with the industry and the class of ma terial, but in any case all material should be stored in a convenient and accessible manner so that it is pos sible to draw it with the least possible difficulty, and also so that it is possible to take account of it with ease and dispatch. In the best systems each lot of material, or rather each bin or other receptacle, is numbered, or otherwise designated, so that material may be listed and found, or referred to, by list.
Where the works are large and several branch store rooms are in use, this system must necessarily be com prehensive. Thus the designation 6 A 24 h might mean that certain material was stored in building No. 6, division A, section 24 and bin or rack h.
All material ordered for an industrial enterprise may be classified as either standard material, special material, or supplies. Standard material includes such material as is used constantly in the product. In continuous industries this will be fairly constant in character, but the demand will vary with the activity of the enterprise. In intermittent industries this de mand will vary not only with the activity of the en terprise but also with the changing character of the work conducted. Provision must therefore be made by the storeroom for anticipating the demands of the factory. The storeroom bins and racks in such cases may be likened to reservoirs for equalizing the supply and the demand. The amount in each bin or rack should therefore never fall below a certain minimum limit or exceed a certain maximum limit, these limits being fixed by the conditions of manufacturing.
The simplest method of insuring that a proper amount of each kind of material shall be on hand, when limits have been set, is by the method of ob servation of limits. A printed form is attached to each bin or rack, and on this form the limits are re corded. As material is drawn the storekeeper deducts the amount so drawn, thus keeping a continuous record of stock on hand. When the lower limit is reached a requisition is placed for enough new material to bring the contents up to the maximum. By this means the wants of the factory are anticipated, and at the same time capital is not unduly tied up in idle material.
An objection to this method for large plants is the fact that the information regarding the state of the stores is widely scattered, and unless a classified index of the bin tickets is maintained it is difficult for the head storekeeper to check quickly the amount of any commodity. In addition to this disadvantage, the entries of additions and withdrawals, made on the bin tickets by storeroom attendants are, in general, more or less slovenly, and there is considerable liability of inaccurate entries, by either accident or design, with consequent errors in material costs.
2. Stores ledger or continuous inventory.—In more highly developed forms of material-recording systems all records are kept by the head storekeeper, or his clerk, either on a card system or on a loose-leaf ledger. Such a ledger has columns ruled to suit the special needs of the stores department, and is commonly called a stock ledger. The term stock, as before noted, re fers more properly to finished product. The name stores ledger is more accurate when referring to raw material and will be used in this work, tho it does not conform to common usage. A typical page from such a ledger is shown in Figure 8 (page 80). The record of only one item is carried on each page and this record, it will be noted, includes not only all re ceipts and issues of the material recorded, but also all orders for new material and a record of any material on hand that has been assigned to work in process of manufacture. When a requisition from the produc tion department is filled from the stores, it is canceled and sent to the head storekeeper, and no record is necessary at the bin or rack. These canceled requisi tions in connection with the verified invoices of new goods give the storekeeper complete information re garding the condition of the material for which he is responsible, and if his department is properly con ducted the stores ledger is a continuous or "perpetual" inventory of all material on hand in the stores. It is obvious that if this inventory is to be accurate the storerooms must be absolutely closed to all except the storekeeper and his assistants. No material may be delivered except on proper requisition, and any dis crepancy between the stores ledger and the bin should be investigated and accounted for. These conditions hold also, for accurate results, with the bin-ticket sys tem. Accuracy in accounting for material is essen tial to accurate cost finding. Provision is usually made on the stores-ledger sheets, as in Figure 8, for noting the price per pound or piece, and the total valuation, both for the purpose of inventory and for the purpose of correctly fixing the value of all goods issued from the stores.