CHECK-OUT MECHANISM FOR EFFECTIVE CONTROL

CHECK-OUT MECHANISM FOR EFFECTIVE CONTROL
MATERIALS : CURRENT PRACTICE IN MATERIAL CONTROL IN LARGE ORGANISATIONS
- By M s. Sakthi Kumar,
Executive Engineer, Neyveli Lignite, Corporation

Current Practice: The indent is raised by User departments according their requirements. The indent is then scrutinised, according the nature and cost of Materials. The User is called and data and specifications are collected. After scrutinising, selection of vendor and cost limits for purchase of materials is in the hands of the purchase department, accounting and inspection, the purchased material is sent to stores. No questions about quality, satisfaction, suitability, utility and scrap are raised. The Purchasing system has limited activities without transparent communication for effective control of materials.

PRACTICE IN CHECK-OUT MECHANISM FOR EFFECTIVE CONTROL OF MATERIAL
The aim of the system is to derive the maximum benefit out of material procured. Let us discuss the various activities related to the materials movement and how the economic usage of material has to be done.

1. The raising of indent should be based on the requirement worked-out by scientific mean, because arriving at an assessment involves the equipment concerned, the past history about the break down, replacement, etc. Indents have to be raised accordingly with some marginal tolerance.

2. At the time of scrutinising the indent, more weightage has to be given for User to stick with specifications, quality, services and period of delivery. The cost consideration has to be kept as secondary.

3. After selection of vendor, the following should be done both by User and purchase department, in order to facilitate choosing an alternative in time if vendor fails.

The budget amount is well known in advance to User.
The Check-out System recommends that budget amount for particular department and expense of this amount for each material and spare has to be mentioned separately under code number of each material spares.
After both - the purchasing department and User has authorised the material, it should be sent to stores. Which means, arrival of material should be communicated to User as soon as possible.
As soon as the material is received in stores, the User has to prepare the inspection - cum - receiving reports.
Before receiving the Material / Spares, the Store Manager as well as the Manager for Scrap has to collect the data about:

I) Scrap either returnable (or) not
II) Spares either repairable (or) not
III) The period of Guarantee to Spares
IV) Reason for failure of spares / materials.
V) In case of consumable, chart of usages (for routine job) Particulars (Specific Job)

When returning the scrap to disposal Yard, the Manager for Scrap should study the quantity, causes for failure, and causes for not reusability, with standard data collected (Data is delivered at the time of raising the Purchasing Order executed by both purchasing department and User). Then Manager for Scrap has to recommend to Stores Manager to issue the material to User.

4. When issuing materials, the Stores Manager should mention the stock remaining and balance amount for particular material.

5. Check -out System recommends that Manager for Scrap and Stores Manager should be a technically qualified person.

6. Check-out System recommends Common Coding sheet to purchasing Department, Scrap Department and Stores Manager.

Check-out Mechanism
The coding Sheet contains:

Name of User
Budget amount for particular material
Balance amount
Issued Quality
Balance Quality
Value of each particular material
Nature of returnable material, either as: a) As scrap b) Reusable if Reconditioned, C) Resalable (Segregating the returns increases the Scrap Value.)
Condition of preservation.

ADVANTAGES OF CHECKOUT MECHANISM
1. More Weightage given to User in preparation of Purchase Order.
2. Purchasing Executive is tied to the hands of purchasing department and User collectively, from indent raising to follow - up and delivery of materials to Stores.
3. Manager for Scrap plays an important role in communicating information to accept or not accept, to enable continued raising of indent for that particular material (to Purchasing Manager), after justifying the returns.
4. Manager for Scrap is kept knowledgeable and informative. If Manager for Scrap does not recommend issue of the Materials, no purchasing activity is conducted.
5. Automatic self - cost control system, no influence of any department individually but collectively.
6. Scrap is valued in advance.
7. Expected returns from Scrap can be calculated
8. It reduces lead-time in purchasing.

Thus Check-out System is an effective cost control of Material and resource.