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A Study on Materials Management of Anglo French Textiles in Pondicherry
INTRODUCTION:
Material management contributes a major part and plays an important role in cost accountancy, which mainly aims at the maximization of profit by reducing the cost on overheads. Material management is the integrated functioning of purchasing and allied activities so as to achieve the maximum co-ordinations and optimum expenditure in the area of materials.Of the three main spheres of production process namely – material, labour and expenses, material management is given a considerate importance, as the importance of materials management can be realized when it is said that purchases accounts for nearly 50% of an organization’s annual expenditure; that nearly 80% of the working capita is tied up in the inventory and the inventory carrying cost is almost 25% a year; that materials represent 40 to 60% of the sale price as 60 to 80% of the production cost of a product and that even a saving of 5% in material cost will substantially increase the profit margin of and enterprise.
Objectives of Materials Management
The main objectives of materials management are as follows
- Procurement of materials at low prices.
- Ensuring high rate of inventory turnover.
- To ensure continuity of supply.
- To maintain the consistency of quality.
- To minimize the acquisition and storing cost.
- Lower administration cost.
- Maintenance of supplier relations.
- Development of new materials and sources.
- efficient report keeping and prompt reporting
- Development of personnel.
The study aims to find out how the above activities are carried out in Anglo French textiles, Pondicherry.
Objective of the study:
The study is undertaken with the following objective in view:
- To study the material purchase procedure adopted in AFT.
- To study the stores maintenance and various material issue procedures adopted in AFT.
Methodology of the study:
The methodology of this study mainly consisted of the field visit and study conducted in the premises of the AFT, along with the clarifications and explanation given by the most efficient and eminent of the AFT.
And also in support of the explanation and clarifications, secondary data were provided by these officials, which provided a base for further analysis of the facts and in their support.
Limitation of study:
This study mainly includes the study of the present practices and procedures followed in AFT, it does not go in derail or relate to the practice or procedures followed earlier on it does not assume the same the same amount of efficiency on deficiency in the further days also. Secondly this study also suffers from other inherent limitation of analyzing of secondary data which is not always 100% reliable.
Thirdly all data of AFT could not be disclosed for this study for some confidential managerial reasons.
History of the mill-profile of Anglo French Textiles:
The AFT is a unit of Pondicherry Textiles Corporation, which is a government of Pondicherry undertaking and is situated on the cuddalore road, pondicherry-4. It is the largest composite textile mill in the south India. The AFT as incorporated ltd., in England in 1898 and proudly celebrated its centenary in 1998. In the beginning Africa and Madagascar were the prominent buyers from the AFT. The dyed cloths exported then were popularly known as “Sendura” clothes. The mill was equipped with 44,256 spindles and 1000 looms at that year. When the French left the Pondicherry, the mill was managed by the Compton company ltd., and then late C.S. Ramachari took over the mill. The mill flourished under his guidance and management. The mill was expanded with additional machine and the export of cloth received great attention. Unfortunately, there was a persistent labour, unrest, which brought down the performance of the mill. This situation gave way to selling of the mill was facing financial crisis due to mismanagement.This dominated into stoppage of operations in the mill ultimately the mill ceased to function from July 1983 and remained closed up to 1986. After 3 years. The company was reopened in 1989 and was taken over by the Pondicherry textile corporation ltd., a govt. of Pondicherry undertaking. The first M.D.after the take over Mr.P.M.Nair who decided that AFT should be leading cotton mill in the fiercely competitive textile world. Thus, AFT transformed itself from “debt-crippled” co. into a very dynamic form “where quality is by design and excellence are obsession”.
THE MILL AT PRESENT
AFT is a composite textile mill, since it comprises all the processing the raw cotton, product of yarn and fabrics. Its function include blowing, carding, drawing, roving, spinning, winding, weaving, dyeing, printing, packing etc ., it is equipped with 62,240 spindles and 1613 looms with 3 units that is “A” unit (old mill-spinning, weaving, processing, printing). “B” unit (new mill- weaving) “C” unit (canvas mill-shuttles looms and Russian looms) and spinning.
The organizational structures of AFT are as:
Chairman
Joint M.D
Functional executives company secretary administrative
Senior manager general manager personal officer
(Works) (Marketing) administrator administration
Senior manager manager manager administration
(Home sales) officer
Assistant manager manager Dy.Manager manager
(Exports) (Accounts)
Supervisor labour officer manager
(Costing)
Workmen welfare officer manager EDP
Safety officer manager
(Internal audit)
Employee’s strength
unit
workmen
Staffs & Officers
A- unit
3505
550
B- unit
1035
65
C – unit
670
32
Total
5210
647
There are more than 100 categories of workmen because of varied and complex processes. Also the staffs are under different categories and grades as per the need and nature of occupation.
The following list shows the strength of workmen and those who have undergone the training so far in some departments.
Department
Strength
Trained
1.spinning
1094
853
2.Weavinf preparatory
696
467
3.Weaving (A&C)
1002
825
4.Weaving (B)
663
102
5.Processing
391
54
6.Warehouse
709
84
Total
4555
2384
Evaluation of Material Management
Evaluation of Material management of A.F.T can be done through the ration analysis.
Ratio analysis:
Accounting ratio is the relationship expressed in mathematical term between related figures.
Ratios help the firm to analyses its performance and to take corrective measures in ccase of any deviation.
Inventory turnover ratio:
(Rs.In crores)
Year
Sales
inventory
Inventory turn-over ratio
2001 – 2002
71.95
29.63
2.43
2002 – 2003
66.78
21.77
3.07
2003 – 2004
70.11
25.94
2.70
2004 – 2005
75.93
30.89
2.46
2005 – 2006
71.94
27.26
2.64
Inventory turn-over ration is the ration between inventory and sales in the year 2002-2003 high inventory turn-over ratio because of sales increasing on the basis of inventory. In the 2001-2002 year inventory turn- over ratio is less when we are comparing with other four years. One important reason for declining that ratio is mill failed to attained decided level of sales. And the respective authorities not care for utilizing inventory the efficient manner in. The year 2001-2002 to 2002-03 inventory turnover ration increasing high rate because of management took necessary action for optimizing sales by way of utilizing inventories. After 2002-03 inventory turnover ration decreasing 3.07 to 2.70 from 2004-05 to 200 2.46 increasing at low rate. 2005-06 Inventory turnover ratios at low rate.
Stores and spares to inventory:
(Rs.In crores)
Year
Stores and spare parts
Inventory
Percentage
2001 – 2002
1.62
29.63
5.47
2002 – 2003
1.96
21.77
9.00
2003 – 2004
1.92
25.94
7.40
2004 – 2005
2.15
30.89
6.96
2005 – 2006
2.68
27.26
9.83
It is the ratio between spare parts and store with inventory. Highest ratio was 2005-06 amount 9.83 and lowest ratio was 5.47 the range between is ratio 4.36. In the year 2003-04 and 2004-05 the ratio is where decreasing and remaining year’s ratio are increasing. Inventory to current assets:
(Rs.In crores)
Year
Inventory
Current assets
Percentage
2001 – 2002
29.63
69.00
42.94
2002 – 2003
21.77
58.71
37.08
2003 – 2004
25.94
56.48
45.93
2004 – 2005
30.89
60.10
51.40
2005 – 2006
27.26
53.52
50.93
Inventory current asset ratios study the relation ship between inventories to current assets. In the year 2004-2005 ratio is inventory current asset ratio is high 51.40, the company more than 50% of current asset invested in inventory. The lowest ratio was 37.08 in the year 2002-03, that year company invest current assets in the firm of inventory is less than 40%, the remaining portion of current assets company invested to others components of current assets. That year company invested current asset amount to other current assets
Inventory to net working capital:
(Rs.In crores)
Year
Inventory
Net Working capital
Percentage
2001 – 2002
29.63
37.61
78.78
2002 – 2003
21.77
30.10
72.33
2003 – 2004
25.94
26.85
96.61
2004 – 2005
30.89
14.74
209.57
2005 – 2006
27.26
07.15
381.26
Networking capital means current assets – current liabilities. Networking capital to inventory ration is show relation ship between networking capital and inventory. After 2003-04 the ratio increasing at very high in the year 2005-06 is highest ratio amount 381.26. The 2002-03 in inventory net working capital ration 72.33 that Year Company invested less amount then after company invested there amount more than 75%. From 2001-02 to2002-03 the ratio flow decreasing 78.78 to 72.33.
Inventory to work in progress:
(Rs.In crores)
Year
Inventory
Work in progress
Percentage
2001 – 2002
29.63
3.03
977.89
2002 – 2003
21.77
2.57
847.08
2003 – 2004
25.94
3.50
741.14
2004 – 2005
30.89
3.27
944.65
2005 – 2006
27.26
3.31
823.56
Raw material spare parts, working progress and finished goods are the important components of inventory. Inventory to work in progress is the ratio reflect inventory to working progress. From 2001-02 to 2003-04 this ratio reflect decreasing than they identify there problem and maid solution that is the result of in the year 2004-05 nut they can’t continue that result more than one year that is in the year 2005-06 the ratio is decreasing.
Inventory to finished goods:
(Rs.In crores)
Year
Inventory
Finished goods
Percentage
2001 – 2002
29.63
24.47
121.09
2002 – 2003
21.77
16.37
132.99
2003 – 2004
25.94
18.93
137.03
2004 – 2005
30.89
23.87
129.41
2005 – 2006
27.26
20.22
134.82
Of the converting raw material into working progress company can spent there resource for converting that work in progress into finished goods. Inventory to finished goods ratio is the ratio between inventory and finished goods in the year 2004-05 company inventories to finished goods ratio is decreasing from 137.03 to129.41 remaining year company ratio is increasing. The highest ratio was 137.03 for the year 2003-04 and lowest ratio is 121.09 for the year 2001-02.
Material management –A theoretical Review.
Material management is the integrated functioning of purchasing and allied activities so as to achieve the maximum co-ordinations and optimum expeditor in the area of materials. Of the three main spheres of production process namely – material, labour and expenses, material management is given a considerate importance as the importance of materials management can be realized when it is said that purchases accounts for nearly 50% of an organization’s annual expenditure; that nearly 80% of the working capital is tied up in the inventory and the inventory carrying cost is almost 25 a year; that materials represent 40 to 60% of the sale price as 60% to 80% of the production cost of a product and that even a saving of 5% in material cost will substantially increase the profit margin of an enterprise.
Definition
According to dream S.Ammer, the material management would embrace all activities concerned materials except those directly concerned with designing or manufacturing the product or maintaining the facilities equipment and tooling. It would embrace the activities performed by major department such as purchasing, production control, receiving and inspection, stores and physical distribution.
Objectives of materials management
The main objectives of materials management are as follows.
- Procurement of materials at low prices.
- Ensuring high rate of inventory turnover.
- To ensure continuity of supply.
- To maintain the consistency of quality.
- To minimize the acquisition and storing cost.
- Lower administration cost.
- Maintenance of supplier relations.
- Development of new materials and sources.
- Efficient report keeping and prompt reporting.
- Development of personnel.
Components of materials
In a manufacturing concern, materials include raw materials. Stores and spares, WIP and finished goods.
Raw materials
Goods which are actually put into the production process in a manufacturing firm are called raw materials. They are purchased and stocked in order to enable a smooth and uninterrupted production.
Work-in-progress
WIP inventories, also called on process inventories, are materials or semi finished goods buying usually on the factory floor. They are inevitable in any production system.
Stores and spares
Stores and spares are materials which are needed to smoothen the process of production. They do not directly enter production but act as catalysts to production.
Finished goods
The goods which are ready for consumers are called finished goods. It serves s a buffer production and market.
Materials cycle
Materials management is basically concerned with the flow of raw materials within the manufacturing operation and flow of finished goods within the business operations. It is a circulatory flow and hence its gets repeated within the stipulated interval of either time or process.
The circulatory flow of materials is described as materials cycle. It consists of the following stages.
1. materials planning
2. sourcing
3. purchasing
4. receiving and inspection
5. storing
6. issuing
Materials planning
Different types of materials are required in different quantities and at different times. The techniques of materials planning helps in predicting the material requirements. Based on sales forecast and production plants, materials’ planning is done.
Sourcing
Most of the firms receive the raw materials from outside sources. The firms should take efforts in order to explore mere and more sources. So that materials are guaranteed and are made available at competitive terms and conditions.
Purchasing
Purchasing stage looks after the procurement of raw materials and replenishment of the existing materials. The important facts of purchasing are identification of specific needs, selection of supplier on the basis of scientific scrutiny, negotiations with selected suppliers. Settlement of terms and placing of orders.
Receiving and inspection
On the receipt of the consignment from the supplier, the receiving section unloads the materials at the delivery bay, the contents are compared with packing slip and purchase order. The condition of the materials is also verified to note that they are not received in damaged conditions.
Storing
The time of receipt and the time of issue of most of the materials are not the same. In between such time gap, the materials are properly stored and preserved. Storing function includes provision of storage space containers and location of store room and materials.
Issuing
Materials are stored with a view them as and when required by the production departments. Materials represent the monetary value so they are issued only against the materials requisition. On the basis of requisition materials are issued to respective departments and then entries are made.
Purchase procedure in the unit:
Raw material (cotton) purchase and stores procedures
Cotton is considered the important raw material in AFT here; there is a separate section in the purchase department, which functions for the purchase of cotton as and when required.
The procedures for purchase of stores and then distribution are same as that of purchase of stores and issue of stores and spares.
Here, the purchase section has the responsibility to maintain all the appropriate records relating to cotton, unlike of spares and stores. It has separate general store. It is also done in the same way as general store of spared and stores.
Stores and spares purchase procedure:
Determination of purchase budget
Based on the previous years consumption of stores and spares, an appropriate amount is allotted for the current year.
Receipt of purchase requisition (indents)
The indents are dividend in two categories:-
Want sheet: - This is based on the stock position which is maintained by the stores department from the bin card system.
A FORM:
This is non regular indent which is drawn up by the concerned department for their requirement which is not covered under the stock position.
These indents are sent to the purchase for processing.
The want sheet is raised by the stores department based on the stock position of the last three months consumption and quantity of three months requirements and is incorporated on the want sheet with staggered delivery.
Inviting tenders/quotation-
The indents are dividend based on the category of the material.
Tenders are floated to various parties when the value of the material exceeds over a lakh.
The quotations are received in sealed covers addressed to the managing Director. It is opened in the presence of the purchase committee. Based on the lowest quotations the order is finalized.
For all other indents, enquiries are sent out and based on the lowest the orders are placed after getting the approval of the purchase committee.
Placing orders
Orders are placed with parties covering all details i.e., complete description of material, quantity, rate, taxes, packing and forwarding expenses, transport and delivery schedule. Copies of orders are sent to the stores, indenting Department, Internal Audit, and Purchase and to the Dealing Assistant in purchase.
Maintaining record of orders and follow up of orders to ensure timely delivery:
The Dealing Assistant of Purchase Department will follow up with the timely delivery and passing of bills. The bills will be entered on the order sheet i.e. Bill no., Date, Amount and Quantity. These bills will be sent to the Stores Accounts Department.
The stores will maintain a record of the material received and will raise a Goods Received Advice (G .R.A.). This will be forwarded to the concerned department who will verify the material and will enter their remarks on the quality received. They will then return the G.R.A. to the Stores. The stores will forward the G.R.A. the Stores Accounts Department who Bill correlate the bill with the G.R.A. and send the same to internal audit for verification.
Procedure of purchase
Procuring of materials is done through indents. The indent are classified in two categories, ‘’want sheets’’.
‘Want sheets’ are drawn up by the department of and is based on the stock position which is maintained through Bin cards.
‘A’ Forms – this is drawn up by the department of their immediate consumption which is not maintained on stock level by Stores.
These Indents carry the complete specification of the material along with the material Code. The Material Code is to identify the material which is also easily accessible in computerizing.
Whenever a particular brand is mentioned on the Indent manufacturers or Authorized Dealers are approached. By doing this quality material at the best prices are ensured. For those Indents that do not mention the brand, enquiries are floated which consist of the complete description of the material along with the quantity specifying the last date of receipt of quotations to those parties who are in a position to supply good quality material.
On receipt of the quotations the same is tabulated and based on the lowest quotation and Approval is put forth to the purchase committed for sanction of purchase.
The approval specifies the present purchase i.e. material, quantity, rate, taxes and delivery schedule as well as details of the previous purchase made. After obtaining the sanction of the committee, the order is placed. The order consists of a number and the date along with all the details of the purchase i.e. material code, description, unit code, quantity, rate, delivery schedule, taxes, payment terms and transport of freight from destination or door delivery. A total of one plus five copies are taken. The original to the Supplier. The copies of offers will contain the indent number, date and the approximate total value of the order. These copies are given to the Internal Audit, Stores, Department, Dealing Assistant for purchase and the last copy will carry particulars of the full file i.e. indent, enquiry, quotations and approval. This will be filled in the master file in the Purchase Department.
Payment terms:
The quotations from the parties will contain various payment terms.
1. Proforma invoice.
2. Bank.
3. Direct.
3.4.1 Proforma invoice:
On receipt of an order the party will arrange to deliver a proforma invoice. This will be sent to the account department for payment. The party on receipt of payment will dispatch the material. If the material is rejected by the department the purchase assistant will write to the party giving details of the rejection and will inform them that the rejected material will be returned only after receipt of replacement. The stores periodical reminders will be sent to the party until replacement is received.
Bank.
On receipt of the order the party will draw the documents through bank usually giving a grace period of thirty days to clear the documents form bank. If the documents are not cleared with the stipulated time the party will charge overdue interest at 24% per annum from the date of invoice. The bankers will hand over the documents on payment including the lorry receipt. On producing the same to the carriers the material will be received. If the material is rejected the same procedures will followed as mentioned in the proforma invoice.
Direct.
The party will send the invoices along with the dispatch documents directly to the company. The lorry receipt will be given to the carriers for obtaining delivery of the material. If the material is rejected the party would be informed the reason for rejecting and the material returned for replacement. The payment terms will differ from 30 days to 90 days credit.
Stores maintenance in the unit
Every manufacturing concern should buy and stock items which are needed frequently. In Anglo French textile two business activities are very significant namely.
1. Purchase
2. Sales
Purchase activity is concerned with the purchase of raw materials i.e. Stores and spares of moving and non-moving items which we have already seen in chapter iii. Since these two activities of cotton purchase and stores purchase control the financial condition of the organization there should be a proper accounting procedure of purchase of raw material and store materials.
The purchase department deals with the purchase of raw materials pares and stores material, but the purchased materials value, stock and consumption are maintained by an auxiliary wing of accounts department. This wing is called stores account section. it deals mainly with an effective material management in order to make its function a success. Records of all purchase, issues and stock position are maintained by the stores account department. The department comes under the accounts section in the head office and is controlled by senior accounts officer Pondicherry textiles corporation limited (P.T.C)
Structure:
Section in charge (1)
Supervisors (3)
Junior supervisors
Clerks (1)
Attender (1)
Works performed by these 11 employees are:
Ledger maintenance -6
Sundry creditor’s stores ledger -1
Claim ledger and correspondence -1
Vouchers and C forms -1
Fitting -attender (1)
Procedure:-
Bin card
The store keeper of the general store maintains a bin card for each and every item. The bin card is purely is quantitative record of receipts, issues and stores on hand. it contains the information about description of materials, bin number, material code, location code, maximum level, minimum level, ordinary level etc.,
The general store maintains a 6months stock position of the quantity of the stores and spares materials in the bin card for all the 3 main units A unit, B unit, C unit. These 3 units have many main departments which have a sub store maintaining stock for 1 week.
The main departments:
A unit: Spinning
Weaving preparatory
Weaving plain
Warehouse
Processing (dye house)
Engineering
Security
B unit: Weaving auto looms
Warehouse.
C unit: Spinning
Projectile looms
The materials used y these main departments are divided into:
1. Stores items
2. Spares items
Stores items:
The items used for the machinery are spares items e.g. pickers, shuttles etc.
Spares items
The items used for the machinery are spares items e.g. Bolts and nuts, wheels etc.
The main departments intimate their requirement of material by raising a sheet called want sheet and sent it to the general store. The general store checks the issues and balance in the bin card. if the item is little or nil they correspond it to the purchase section which sent quotations for the materials in the want sheet to 2 or 4 suppliers who quotes the lowest price.
The suppliers deliver the materials according to the purchase order by personal, lorry, railway or post.
General stores receive the materials according to the purchase order by personal, lorry, railway or post.
General stores receive the materials from the dispatch clerk and prepare a goods received advice note (G.R.A.) where they mention the.
· Material code of the materials
· Number of the quantity received
· Description of the materials
· Name of the supplier
· Lorry way bill no. and date
The original and duplicate GRA are sent to the main department. The head of the department verifies the materials and give the remarks to the general store which posts the material quantity in the bin card as receipt and sends the original GRA to stores account section. The suppliers also sent their invoice particulars in the order sheet and sent the same to stores accounts section.
Goods received advice note.
Goods received advice note is the recorded evidence which confirms the receipt of stores and spares materials from the suppliers with remarks about the quantity and quality by the technical authorities concerned of a particular department to which department materials are to be utilized.
Passing of invoices and GRA form.
Invoices are received from the material purchase department. The general stores retain the duplicate goods received advice note GRA and the original is sent to the stores accounts department with a remark whether the goods have been accepted or rejected. the invoice and GRA note is checked for verification of lorry waybill number, unit, quantity received etc. if the goods are approved by the department the invoices are linked to the G.R.A. using material code for every items and entries are made in the purchase day books and sent for payment.
Purchase daybooks.
Purchase daybook is the daily record of the invoice value. The stores account department maintains a separate purchase purchase daybook for each department, month wise.
16 purchase day books are maintained by the department.
Name of the purchase daybooks.
Stores spares
Spinning Spinning
Weaving preparatory weaving preparatory
Weaving plain weaving plain
Weaving auto weaving auto
Bailing
Processing Processing
Engineering engineering
General
Capital daybook
Local daybook
Foreign daybook
Invoices sent by the suppliers are of two kinds.
Direct bills
Paid bills
Direct bills:
The suppliers sent the materials directly to the general stores and ger the cost of the materials paid by cheque through their invoices.
Paid bills:
The suppliers first receive the stock of the materials through their invoices and then supply the materials to the general stores.
Direct bills passing:
In direct bills if the materials are rejected or any shortage or breakage of materials is notice, value of such rejections, shortages, breakage is deducted from the invoice before passing the bgill for payment.
Paid bills passing:
In case if invoices are drawn through bank or payment has already been made by VVP, RPP claim is made through the purchase section on the party or on the insurance company for the part of the quantity of the materials damaged or fully rejected.
Accepted invoices are entered in the debit side of the purchase daybook and rejection and claim entries are entered in the credit side.
Procedure for the passed bills:
After entering the bills in the purchase day books department wise, the stores account departments forward the bills to the internal audit section for verification. They check the bills and sent it back to the stores account section for preparation of C forms and vouchers.
C forms issued by the government of the stated are received by this department C forms are issued only for (purchase made outside Pondicherry state. if C forms are sent central sales tax is 4% OTHERWOSE IT IS 10% on the value of the goods. the mill sends one C forms, for the same party in the same accounting year for bills not exceeding Rs.100,000/- in total.
Imperfect cash book:
Imp rest cashbook is also maintained in stores accounts section. Petty cash of Rs.50,000/- is given to the general stores to purchase items required urgently. Every month the balance is checked.
Stock register:
It is a book containing loose sheets in different colors each of which is meant for an item material, the register shows the same details which a bind card shows but in addition to that it contains goods on order and goods reserved columns.
Stores ledger:
Stores ledger or consumption ledger is an important record in materials control system forming a part and parcel of perpetual inventory system. it is a record for the receipt issues and stock of the stores and spares materials both in quantity and value wise. All receipts and stock are priced on some bases. There is a separate ledger sheet for each material. The stores account department maintains separate stores ledger for every main department as like the purchase daybook.
There are more than 40 ledges and more than 15,000 items for the stores and spares materials.
Materials requisition order:
Material requisition order is one by which a particular department receives the required stores and spares materials from genera stores.
Procedure for working the stores ledger:
Various departments send material requisitions order to general stores department. They deliver the required items and enter the issues in the bin card and send the MROs to the stores accounts section. the stores account department posts the receipts from the purchase daybook and issues from the MROs items wise in the stores ledger and show the balance of stock position.
Generally stores ledger is maintained by three bases
· Running average method
· First in first out method
· Last in first out method
But AFT maintains stores ledger on the basis of first in first out method. Under this method materials issued are charged at actual cost in the chronological order on the assumption that consignments received earlier have been issued first.
The stores accounts section arrives month wise stock position of every materials for quantity and value. If there is enough stock for issues closing stock is arrived as under.
Opening stock + new receipt = new stock
New stock-issues/consumption = closing stock.
In case if there is no enough stock for the issues because of some delay in accounting the receipt in the purchase day book, issues are made from the last months average. This is called over-posting. After posting the receipts in the next month the department adjusts the over posting by plus or less adjustment.
Adjustment issues:
Plus adjustment issues:
Sometimes there will be stock in the general tore department but the bill might not have been accounted, o they issue some material by taking last months average as the value of the quantity. Then after posting the receipt they adjust the correct value.
In cases, where issue is les than purchase cost, they make an additional adjustment issue. This is called plus adjustment issues. A specimen of the same is given below:
Plus adjustment issues
RECEIPTS
ISSUES
STOCK
Date
GR no.
Unit
Value
Date
MRO
Unit
Value
Unit
Value
Feb ’98
4/722
5
70.00
Jan ’98
Add
Adj
Issues
9010
5
67.50
2.50
5
70.00
5
70.00
5
70.00
Less adjustment issues:
If issue is more than purchase cost, they make less Adjustment in issues. A specimen of the same is given below:
RECEIPTS
ISSUES
STOCK
Date
GR no.
Unit
Value
Date
MRO
Unit
Value
Unit
Value
Feb ’98
4/722
5
70.00
Jan ’98
Add
Adj
Issues
9010
5
75.00
5.00
5
70.00
5
70.00
5
70.00
Stores return Adjustment:
If the issues is not wanted by the main department they retun it to the general stores, which makes stores return Adjustment. A specimen of the same is given below:
RECEIPTS
ISSUES
STOCK
Date
GR no.
Unit
Value
Date
MRO
Unit
Value
Unit
Value
feb’98
9010
5
50.00
Jan’98
9010
50.00
2.50
70.00
10
5
10.00
100.00
50.00
100.00
Monthly consumption statement:-
Stores account department prepares a monthly consumption statement of both spares and stores. The three main statements prepared are:
Stores statement
Spares statement
Others Spares statement
Details of the consumption particular are sent to the concerned departments to verify their consumptions for the month:
Stores accounts also take details of purchase statement from the stores ledger and tally with the stores purchase book.
Inventory stock register:
The stock register is maintained by the department from which closing stock at the end of every month is arrived. Details shown in the stock register are as follows:
Departments
Opening stock
Purchase
Issues
Adj.
Issues
Less Adj.
Stock return
Net issues
Closing
Closing stock:
Closing stock: opening stock + purchase – issues – additional Adjustment Issues + Less Adjustment Issues + Stores Return Adjustment.
Net issues: issues + additional adjustment issues – less adjustment issues – store return.
Sundry parties’ stores ledger:
To ensure proper payment for the suppliers and in view of audit purpose a regular sundry creditor’s stores supplier account is being maintained. A separated ledger having individual folio for each and every supplier is available with store accounts section. Credit entries are taken for individual suppliers from stores purchase daybooks, debit entries are taken from the cashbook maintained by accounts department and monthly review of individual supplier transaction is done. Trial balance is taken to check the overall position of the ledger. Quarterly review of supplier’s transaction is done to check the debit balance lying with the supplier in respect of advance payments given for supply of materials.
Capital ledger: capital ledgers are maintained separately to show the purchase of capital goods e.g. Machinery, fans, refrigerators etc.
Comparative statement:
Comparative statements are prepared for analyzing the increase or decrease in consumption. Once in every 6months, the stores accounts department prepares the statement and sends it to the department concerned indicating the quantity of items consumed. They check the amount consumed with the standards fixed already. If they are found to have consumed more they try to reduce their consumption. The comparative statements are also used for studying the materials and rectifying the defects.
Annual confirmation:
At the end of every year the stores accounts sections sends printed forms stating the balance the company has to pay to that particular supplier. This is known as annual confirmation and is also send to the supplier to verify the balance account. The confirmation and the trial balance taken at the close of annual accounts is subject to the approval of statutory Auditors.
Claim register:
Claim register is maintained for the particulars of the claim made against the party. The claim particulars are posted in the claim ledger from credit side of purchase day book.
Inventory control:
The word inventory is defined as materials lying in storage. The general stores adopt the following methods of inventory control.
ABC Analysis
It is also known as always better control and is a new technique of stock control. The basic principle involved in this method is that high value items are more closely related than low valve items. Under this system, items of materials are given A, B, or C designation depending upon the amount expanded for the particular item during the period.
A item represent large value for few items.
B items are numerous but represent smaller amount of money.
The rest of the items are called C items classified as class a items. Items costing between Rs.1000/-and Rs.1000/- are classified as class B items.
Items which cost below Rs.1000/- are called calls C items. Class a items constitute 75% of the value, but form only 5% to 10% of the total quantity. Class B items constitute 20% of the quantity and the rest of the items form C category.
The general stores department serves the objective of effective control at minimum cost by this approach of ABC analysis.
Perpetual inventory system:</str
Nidheesh K B
Indian Writing Instrument Industry Moving Towards Global Exposure
The Indian writing instruments market today is still on the path of discovering new niches with ergonomic designed products, promotional marketing items and luxury items but in the coming years it is bound to grow tremendously not only domestically but also in it’s exports immerging as world leaders in Writing Instruments.
The stationery sector is a cluster of many sectors out of which the most prominent and important probably is the writing instruments Industry. The two most important tools of it are pen and paper. Other materials like pencil, rulers, writing pads, erasers etc also play an active role which are relevant items useful for commercial and office use.
Even with the advancement age and rule of technology the writing instrument industry still holds a large share of the market. Over a period this industry has seen growth in the domestic market and is now is all set to become an export oriented market. For long period China has said to be ruling the export market in Writing Instruments and as per the source China alone exports around Rs.5000 – 6000 crore worth goods. India had not entered much in the export field uptil now because its domestic demand was very high, at present India’s current export share is barely RS. 200 crore but now the industry is planning to expand further in it’s supply and infrastructure thus enabling them entry into the foreign markets. Foreign buyers of writing instrument also have been looking for an option. Uptil now they were buying their goods from china. Chinese pens are good looking and cheap but they lack long shell life and can’t provide a good writing experience. India will serve to be the best possible option for them as it is the only country whose manufacturing cost is almost same as China.
If the Indian industries assure product life this is where the Indian manufacturers and exporters will have an edge over china. But the major hindrance of Indian writing industry to grow still remains i.e. though it is among the Asian leaders for supplying stationery it’s international competition is threat to it’s Writing Instrument Industry and may stunt the growth of the market within. Chinese revolution in stationery was indeed a threat to the other nations and India is no exception to it. China even today spoils the global buyers with innovative and inexpensive creations and is said to capture a huge part of the market.
Though slowly the writing instruments industry is achieving a well-developed and mature status and quality has also started playing an important role but still it may take few years more before the end of domination of Cheap quality Chinese product’s rule in writing instrument sector. Innovation and top quality goods at competitive prices are the major and only implementations through which the Chinese dominance can be put to an end. New ideas and technological advances in the writing instruments sector should be put into practice to survive in this competitive market. Though gradually and slowly the market is recovering from buying these cheap goods and it is turning out to be a brand loyal market than the old conventional market, which use to live on substitute or counterfeit goods. Also the government’s goal of reaching towards 100% literacy is bound to increase the demand. The Indian market today is still on the path of discovering new niches with ergonomic designed products, promotional marketing items and luxury items but in the coming years it is bound to grow tremendously not only domestically but also in it’s exports immerging as world leaders in Writing Instruments.
Karishma Roy
http://www.articlesbase.com/writing-articles/indian-writing-instrument-industry-moving-towards-global-exposure-96838.html
How You Can Create Advertising That SELLS!
Businesses spend too many dollars, however, on ads that simply
will not result in increased sales and profits. These ads are
poorly conceived, poorly written, poorly designed, poorly
targeted, and poorly placed.
Sounds like a poor way to do business, doesn’t it?
I often ask clients (as tactfully as possible), why they have
run a particular ad. I get a lot of blank stares. A few tense
moments will pass while the client tries to think of a clever
answer. “To get the company name out in front of the public so I
can get more business.” they reply, with some relief.
This poor soul has just described a lack of a well defined goal,
which leads almost inevitably to what I call an institutional
ad. An institutional ad can best be described as one which
identifies the advertiser and lists address, telephone number,
hours of operation, and (maybe) the company logo. That’s it.
What a terrible waste of money!
Unless your company grosses a billion dollars a year, you can’t
afford to do institutional ads. If your company does gross over
a billion dollars a year…you’re probably too smart to run
institutional ads.
Every ad you run must result in increased sales and profits and
an enhanced image for your company. Every ad should make the
customer a solid offer and give the customer sound reasons to
buy from you now. Remember, the customer is sitting back and
asking, “What can you do for me?” If you’re careful to answer
that question with a powerful offer and reasons to buy now,
you’re on your way to advertising success…which results in
increased sales and profits.
How can you improve your chances of increasing sales?
Let’s look at some profit-producing ideas…
SEEK PROFESSIONAL HELP
Very few businesses are prepared or qualified to produce quality
advertising. If you spend more than $2,000 per month in
advertising, you should seriously consider hiring a qualified
advertising professional. There are any number of skilled
freelancers who can develop strategy, and create your marketing
materials with a keen eye to using proven methods and techniques.
Good advertising talent always pays it’s own way through
increased sales and profits, improved cost-effectiveness,
reduced selling costs, and shortened selling cycles.
If your resources are limited, don’t feel lost. There’s no
reason why you can’t learn to write an effective ad. That’s what
the rest of this article is all about…how you can create
advertising that sells.
FOLLOW A PROVEN FORMULA
One of the oldest and most useful formulas for ad design takes
its name from the opera Aida by Giuseppe Verde. In this case the
letters A-I-D-A stand for ATTENTION, INTEREST, DESIRE, AND
ACTION.
In it’s simplest form this formula serves as a structural
blueprint. It guides us to: (1) Get the prospect’s Attention,
(2) Foster his or her Interest in your offer, (3) build Desire
for your product or service and (4) Generate some type of Action
on the part of the buyer.
As we expand on each of these elements individually, you’ll
discover for yourself how to apply the formula to your specific
situation.
ATTENTION (The Headline)
Hit your prospect right between the eyes with a magic wand. How?
With a powerful benefit headline. The headline is the most
important single element of your ad. You have two to three
seconds to stop the reader as he or she passes by. You must stop
the reader, and interest them in your benefit, if you expect
them to read further.
A powerful headline will (1) stop the reader (2) isolate and
qualify your best prospects, and (3) pull your reader into the
sub-heads and body copy.
How do you write the attention-getting headline? First,
carefully review all the benefits of-use of your product or
service. Second, take your most important benefit and weave that
benefit into your headline. Use action words to describe the
benefit to one individual reader.
Here are some examples…
“Save 50% On Office Supplies…Send For Your Free Catalog Today
!”
“How YOU Can Create Advertising That SELLS!”
“New! Amazing Techniques That You Can Use To Land A High-Paying
Job…Today!”
“How To Design Profit-Producing Web Sites That SELL!”
APPEALING TO BUSINESS EXECUTIVES
When writing your ad to a business-to-business audience you
should keep in mind the six key benefits most likely to get
attention:
1.Save Money 2.Save Time 3.Increase Sales 4.Increase Profits
5.Enhance Image 6.Boost cash flow
Most other benefits are subordinate to these key six. I call
them the”Business Benefit Six-Pack.” Show your customer how your
product or service provides these benefits, and you will
dramatically improve your results.
INTEREST AND DESIRE> (The Offer, Body Copy, Benefits-Benefits-
Benefits)
You build interest in your product or service (and the desire to
buy) by making the customer a compelling offer and by describing
as many benefits as possible in simple and interesting terms.
Tip # 1: Top ad pros always write the ad first, then buy
whatever space necessary to display the ad message with clarity
and power.
Tip # 2: Words sell…graphic design displays the words in a
visually appealing way. Don’t confuse the two. No amount of
trendy design will make a poorly written ad sell for you. Good
design reinforces good copy…it cannot take the place of it!
The implication for internet marketers is that content is king.
Avoid glitsy, moving graphics that only distract from your
message and increase load times. Good design and good copy
should work synergistically.
Tip #3: Long copy sells…as long as it’s good copy. I call it
“greased slide” copy. You get the reader on the top of the slide
when he reads a powerful headline, and he can’t get off until he
has taken the action asked for (i.e., ordered the product, made
the trip to the store, dialed the phone, clicked the
order/inquiry button, filled out the on-line order, etc.).
ACTION(Ask For The Order)
Now comes the moment of truth. You must ask for the order. Give
reasons for the customer to buy now…and make it easy for him
to do so. In direct response marketing, this will involve a
coupon for mail orders, a toll-free order line, an e-mail
address, an on-line order form, a fax order line..any means to
make it easy and simple to order!
Take the fear out of the purchase. Give solid guarantees. Offer
secure ordering for on-line customers. Show testimonials from
satisfied customers.
Show what the customer is going to lose if he doesn’t order now.
If you are a retailer, include a map to your store(s) (newcomers
love them). Show the credit cards you accept, list the hours of
operation, tell them about your friendly staff, include a
special coupon or other incentive. In other words, “Roll out the
red carpet.”
INVEST IN FUTURE PROFITS
So there you have it. A primer on good advertising. If I’ve
piqued your interest to learn more, then check out the other
articles available at this resource.
Remember, bad advertising…no matter what the media…is an
unproductive expense.
Good advertising is an investment in future profits!
Good advertising and good management go together. You can’t have
a successful business on-line or off-line—without both.
Thom Reece
http://www.articlesbase.com/copywriting-articles/how-you-can-create-advertising-that-sells-775.html
Home Benefits From Ceiling Fans
Ceiling fans are a popular fixture for good reason. Functionally similar to any other kind of electrical fan, ceiling fans have many benefits over their more conventional counterparts.
A ceiling fan is nothing more than an electrical fan that hangs from the ceiling, and optionally includes lighting. Ceiling fans are preferred by many people due to the space savings over the more conventional or portable fans that take up significant floor space.
Air circulation is a primary benefit of a ceiling fan. They are proven to make a room feel at least 4 degrees cooler than without any moving air. When installed over a kitchen dining table, the moving air helps to dissuade flying pests from entering the area.
Colder winter months benefit from a ceiling fan too. The moving air helps distribute the warm air coming from sources like a furnace or heat stove. Moving this heat around the home makes for a more even distribution of warmth.
Air conditioners do a fine job of cooling a home during hot summer months. But the bill for the electricity consumed can be prohibitive. Yet another benefit of ceiling fans is the energy savings on days where the heat isn’t so high that a ceiling fan cant make a room feel comfortable.
Indeed, the cost savings in electrical power are significant. Ceiling fans consume power at the rate of only pennies per day, while air conditioning units can consume power at the rate of dollars per day. Clearly, during spring and fall months, or even summer mornings / evenings, and ceiling fan can suffice for comfort in room temperature and wallet.
It is important to note – a ceiling fan run in the winter for warmth distribution needs to run clockwise to draw air up against the ceiling. Since warm air rises, this gives it a chance to get pushed around and mixed with the cooler air floating around below.
So where did this great idea come from?
Two dudes, father and son – James and John Hunter first invented the ceiling fan back in 1886. It was originally powered by water since there was no electrical system that you could simply plug into back then even though electricity had been discovered more than 100 year prior.
In 1903 the Emerson Electric Co incorporated the Hunters ceiling fan design in their products. Later the Hunter Fan company was spun off bearing the name of the original duo. Since then there’s been a great deal of evolution in design and technology. Today, there are countless ceiling fan designs offered by the Hunter Fan company.
Casablanca modern fans
Casablanca manufactures the most modern styles of ceiling fans available anywhere. The are beautifully crafted and luxurious ceiling fans. Casablanca fans are not inexpensive. Due to their appeal some of the designs can become collectors items. Don’t be surprised if you find these fans costing a pretty penny over other options.
Age has served the ceiling fan well, what with materials and technologies, and all – from water power to electricity, and light weight material blades, the ceiling fan is the most affordable option for temperature comfort going.
Dave Marx
http://www.articlesbase.com/home-improvement-articles/home-benefits-from-ceiling-fans-131282.html