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FACTORY 
 STORESKEEPING 
 
 The Control and Storage of Materials 
 
 HENRY H?TARQUHAR 
 
 I' 
 
 ASST. PROFESSOR OF INDUSTRIAL MANAGEMENT, HARVARD GRADUATE SCHOOIj OP 
 BUSINESS administration; consulting MANAGEMENT ENGINEER 
 
 First Edition 
 
 McGRAW-HILL BOOK COMPANY, Inc. 
 NEW YORK: 370 SEVENTH AVENUE 
 
 LONDON: 6 & 8 BOUVERIE ST., E. C. 4 
 
 1922 
 
55 
 
 
 Copyright, 1922, by the 
 McGraw-Hill Book Company, Inc. 
 
 BUG 12 72 
 
 THE MArLK ritEss yonK ta 
 
 ©CI.AB77838 
 
FOREWORD 
 
 Great managers are primarily concerned not with 
 today, but with to-morrow. This is true because they 
 have taken advantage of the possibihty of standardizing 
 those features of their work which lend themselves to 
 standardization so that they are left free to give their 
 personal attention where it is really most needed — 
 to matters which cannot be systematically controlled. 
 The administration of any industrial enterprise may be 
 broadly divided iiito the management of men, and the 
 management of things such as plant, equipment, and 
 materials. The former constitutes the art in manage- 
 ment, while the latter is susceptible to a more scientific 
 regulation. If the administration of industrials is to 
 become less of an art and more of a science, a sharp 
 division must be made between those matters which 
 from their very nature must remain largely in the 
 realm of art — the functions of dealing with human 
 beings and with intangible questions of policy — and 
 those which may be controlled through predetermined 
 and systematic procedure. 
 
 Even where the effort has been made to develop the 
 scientific side of management, however, the popular 
 imagination has been caught by that part of it which 
 deals with shop planning and incentive payment, and 
 more than its share of the average manager's serious 
 attention is absorbed by the actual making of goods. 
 The fact that such planning and payment to be truly 
 effective must be based on unspectacular standardization 
 of equipment and materials has not been sufficiently 
 stressed, and the fact that no part of the business; can 
 function to best advantage until all parts function to 
 good advantage is just beginning to be appreciated. 
 
vi FOREWORD 
 
 Thousands of dollars are lost in hundreds of factories 
 through unorganized handling of materials. Although 
 the cash statement is scrutinized with fatherly care, 
 once part of this cash is converted into materials, which 
 are of considerably greater potential value than an 
 equivalent amount of money, this form of wealth tends 
 thenceforth to be neglected and the attention remains 
 centered in the cash drawer. The fact is that the 
 interests of the cash drawer are best served by manage- 
 ment so organized and controlled as to serve directly 
 production needs, and good industrial relations in the 
 factory are well-nigh impossible without control not only 
 of materials but also of all other controllable features of 
 the work. It is for this reason that the attempt has been 
 made in this volume to show how one of these functions of 
 management may to a considerable extent be removed 
 from among the ever-present troubles of the manager. 
 
 As used, the term materials will be understood to 
 include stores or raw materials and factory supplies, and 
 worked materials or work in process and partly or com- 
 pletely finished parts. The book deals with the replen- 
 ishment, storage and disbursement of these two classes 
 of materials, but excludes the administration of work 
 while in process, after it passes from storage to the shop, 
 which is known as routing and which does not fall within 
 the scope of this volume. Unless otherwise stated, the 
 discussion applies to both stores and worked materials; 
 and the viewpoint is that of the manager of production 
 of the medium sized plant engaged in manufacturing a 
 variety of articles both to stock and to order. No 
 attempt is made to outline a '^ system" for any specific 
 type of factory, since local variations necessitate local 
 adaptions ; rather the guiding principles of effective mate- 
 rial control which are applicable alike to all types and 
 kinds of production are emphasized and illustrated by ex- 
 amples of detailed procedure which has been found 
 effective in numerous instances. 
 
FOREWORD Vll 
 
 The object of this book, then, is to outline the princi- 
 ples and methods by which one of the problems of 
 industrial management — the handling of materials — 
 may be standardized and cheapened through scientific 
 regulation, in the hope that the time and energy of the 
 manager may be thus released for the task of Manage- 
 ment in the highest sense, that of bringing about the very 
 best conditions for everybody concerned. 
 
 Henry H. Farquhar. 
 
 Belmont, Mass., 
 May, 1922. 
 
ACKNOWLEDGMENT 
 
 To the late Frederick W. Taylor, whose pioneer work 
 in formulating principles of management and develop- 
 ing sound methods by which those principles were made 
 effective, I am indebted for the general viewpoint as well 
 as for whatever in the following pages is sound in theory 
 and effective in practice. 
 
 I wish to express appreciation of the help and advice 
 received in the preparation of this volume from my wife, 
 Elizabeth Holton Farquhar; from L. Herbert Ballou; 
 from Charles R. Howard; from Harlow S. Person, and 
 from Hugo Francke. 
 
 My thanks are due also for forms and materials 
 supplied by the I^ewis Manufacturing Company, 
 Walpole, Mass.; by the Bethlehem Steel Company, 
 Bethlehem, Pa.; by the Russell, Burdsall and Ward 
 Bolt and Nut Company, Port Chester, N. Y. ; by the 
 Universal Winding Company, Providence, R. I.; and 
 by the W. H. GrifHn Shoe Company, Manchester, N. H. 
 
 . H. H. F. 
 
CONTENTS 
 
 , Page 
 
 Foreword v 
 
 Chap. 
 
 I. Relation Between Material Control and Produc- 
 tion 1 
 
 II. The Material Cycle. Prerequisites to Control . . 15 
 
 III. Personal. Organization. Location of Departments . 26 
 
 IV. The Bases of Material Replenishment 38 
 
 V. The Material Balance Sheets 53 
 
 VI. The Purchasing Department as Related to Material 
 
 Control 70 
 
 VII. Traffic, Receiving and Inspection Departments ... 85 
 VIII. The Store Room Layout, Equipment Storage and Pro- 
 tection. Maintenance Stores 98 
 
 IX. Classification and Symbolization of Materials. . . . 140 
 
 X. Material Accounting; Inventories; Statistics. ... . 159 
 
 Appendix 175 
 
 Index 177 
 
FACTORY STORESKEEPING 
 
 THE CONTROL AND STORAGE OF MATERIALS 
 
 CHAPTER I 
 
 RELATION BETWEEN MATERIAL CONTROL AND 
 PRODUCTION 
 
 Summary: Thb Functions of a Manufacturing Plant. All Contribute to 
 Production. Standardizing for Material Control. Simplification. Speci- 
 fications. Maintenance of Quality. Determination of Quantity. 
 Methods of Administrative Control. — The Ideal Material System. 
 Knowledge Required to Secure it. Speculative Purchasing. — Relation 
 between Manufacturing Efficiency and Material Control. All Costs are 
 Costs of Production. Storage and Handling Costs must be Low as 
 Possible. Some Typical Cases. — Summary of Material Losses. Lack 
 of Standards of Variety and Quality. Excessive Supply. Deficient 
 Supply. Faulty Management. 
 
 The Functions of a Manufacturing Plant. — A manu- 
 facturing establishment, as the name implies, exists 
 primarily for the purpose of turning out a product for 
 sale at a profit. This fact curiously enough seems some- 
 times to be overlooked. Activities other than produc- 
 tion proper are of course necessary in order that the main 
 purpose for which the plant exists may be accomplished, 
 and it is necessary in order to avoid a lack of balance 
 in management that each activity be seen in its true 
 perspective without misleading lights and shadows. The 
 main functions in the administration of any manufactur- 
 ing undertaking are : 
 
 The Financial and accounting, or the raising and regu- 
 lation of funds by which the business is carried on. 
 
 The Engineering or technical, which determines the 
 design and composition of the product. 
 
 1 
 
2 FACTORY STORESKEEPING 
 
 The Production, the prime function of transforming 
 raw material into a salable product. 
 
 Selling, which creates a demand for and disposes of 
 what is manufactured. 
 
 Personnel, which has to do with the policies and prac- 
 tices grouping themselves about the human element. 
 
 All minor activities of the plant may be grouped 
 under one or another of these broad major functions, 
 and all, it must be remembered, spring from and must 
 primarily serve production since this is the activity for 
 which the whole establishment was founded. Looking at 
 the matter in this light, the Production function really 
 embraces finance, engineering, selling and personnel, but 
 deals more specifically with activities in turning out a 
 product through the use of land and buildings, equip- 
 ment, organization, materials, production and cost 
 systems, and so on. Now, if we have learned anything 
 from the great amount of careful work which has been 
 done in an attempt to reduce the management of industry 
 to less of an art and more of a science, it is that it is just 
 as necessary to control one of these variables with which 
 the manager must deal as it is to control any other and 
 that the business must be looked upon as being organic 
 and not as a series of disjointed and unrelated activities. 
 This viewpoint brings home at once the fact that none of 
 these production activities can continue unless selling 
 provide a market, that machines are useless unless power 
 be available to drive them, that men are useless unless 
 they be provided with work to do and with facilities to do 
 it, and that in turn all of these activities must cease 
 , unless materials are supplied as needed. It is only 
 through the conduct of manufacturing operations that 
 the material problem in the strictly manufacturing 
 business arises — eliminate the production activity and the 
 need of materials, aside from miscellaneous office sup- 
 plies and the like, disappears. 
 
 One of the major functions of production, then, is 
 ',that of providing its needs in materials and of standard- 
 
MATERIAL CONTROL AND PRODUCTION 3 
 
 izing material activities so that these needs may be 
 adequately met. The function of material supply, 
 instead of being relegated to the background and con- 
 sidered as a ''necessary evil," must thus take its place 
 beside those ordinarily given greater consideration. 
 Only by so doing may a balanced management be 
 brought about ; only when material regulation has been 
 standardized may it be pushed to the background to 
 make room for some of its brothers which are less 
 amenable to control. 
 
 Standardizing for Material Control. — Constant em- 
 phasis is placed throughout this volume upon the impor- 
 tance of standardizing the various features of the whole 
 material problem of the factory, with special emphasis 
 upon certain phases of such standardization. As applied 
 to material problems, standardization embraces the 
 following : 
 
 1. Simplification, or the reduction of the variety of 
 different kinds of material dealt with. 
 
 2. Specifications, or the determination of requisite 
 quality of each item of material to be carried. 
 
 3. Maintenance of Quality, or the measures necessary 
 to see that materials actually received conform to 
 predetermined specifications. 
 
 4. Determination of Quantity, or the question of ascer- 
 taining and regulating how much and when to buy 
 various materials under different conditions. 
 
 5. Methods of Administrative Control, or the measures 
 by which the whole material cycle is brought under 
 systematic operation. 
 
 The major emphasis in the present volume is given to 
 the last two topics, that is, to the regulation of inventory 
 and the methods of coordinating and controlling the 
 whole material procedure from beginning to end — both 
 aspects of factory storeskeeping of vital importance 
 entirely out of proportion to the attention they usually 
 receive, yet the fundamentals of which must be grasped . 
 by the men responsible for materials in the factory 
 
4 FACTORY STORESKEEPING 
 
 if this function of production is continuously to play its 
 part in the struggle for high output and low costs. It is 
 because of the comparatively little serious attention 
 usually given to these two phases of material handling 
 as contrasted with that usually devoted to questions of 
 variety and quality, that these problems of quantity and 
 control have been given right-of-way in this book. 
 Before passing to these in detail, however, it is necessary 
 to get a clear picture of the relation between them 
 and simplification, determination of specifications, and 
 maintenance of quality. 
 
 Simplification. — Reduction of variety of materials 
 necessary under given conditions may ordinarily be 
 accomplished without a corresponding reduction in the 
 number or variety of products manufactured, desirable 
 as the latter is in many instances. But without touch- 
 ing the question of the number of products to be made, 
 it is usually possible through careful investigation, to 
 eliminate many items heretofore carried through analyz- 
 ing exact needs and rigorously eliminating needless frills 
 and varieties, and by making parts interchangeable so far 
 as possible. 
 
 The necessity of conserving manufacturing facilities 
 for strictly military needs during the war gave a tre- 
 mendous impetus to reduction of variety, substitution 
 of standard or interchangeable parts, and elimination, 
 of all materials for which there was not a real need. 
 The War Industries Board did notable work in this con- 
 nection, and it is significant that much ground gained at 
 that time has been held and that the work of simplifi- 
 cation is progressing steadily in almost every industry 
 fostered by the Department of Commerce. 
 
 As a result, many instances of remarkable financial 
 savings in various lines of work through centering atten- 
 tion upon essentials only, might be cited, and the effort 
 to cut down the number of articles with which the factory 
 supply service must deal is one of the essentials of good 
 
MATERIAL CONTROL AND PRODUCTION 5 
 
 material management. Many storerooms contain up- 
 wards of 25,000 different items; a reduction of even a 
 fraction of this number is usually worth all it costs, 
 through saving storage space, interest on investment, 
 labor of handling and keeping inventory correct, balance 
 sheet work and all of the clerical operations necessary to 
 put through any transaction in requisitioning, purchas- 
 ing, receiving and inspecting, storing, issuing and account- 
 ing for any item of material. The degree of control which 
 may be exercised over material routine generally, varies 
 inversely with the number of items between which atten- 
 tion must be divided; it is therefore essential to reduce 
 these to the very minimum consistent with successful 
 operation of the plant. 
 
 Specifications. — The determination of the specifi- 
 cations or the requisite quality of each item of material 
 to be retained after simplifying our needs is a technical 
 matter of the utmost importance. It would be out of 
 place to attempt to treat a subject of this size and impor- 
 tance in a volume devoted primarily to a different 
 purpose. No manufacturing undertaking, however, can 
 be successfully carried on until raw material specifica- 
 tions, in the form of standards of composition, of dimen- 
 sion, of strength, of finish, of color, and so on, have been 
 determined, and a strict regulation of quantity is pred- 
 icated upon a predetermination of quality because the 
 very act of setting a strict limit on the amount of goods 
 to be carried necessitates being sure that each item of 
 this supply be suitable for the uses to which it is to be 
 put. 
 
 Maintenance of Quality. — Standard specifications may 
 prove to be a positive harm, however, unless means be 
 taken to put them to constant and effective use, for 
 unless this be done the specifications themselves lend a 
 false feeling of security as to quality. On the one hand, 
 in setting specifications it should be remembered that 
 ''good enough is best;" on the other hand once necessary 
 
6 FACTORY STORESKEEPING 
 
 quality has been determined by those who know, it 
 becomes the imperative duty of those entrusted with 
 inspection of quahty to see that no material not up to 
 these minimum requirements be passed for use. The 
 safeguards which must be thrown around the technical 
 inspection work itself, therefore, are here dealt with as 
 one of the essentials of current material handling upon 
 which adequate regulation rests. 
 
 It will thus be seen that there is a very intimate rela- 
 tion between simplifying varieties, determining stand- 
 ards of quality, inspection to enforce conformity to those 
 standards, determination of quantity and standardization 
 of methods of material management. These five must go 
 hand in hand if ideal results are to be secured. 
 
 The Ideal Material System. — From a material stand- 
 point the fundamental idea upon which war is conducted 
 is so to organize and manage that the man at the front 
 is enabled to keep his mind continuously on his main 
 duty — the defeat of the enemy — without handicapping 
 him in any way with questions of supplies of any kind. 
 He should be able absolutely to forget material. Ideally 
 and actually he should be able to reach his hand behind 
 him at any time and receive exactly what he needs 
 — no more, no less — at the moment. An over supply 
 will impede his action, consume his time and attention 
 and result in waste; a deficiency either in quantity or in 
 quality will render him helpless. That is the basis upon 
 which the supply service of the army is organized — • 
 material and ration supply should be automatic and 
 governed absolutely by current needs. 
 
 For the man at the front substitute the man at the 
 machine, and the above ideal becomes that of the supply 
 service in the factory, for the same reasons and to be 
 attained through similar methods. 
 
 To make this supply automatic in either case, we 
 must first know the requirements; we must know the 
 original outfit in quality and in quantity that a man 
 
MATERIAL CONTROL AND PRODUCTION 7 
 
 needs when he takes up his work and the probable rate of 
 use of each article while on the job. Then, if we are to 
 send forward the right quantity of the right materials to 
 him just when wanted, many other things are necessary. 
 We must know how long it takes to secure the goods 
 ourselves from our supplier, and how long it takes us to 
 forward them from ourselves to the man who is to use 
 them. It is necessary to know how much of the goods 
 are on hand in the store room, how much has been 
 ordered to be shipped, how much has been promised for 
 specific uses and therefore not available for filling sub- 
 sequent requests, and from this how much is still avail- 
 able for future demands. Besides these things, to make 
 the supply reliable, there must be a definite location for 
 each article of goods in stock, knowledge as to exactly 
 where and how much of each is on hand, and ability to 
 get them in and out quickly. This, of course, requires 
 that means be taken to safeguard materials while in 
 storage and to keep accurate records of amounts. 
 Accuracy in handling, is essential, all items should be 
 checked all the way down the line as far as is possible 
 consistent with speed and with the personnel employed. 
 Theoretically no goods may pass out of one's hands 
 without a receipt: this, of course, is not always possible 
 in war, or necessary in war or industry. But efficient 
 transportation and sufficient checks at each stage are 
 necessary; therefore, proper identification of the goods 
 is required so as to enable anyone into whose hands they 
 pass to know what the goods are and for whom they 
 are intended. In addition to all these considerations 
 of quantity and time, in both war and industry there 
 are considerations of quality, and in addition to this in 
 industry the further consideration of cost, by which is 
 meant not simply the original purchase cost, but the final 
 use or time cost considering the effectiveness and dura- 
 bility of the particular item in actual use. 
 
 These are a few of the many details to be brought 
 
8 FACTORY STORESKEEPING 
 
 under control in well-regulated material handling. They 
 are not matters to be looked after by an inexperienced 
 clerk. Neither does the answer lie in devising a material 
 '^system" and thereafter leaving it to run itself or to be 
 supervised by otherwise preoccupied officials or those 
 who, because their duties do not bring them face to face 
 daily with production troubles, may not realize the vital 
 dependence of manufacturing efficiency upon material 
 control. There is, strictly speaking, no such thing as a 
 material function in itself in the manufacturing business, 
 and those manufacturers who, in addition to producing, 
 deliberately indulge in the buying of materials for re-sale 
 and ''playing the market" are by so much engaging in a 
 separate line of business as distinct as possible from that 
 for which presumably their investment in plant and 
 equipment was made — a dangerous speculative business 
 in which they would in most cases do better not to indulge. 
 Even though a conscious buying for re-sale be not per- 
 mitted, there are many plants which are even worse off 
 because, lacking this definite policy, they have yet failed 
 to substitute the proper one of governing purchase from 
 the standpoint of manufacturing needs. The tendency 
 in the best plants today is to look upon the control of 
 material as a production function and to govern the 
 replenishment of materials in accordance with the 
 requirements for production during a reasonable future 
 period. One of the oldest, largest, and most progres- 
 sive manufacturing plants in this country adheres stead- 
 fastly to this policy, and has done so for a number of 
 years. 
 
 Relation between Manufacturing Efficiency and Mate- 
 rial Control. — The vital dependence of manufacturing 
 efficiency on the strict regulation of materials is realized 
 most by those closest to and responsible for production. 
 Although a blunder on the part of the purchasing 
 agent, for example, may result in just censure of that indi- 
 vidual, it is after all production which has to bear the cost 
 
MATERIAL CONTROL AND PRODUCTION 9 
 
 of the blunder, for the cost of what he buys, as well as the 
 cost of his failure to buy when he should, alike must 
 eventually be borne by the cost of the product turned 
 out.^ Production must, therefore, suffer, in addition 
 to leaks, any evils of over- or under-stocking; and 
 curiously enough both of these losses are most often 
 encountered in the same plant simply because insufficient 
 attention is paid to material problems in general. The 
 only economic justification for storing materials in 
 quantity is that through this reservoir production may 
 be regularized and thus cheapened. It therefore follows 
 that the cost of the product must not be unduly increased 
 through storing too much nor through failure to store 
 enough, for in either event production is not securing the 
 benefit of storage to which it is entitled. There are but 
 two ways in which materials may be sold at a profit: 
 they may be re-sold in the condition in which they were 
 bought at higher than the purchase price, or they may 
 be processed to a finished or partly finished state and sold 
 for more than the cost of raw material plus manufacture. 
 Obviously excess materials cannot be processed, which 
 leaves us only the first alternative of re-sale — as before 
 stated, a questionable policy for a manufacturing 
 concern. 
 
 The now classic case of a government establishment 
 may be recalled in this regard. There was here, of 
 course, no element of speculation, but the loose methods 
 of regulating materials then prevalent and still common 
 were in use. Upon the initiation of changed methods of 
 management, the stores situation was thoroughly over- 
 hauled. Among other things which came to light was a 
 
 1 This regardless of the cost methods used, for even where a so-called 
 "Standard" or predetermined cost of material entering the product is 
 used (any excess over this cost being charged to Profit and Loss), the 
 balance sheet must yet show that articles produced are sold at more than 
 all costs of producing them (blunders included) or the business must 
 eventually discontinue. We are only obscuring the approach of the evil 
 by absorbing such losses in a separate account. 
 
10 FACTORY STORESKEEPING 
 
 supply of materials above current needs amounting to 
 more than $122,000. 
 
 This occurred in a government institution, however, 
 for which allowances may be made. Let us look at some 
 happenings in private plants. The author vouches for 
 the accuracy of these stories, although, of course, names 
 cannot be mentioned. In a machine shop, upon a similar 
 round-up 40 tons of idle stock was unearthed from around 
 the machines, under the benches, and on the floor of one 
 department. This consisted of raw stock cached by 
 the workman, excessive amounts delivered to the 
 machine and not disposed of, partly worked parts side- 
 tracked for "rush" jobs, and so on. There was no 
 speaking acquaintance between material regulation, 
 either purchasing or issuing, and production needs. 
 
 In another plant the purchasing agent bought only 
 for current needs as judged from comparison of reports 
 of materials on hand and sales orders which were fur- 
 nished him. From this placing of responsibility for such 
 matters and from the methods in use, his ability to do so 
 was questioned although he surpassed the average pur- 
 chasing agent in capability. An actual investigation 
 showed more than $50,000 worth of excess miscellaneous 
 items on hand. Any of those items could have been 
 secured in 3 weeks; some were on hand in sufficient 
 quantities to last 10 years. The intent was good in 
 this case, but human limitations and faulty detail made 
 its accomplishment impossible. 
 
 The purchaser for one medium-sized factory was a 
 bargain hunter — one of the most costly and tenacious 
 diseases to which purchasing agents are heir. Responsi- 
 bility for designation of how much to buy had, up to 
 this time, never been clearly defined, and was usually 
 exercised by the purchasing agent alone; he originated 
 and approved replenishment orders unless some special 
 occurrence made consultation necessary. One morning 
 he beamed into the office with the news that there had 
 
MATERIAL CONTROL AND PRODUCTION 11 
 
 just been delivered 18 months' supply of a certain item 
 which he had obtained at an ''exceptional reduction in 
 price." The works manager replied that they had just 
 discontinued the use of that particular item altogether. 
 In this case the material was ' immediately re-sold (at a 
 lower price than was paid for it), but such ''bargains" 
 often form very considerable portions of the excess 
 supplies shown up when materials on hand are measured 
 against requirements. 
 
 A somewhat elaborate "stores system" had been 
 installed for keeping track of partly worked parts in 
 another factory. Due to a multiplicity of detail whereby 
 the main requirements of successful stores management 
 had been, however, missed, the difference in inventory as 
 shown on three supposedly accurate interlocking records 
 was surprising, and $15,000 worth of material, as per the 
 book records (in this case under the control of the cost 
 department), could not be physically located or otherwise 
 accounted for. Those entrusted with the work of record- 
 keeping did not realize the importance of it and had no 
 particular incentive to keep it accurate; the cost man 
 regretted that it became necessary to "write off" such 
 a loss, but otherwise attached no particular significance 
 to the matter. 
 
 Akin to this is the case in another plant where the 
 works manager in all important cases must send a per- 
 sonal representative to the store room to check the 
 accuracy of the book balance reported to him from the 
 balance sheets. These again are under the control of 
 the cost office. 
 
 A case came to light in an otherwise exceptionally 
 progressive factory where, because of fairly uniform 
 production requirements, it was thought to be unnecessary 
 to apportion, or reserve on the books, material for each 
 manufacturing order in advance of its disbursement. 
 Instead, the average consumption over a period of weeks 
 was determined, to which was added a liberal factor for 
 
12 FACTORY STOEESKEEPING 
 
 safety, and the resulting quantity was specified as the 
 ''minimum" below which goods on hand should not be 
 allowed to fall without issuing a replenishment order. 
 This minimum was entered on the balance sheet for the 
 item, and book balances were carefully checked with bin 
 contents from time to time. To give added assurance, 
 over the minimum quantity in the bin was placed a red 
 cloth as a signal to the storekeeper, before touching the 
 minimum stock, to remind the balance clerk to issue a 
 replenishment order. This procedure seemed to the 
 manager to be water-tight, but after a few months' 
 operation a costly shortage occurred on the item. Upon 
 investigation it was found that recent demands had so 
 far exceeded average demands (upon which the ''mini- 
 mum" was based) that stock became exhausted. Rather 
 than increase the minimum limit to cover such excep- 
 tional demands and thereby increase the inventory 
 of idle material during all times of normal consumption, 
 the firm was persuaded to adopt the common sense policy 
 of looking ahead in these matters and apportioning all 
 such material immediately the need became known. 
 
 No, efficiency in production cannot be obtained under 
 such handicaps. Money is carefully guarded and 
 checked to the penny; materials are potentially of far 
 greater importance to the manufacturing business than 
 an equivalent amount of money. They should be as 
 carefully guarded and controlled. 
 
 Summary of Material Losses. 
 
 A. Lack of Standards of Variety and Quality. 
 
 B. Due to Excessive Supply. — Excess materials, not dis- 
 posed of, cause any one or all of the following losses: 
 
 1. Loss of Interest on Investment. — The money which 
 is spent for material in excess of what is needed for 
 production during a reasonable period might otherwise 
 be loaned at interest or reinvested profitably in the busi- 
 ness, thus producing more money; or it may be used to 
 obviate the necessity of borrowing, thus producing a 
 
MATERIAL CONTROL AND PRODUCTION 13 
 
 direct saving; invested in idle material, however, it 
 adds a cost of doing business — the cost of the loss of 
 interest on money needlessly spent. 
 
 2. Loss of Insurance on Goods. — A heavy inventory 
 imposes a heavy insurance cost, or a heavy loss in case 
 of fire, usually both. 
 
 3. Excess Storage Space. — Every cubic foot of storage 
 space has a rental value. Taxes, insurance, depreciation 
 and repairs on the building, interest on investment, 
 heat, hght, cleaning — ^all such costs for any space through- 
 out the plant must be charged against what occupies that 
 space, be it an operating machine or dead stock, and this 
 charge must eventually appear against the cost of the 
 product which the space is supposed to benefit. In 
 the former case the product of the machine may offset 
 or more than offset these rental charges: in the latter 
 case the charges go to swell expenses which ordinarily 
 can not be returned by the excess materials themselves 
 and which therefore add to the burden which must other- 
 wise be shouldered. 
 
 4. Deterioration. — In few cases do materials of any 
 kind retain their original quality during the passage of 
 time. Deterioration, depreciation or obsolescence will 
 sooner or later cause a loss in idle stock. 
 
 5. Reduced Stock Turnover. — During normal times of the 
 buying and selling markets the ideal condition as regards 
 storage in the manufacturing business would be that in 
 which no storage whatever is necessary. Imagine a 
 factory where, immediately upon receipt, raw material is 
 delivered to the machine, processed at once and immedi- 
 ately shipped upon completion. Such a factory would 
 have a stock turnover limited only bj'' the time neces- 
 sary for the longest operation on the product. The cost 
 of material entering into the product under such condi- 
 tions would obviously be less than that in which storage 
 is necessary, for in storing we have the fixed costs men- 
 tioned previously, the cost of added delivery, handling 
 
14 FACTORY STORESKEEPING 
 
 and transportation charges, and possibly deterioration 
 or obsolescence in the materials themselves. No matter 
 for how short a period we store, therefore, the cost of the 
 stored article issued to the shop is actually greater 
 (whether it show on cost records or not) than is the cost 
 of a non-stored article. The profit on the finished 
 product is therefore less; or, if the same, that part of it 
 which pertains to the materials occurs fewer times per 
 year. It is more profitable to make 2 per cent per trans- 
 action six times a year than it is to make 13 per cent only 
 once a year. This is a point overlooked in innumerable 
 manufacturing and other concerns. 
 
 6. Additional Handling and Confusion. — Except under 
 fortunate conditions of ample and well arranged storage 
 space, a supply of material in excess of normal needs 
 almost inevitably results in shifting locations, additional 
 piling, unpiling and transporting, additional record 
 keeping, lack of definite identification and consequent 
 confusion and difficulty in finding materials quickly. 
 
 C. Due to Insufficient Supply. — -The losses which may 
 and do result from a failure to have on hand just the 
 article desired in sufficient quantity when needed are too 
 frequent and obvious to merit rehearsal. A warning 
 may be thrown in here, furthermore, to the effect that 
 when a policy of governing materials strictly by produc- 
 tion needs is determined upon, ample safeguards are 
 necessary to insure against a shortage. One such occur- 
 rence may offset many times the cost of an excessive 
 supply. 
 
 D. Due to Misplaced Responsibility and Faulty 
 Routine. — Some typical instances of such losses were 
 given in preceding paragraphs, and since the causes may 
 be innumerable no summary will be attempted. It is 
 largely the petty annoyances and little leaks, however, 
 in themselves often insignificant, which in the aggregate 
 amount to infinitely more than it would cost to remedy 
 them. 
 
CHAPTER II 
 
 THE MATERIAL CYCLE. PREREQUISITES TO 
 CONTROL 
 
 Summary: Classes of Materials — The Material Cycle — Sources of 
 Information — Forms and Functions of Each — Prerequisites to Control — The 
 Fundamental Principle; Rules for Material Regulation. 
 
 In Chapter I the points were brought out that effec- 
 tive manufacture is absolutely dependent upon effective 
 regulation of materials, that ideal material management 
 provides a regulated movement of supplies according to 
 actual needs, that either an excess or a deficiency is bad, 
 and that constant vigilance is necessary to guard against 
 these and other losses, and finally since production is the 
 activity most directly interested in and affected by these 
 matters that the regulation of them should rest squarely 
 upon this function of the business. 
 
 Classes of MateriaL — It is necessary to define exactly 
 what we are talking about when we use the word 
 ''material." Material may be divided into 
 
 I. Stores, or 
 
 (a) Raw materials, and 
 
 (b) Factory supplies 
 
 II. Worked Materials, or 
 
 (a) Partly worked, and 
 
 (b) Finished parts 
 
 Raw materials are those intended for use in the product 
 which are still in the condition in which we bought them. 
 They may thus be finished product to our supplier and 
 raw material to us. 
 
 Factory Supplies include all stationery, forms, main- 
 tenance and power supplies, spare parts of machines, 
 lavatory equipment and similar miscellaneous articles of 
 general factory use. 
 
 15 
 
16 FACTORY STOEESKEEPING 
 
 Worked materials on the other hand, consist of raw 
 materials on which some processing work has been per- 
 formed in our plant looking toward the conversion of 
 them into the finished product. They may be partly or 
 completely finished parts or products; in the latter case 
 they are often referred to as "stock," and they may be 
 salable in both conditions. 
 
 Looking at Stores from a slightly different angle, we 
 have: 
 
 A. Classified Stores or those which we ordinarily keep 
 on hand in quantity and to which naturally we desire 
 to give greatest attention. They are, as the name 
 implies, carefully classified and strictly regulated in 
 every way since they form the foundation of manufacture ; 
 and 
 
 B. Unclassified Stores or those which are not regularly 
 stocked but are ordered for special purposes. Here 
 would fall items such as chairs, desks, typewriters, 
 special orders of lumber and similar items not carried 
 regularly in the store room. 
 
 Such subdivisions provide not only a convenient means 
 of identification of the various items in the store room, 
 but are desirable for accounting and other purposes 
 to distinguish those parts which we buy from those 
 which we make. 
 
 Although this volume deals primarily with stores, and 
 particularly with classified stores, many of the considera- 
 tions in governing this class of material apply with equal 
 force to worked materials. In the case of worked mater- 
 ials, although a manufacturing order on one of our 
 production departments is issued to renew the supply 
 instead of a replenishment order on the purchasing agent, 
 and although thereafter there are similar differences in 
 treatment, yet in each case the same principles of control 
 apply and the same general sequence of operations must 
 be gone through. 
 
THE MATERIAL CYCLE 17 
 
 The Material Cycle. — The series of activities in secur- 
 ing, storing, and disbursing material run about as 
 follows : 
 
 1. The determination of what is needed, when, and in 
 what quantities. 
 
 2. The placing of the request to purchase — hereafter 
 called the replenishment order, often called purchase 
 requisition — with the Purchasing Agent. ^ 
 
 3. The securing and filing of information concering 
 sources of supply. 
 
 4. The securing of bids or quotations for the article 
 desired; the decision as to price and suppliers. 
 
 5. The placing of the order to buy — hereafter called 
 the purchase order. 
 
 6.- The follow-up of outstanding purchase orders to 
 insure delivery when needed. 
 
 7. The receipt of the goods. 
 
 8. The count and inspection. 
 
 9. The transportation and receipt into stores. 
 
 10. The storage, safeguarding and accounting for the 
 goods while in stores. 
 
 11. The placing of the request to issue — hereafter 
 called the stores or worked material issue — with the 
 storekeeper. 
 
 12. The disbursement of the goods. 
 
 13. The accounting work at each stage of the trans- 
 actions — the recording of what has been ordered, what 
 received; balances on hand; amounts reserved and 
 amounts still available; the checking and paying of the 
 bill; costs and the charging into and out of stores; the 
 maintenance of inventory records. 
 
 The phases of this cycle are very far from being a 
 series of disjointed transactions — they are a series of 
 interdependent acts, a false step in any one of which may 
 produce disastrous production consequences. 
 
 Sources of Information — Forms and Functions of 
 Each. — The various forms and methods used in material 
 
18 FACTORY STORESKEEPING 
 
 routine will necessarily differ in individual factories. 
 For the sake of clearness in following subsequent discus- 
 sion, the names and functions of the more important 
 sources of information as here used may be summarized. 
 They are listed in the order in which chronologically they 
 usually come into play in actual operation. 
 
 The more important forms are illustrated in the follow- 
 ing chapters. Those shown are samples only, and the 
 reader is cautioned that for his own particular needs 
 very different forms may be required. The fact should 
 be emphasized also that too great variety in colored 
 paper on which these various forms are printed should be 
 avoided, but forms of the same size at least should be 
 printed on paper sufficiently different to avoid confusion. 
 
 Bill of Material — Parts List. — A list made out by the 
 engineering department showing drawing and pattern 
 numbers, quantities, description, and composition or 
 reference to specifications, of each part of the product 
 which is to be made in our plant. Various other sorts of 
 information are sometimes shown according to circum- 
 stances. If the bill be extended to include not only 
 worked materials but all raw parts, and all stores enter- 
 ing into the product, it is usually referred to as a List of 
 Parts, 
 
 The bill of material is thus the basis of all needs for 
 manufacturing material, and the bill itself or abstracts 
 from it may serve for making these needs known to the 
 persons whose duty it is to see that these materials are 
 supplied. 
 
 Purchase Specifications — made by the engineering or 
 other technical department, show complete information 
 as to the characteristics of all material used by the estab- 
 lishment, drawn up for use of the purchasing agent and 
 the inspection department. Specifications may vary all 
 the way from elaborate detailed physical and chemical 
 characteristics with instructions as to manufacture and 
 for testing the finished product, down to the simple 
 
THE MATERIAL CYCLE 19 
 
 designation of a well-known trade name of an article of 
 standard quality. 
 
 Classified Stores Balance Sheet {or Card) — the most 
 important single source of information in the stores 
 system. It is the central means by which most questions 
 regarding the status of material are answered and the 
 principal mechanism by which systematic material 
 routine is controlled. One such sheet for each item 
 shows the name of the item, the time necessary to renew 
 the supply, the symbol, the limits for replenishment, 
 often the location in the store room, with columns 
 for entering complete information as to material out- 
 standing on purchase orders, material issued and balance 
 still on hand in the store room, with the value of such 
 supply, with the addition if necessary of columns showing 
 amount of material apportioned or reserved for specific 
 uses, and amount still available for apportionment to 
 other uses. Through the balance sheets must flow a 
 constant stream of information whereby they may be 
 kept up to the minute in record of transaction, and from 
 the balance sheet originate all requests upon the purchas- 
 ing agent to renew the supply for classified stores when 
 a predetermined low point has been reached. 
 
 Worked Material Balance Sheet.— Similsir in function 
 and operation to the classified stores balance sheet. 
 
 Unclassified Stores Balance Sheet. — Similar in purpose 
 to the classified stores sheet, but much simpler in opera- 
 tion — since on it are recorded only transactions dealing 
 with articles ordered especially for some specific purpose, 
 ordinarily to be issued out for that purpose immediately 
 upon their receipt at the plant. 
 
 Replenishment Order. {Purchase Requisition). — 
 A requisition on the purchasing agent to buy a specific 
 article or service. Replenishment orders theoretically 
 may originate with any one in the employ of the concern; 
 practically, however, their use is usually limited to the 
 heads of departments and the balance clerk, the former 
 
20 FACTORY STORESKEEPING 
 
 for unclassified items only, the latter for either classified 
 or unclassified. In all cases replenishment orders should 
 pass to one of the higher authorities for approval. 
 
 Purchase Order. — The formal document made out and 
 signed by the purchasing agent and dispatched to the 
 vendor as notice to him that we desire to purchase. 
 When accepted, it becomes a contract. It must there- 
 fore be entirely complete in description and unambiguous 
 in language. It is ordinarily made out in several copies, 
 such as the balance clerk's copy, the receiving clerk's 
 copy, the purchasing agent's copy, the purchasing 
 agent's copy by serial order number, the auditor's copy, 
 the foremen's copy, the purchasing agent's tickler copy, 
 with others where necessary. 
 
 The purchasing agent's tickler copy of the purchase 
 order is a carbon copy of the purchase order used in the 
 purchasing agent's office as a means by which the prog- 
 ress of delivery of goods ordered may be followed. (See 
 Chap. VI.) 
 
 Freight Register. — Made out by traffic department or 
 other representatives of the firm who receive packages 
 from the railroad or other transportation agents. It 
 shows number of package, number of packages received, 
 from whom received, weight, transportation charges, 
 and information as to condition. It serves as a summary 
 of receipts, and for entering transportation charges 
 against particular items. 
 
 Notification of Receipt. — When packages are received 
 from the transportation agent, they are unpacked and 
 contents checked. For each such shipment a notifica- 
 tion of materials received is made out by the receiving 
 clerk as notice to everyone interested that materials 
 are on hand. This serves particularly to inform the 
 balance clerk of this fact so that appropriate entries 
 may be made as to receipt on the proper material balance 
 sheet, and is the means by which the vendors' invoice 
 is checked with goods actually received. 
 
 Material Inspection Report. — All incoming goods must 
 
THE MATERIAL CYCLE 21 
 
 be inspected for quality. Notice of decision in this 
 respect may be provided on the notification of receipt 
 form, or a separate form may be used for the purpose. 
 If so, it should accompany the notification of receipt 
 in its travel through the plant. 
 
 Returned Goods Report. — When any of our products 
 are returned by one of our customers a report must be 
 made out showing what has been received, supported by 
 an inspection showing what if anything is the matter 
 with the goods. It is then necessary for someone to 
 designate what disposition shall be made. The report 
 may then be returned to the receiving clerk as his author- 
 ity for disposition of the goods. This report serves an 
 important function in providing a systematic means of 
 disposing of articles which have a tendency to lie around 
 and clutter up valuable space. 
 
 Bin Tag. — A tag attached on or near each bin of 
 material. Whenever material is put into or taken out 
 of the bin, a notation to this effect is made on the proper 
 bin tag for the material, showing date, amount put in or 
 taken out, and account to which the transaction is to be 
 charged. The bin tag furnishes one important means by 
 which accuracy of perpetual inventory is maintained. 
 
 Overflow. Bin Tag. — In case the regular bin provided 
 for a certain material is insufficient to hold all of it, it 
 becomes necessary to store the remainder in an ''overflow 
 bin." In this case, it is necessary to have a cross refer- 
 ence between the two bins, so that the overflow bin tag 
 is placed on the regular bin with a notation on it as to 
 where the overflow bin may be found, and on the overflow 
 bin is placed the regular bin tag on which, as additions 
 to or withdrawals of stock from the bin are made, 
 proper entries are recorded. 
 
 Bin Label. — A label to be attached to each bin or other 
 container of material, showing just what this particular 
 bin holds as designated by whatever system of identifica- 
 tion is employed. 
 
22 FACTORY STORESKEEPING 
 
 Stores Issue. — The means by which stores are secured 
 from the store room. Issues are made out by the person 
 desiring goods, approved if necessary by the proper official, 
 sent to the storekeeper as his authority to disburse 
 goods, and must contain information showing exactly 
 what and how much is needed. When desired goods 
 are removed from the bin, entry is made on the bin tag, 
 goods are delivered by messenger or by special trans- 
 portation men to whomever is to receive them, his 
 signature secured for receipt, and the stores issue is then 
 passed to the balance clerk for entry, thence to the cost 
 department for accounting purposes. 
 
 Worked Material Issue. — This serves the same purpose 
 for worked materials as the stores issue does for stores. 
 
 Stores Credit. — This is the reverse of the stores issue 
 and is used where goods are returned to the store room 
 after being once issued. The function and general pro- 
 cedure is the same as with the stores issue. 
 
 Worked Material Credit. — A similar form for returning 
 unused worked material to stores. 
 
 In order to distinguish transactions readily, forms 
 used for worked materials should be printed with differ- 
 ent colored inks from those used for stores. Stores 
 forms are usually printed in black, and worked materials 
 in red ink. 
 
 Move Order. — A request on the transportation men to 
 move materials or other objects from one designated 
 place to another. It may be used to follow and record 
 the movement of material throughout the plant. 
 
 Identification Tag. — The tag attached to each article 
 or lot of articles in transit throughout the plant, showing 
 what the articles are and for whom they are intended. 
 It corresponds to an address on an envelope sent through 
 the mail. 
 
 Worked Material Received in Stores. — When raw mate- 
 rial is issued to the manufacturing department, it is done 
 upon the authority of a stores issue. After processing 
 
THE MATERIAL CYCLE 23 
 
 it may be returned to the store room for further safe- 
 guarding, when it must be accompanied by a worked 
 material received in stores, which in this case would 
 perform the same function as a notification of receipt. 
 It is information to the storekeeper, to the balance clerk 
 and to the cost clerk whereby their respective entries 
 may be made. 
 
 Stores Count. — The only absolutely certain way to 
 maintain perpetual inventory is by an actual physical 
 count of goods on hand. This form provides a means 
 for the storekeeper or his representative to report back 
 to the office exactly how many articles of various kinds 
 are now in the bins. 
 
 Prerequisites to Effective Material Control.^In the 
 previous chapter it has been indicated that the problem 
 of material resolves itself into that of having on hand at 
 exactly the right time just the right materials in just 
 the right quantity at the lowest cost consistent with 
 quality. This is the one underlying principle of material 
 control. Some of the more important measures to be 
 effected in putting this principle into operation were also 
 indicated. Without presuming to make the list com- 
 plete, these may be reviewed and supplemented, and 
 finally a set of working rules presented by which they 
 may be enforced in practice. The prerequisites to ade- 
 quate material handling are: 
 
 1. Definite requirements in materials of all kinds. 
 This presupposes standardization of quality and knowl- 
 edge of rate of use. 
 
 2. Knowledge of time necessary to renew. 
 
 3. Minimum cost consistent with quality. 
 
 4. Record of amounts ordered, on hand, apportioned 
 and available. 
 
 5. Count and inspection upon receipt. 
 
 6. Definite location. 
 
 7. Adequate storage and safeguarding. 
 
 8. Strict control of issue, inventory and accounting. 
 
24 FACTORY STORESKEEPING 
 
 9. Quick and efficient transportation. 
 
 10. Definite identification. 
 
 11. Classification and symbolization. 
 
 12. Centralization of authority and responsibility 
 of the whole material function proper and of each phase 
 of it. 
 
 13. Checks and balances in routine., enforced through 
 thorough supervision. 
 
 Rules for Material Regulation. — For the purpose of 
 energizing the principle, and of enforcing in practice 
 the requirements for material control, certain rules are 
 necessary. They are here listed seriatim without com- 
 ment or explanation since the various considerations 
 necessary to make them effective in operation will be 
 outlined in some detail in the following chapters: 
 
 1. Replenishment of material must be governed 
 strictly by requirements for production during a reason- 
 able future period. 
 
 2. There must be predetermined specifications for 
 each article purchased. 
 
 3. All replenishment orders must be in writing and 
 may be issued only by specified persons. 
 
 4. All replenishment orders must be approved before 
 they may be honored by the purchasing agent. 
 
 5. All purchase orders shall be in writing and must be 
 systematically followed up. 
 
 6. All persons concerned directly in the transaction 
 must receive copy of the purchase order. 
 
 7. There must be a careful count and inspection of 
 all goods received before they may be stored or released 
 for use. 
 
 8. Notice of receipt of materials must be given 
 immediately. 
 
 9. Responsibility for storage and issue must be 
 centralized. 
 
 10. Storage other than in the store room must be 
 reduced to a minimum. 
 
THE MATERIAL CYCLE 25 
 
 11. The store room must be accessible only to author- 
 ized persons. 
 
 12. Materials must be stored and indexed according 
 to a systematic scheme. 
 
 13. Movable, interchangeable storage units must be 
 used as far as possible. 
 
 14. Double-binning must be used whenever possible. 
 
 15. A perpetual inventory must be maintained on all 
 goods. 
 
 16. Balances of materials must be kept on bin tags and 
 on balance sheets with constant independent checks 
 between them. 
 
 17. No materials must be issued except for authorized 
 purposes upon written requests signed by specified 
 persons. 
 
 18. All materials — raw, worked, and factory supplies — 
 should be carefully classified and preferably mnemoni- 
 cally symbolized. 
 
 19. Organization for material control must be carefully 
 formulated and made effective by intelligent and persist- 
 ent supervision. 
 
CHAPTER III 
 
 PERSONNEL. ORGANIZATION. LOCATION OF 
 DEPARTMENTS 
 
 Summary: Duties and Qualifications of Material Personnel. — Relation 
 between Departments. Responsibility for Quality, Quantity, Time, 
 Cost — Administrative Organization Chart. — Physical Location of Offices. 
 
 The Members of the Personnel — Duties and Quali- 
 fications. — The personnel concerned with material hand- 
 ling must necessarily differ both in quantity and quality, 
 as well as in organization, with the particular factory 
 dealt with. It must never be forgotten that no material 
 system will run itself — real men are needed in addition 
 to best methods. In any strictly regulated material 
 procedure, however, whatever be the type of industry, 
 or character of personnel, the following duties must be 
 performed regardless of whether or not the exact titles 
 used below are employed or not, or of whether, as in 
 the smaller plants, several of these duties may be com- 
 bined in one person. The duties and qualifications here 
 summarized are confined to those relating to material 
 handling. 
 
 Engineering Department. — The function of ascertain- 
 ing the proper quality of goods, considering the uses to 
 which each article is to be put. The results are written 
 up in purchase specifications, which are repeated or 
 referred to on the balance sheet. The function of 
 inspecting and testing materials upon receipt to see 
 whether they conform with these specifications. 
 
 The person in charge of this work must in many cases 
 possess technical knowledge of a high order, he must 
 possess firmness, backed by sound judgment, and he 
 therefore requires intimate knowledge of production 
 
 / 26 
 
PERSONNEL 27 
 
 needs. He may often be assisted to good advantage by 
 various advisory committees appointed for the purpose. 
 
 Purchasing Agent. — Responsible for purchasing all 
 goods, as and when called for, at the lowest price 
 consistent with quality. Responsible for the follow-up 
 of all outstanding purchase orders, and for seeing that 
 delivery is made when promised. It is his duty to 
 report at once to the proper person any change in condi- 
 tions in the market or in transportation which may affect 
 the time or amount of an order of goods. 
 
 The purchasing agent should possess shrewdness and 
 tact, technical knowledge is an advantage, and he must 
 possess common sense and ability to hold his own in an 
 argument. 
 
 Balance of Stores (or Worked Materials) Clerk. — Called 
 also stock clerk, material clerk, material record clerk, 
 etc. The general function of a central clearing house, as 
 embodied in the balance sheets, for all information in 
 regard to material on hand, material outstanding on 
 order, material which has been apportioned or reserved 
 to manufacturing or other needs, and material which may 
 be further apportioned or which is considered available. 
 It is the duty of the balance clerk to keep the balance 
 sheet for each item up to date by posting any one of the 
 above transactions when it occurs, to see that perpetual 
 inventory is accurately maintained, to requisition 
 materials for stock as necessary. His function in general 
 is similar to that of the personal ledger bookkeeper in a 
 bank. 
 
 r/ie Qualifications of a Balance Clerk. — A whole lot of 
 common sense. Accuracy absolutely essential. Fore- 
 sight. Persistence, and constant watchfulness. 
 
 First-class people should be used for balance sheet 
 work. Bookkeeping is more or less mechanical, but 
 balance work requires an alert mind. Much money may 
 be lost or made at the balance sheets. The effectiveness 
 of the balance clerk's work, or indeed of much of the 
 
28 FACTORY STORESKEEPING 
 
 whole material routine, depends to a considerable extent 
 upon the proper functioning of the planning department, 
 upon which he is dependent for much of the information 
 which he must use. 
 
 Works Manager. — Besides his general supervisory 
 duties, it is specifically his duty as regards material 
 regulation to approve all replenishment orders before 
 they may be honored by the purchasing agent, or to dele- 
 gate this authority to other officials. 
 
 Traffic Manager. — An important duty of the traffic 
 manager is to keep those responsible for the ordering of 
 materials fully informed as to traffic conditions, so that 
 ample allowance may be made for embargoes or other 
 transportation upsets. Ordinarily this information 
 should be reported to the purchasing agent who should 
 then be held responsible for interpreting this and other 
 relevant information into an allowance affecting the 
 time or amount of ordering goods. It is the traffic 
 manager's duty also to receive all goods from the trans- 
 portation agent, to see that the packages correspond 
 with the descriptions on the way bills or other descrip- 
 tive documents, to certify the transportation charges 
 to the auditor, and in general to conduct all dealings with 
 transportation agencies. 
 
 Receiving Clerk. — Unpack all packages and check 
 contents against his copy of the purchase order; make 
 out a notification of receipt and send it immediately to 
 persons interested. This notification or an accompany- 
 ing form must contain information showing acceptance 
 or rejection by the engineering department or other 
 inspectors. 
 
 Transportation Men. — Move materials and apparatus 
 into and out of store room and to other designated 
 places as per directions issued by move orders. 
 
 Storekeeper. — Responsible for the receipt into stores, 
 arrangement and stowage, custody, and issue from 
 stores of all goods; systematic counts to insure accuracy 
 
PERSONNEL 29 
 
 of perpetual inventory; reduction of spoilage and 
 deterioration. 
 
 Auditor. — Checks invoice against notification of mate- 
 rial received and notifies purchasing agent to secure 
 adjustment for rejected materials. Pays for those goods 
 passing inspection, or if the policy of taking all cash dis- 
 counts immediately upon receipt of invoice be followed, 
 pays invoices upon presentation. 
 
 Cost Department. — Sees that proper charges and credits 
 are made and summarized for all material issued or 
 returned, and that these transactions are properly 
 taken up in the books of account. 
 
 Besides these functions, we have that of requesting 
 material for use, exercised by various persons throughout 
 the plant, and finally that of planning, which, while not 
 absolutely prerequisite to partial material control is yet 
 the center of production activities and is necessary for the 
 accurate forecasting of material needs. The existence of 
 an effective planning department is assumed throughout 
 these discussions. 
 
 Naturally, depending on the size and complexity of 
 the business, these functions may not be exercised by 
 persons as listed above. Fewer persons may be required, 
 or many more may be necessary in larger plants. For 
 instance, there may be one head material man, under 
 whom would come several storekeepers, several balance 
 clerks, special transportation men and so on. Similarly, 
 the receiving department may be very large in itself, 
 consisting of several men and several stenographers; 
 or on the other hand the storekeeper may in smaller 
 plants serve also as receiving clerk, although this practice 
 is open to considerable danger. Regardless of the 
 number of persons required, however, the functions to be 
 performed remain the same, and ordinarily it is a mistake 
 to split responsibility for any one function between 
 different persons; thus special considerations may require 
 the usually unsatisfactory resort to several detached 
 
30 FACTORY STORESKEEPING 
 
 store rooms each with its own storekeeper; these should 
 all report, however, to one man who heads the storage 
 function. 
 
 Relation between Departments. — It is obvious that 
 responsibility for the material routine rests with many 
 officials of the plant. It therefore becomes necessary 
 in individual cases to determine carefully just what the 
 relation of material regulation shall be to each of the 
 departments affected, as well as the relation among 
 the members of material personnel themselves, so that 
 there may be no overlapping of functions. Although no 
 general rule can be laid down which will suit all cases, 
 there are certain necessary relationships which should 
 not be lost sight of in the distribution of functions in 
 any case. On the one hand, a too great concentration 
 of authority and responsibility in certain hands may 
 lead to fraud or careless work due to a lack of independent 
 checks; on the other hand, by a too sparsely scattered 
 arrangement work may be so slowed up as to be insuffer- 
 able. The problem lies in choosing the middle ground 
 between these two extremes. An illogical arrangement 
 of functions, furthermore, may lead to complications 
 quite as distressing as a too broad or a too narrow sub- 
 division. Consider first the four major elements (quality, 
 quantity, time, and cost) into which material handling 
 has been divided: 
 
 Responsibility for Quality. — It would seem axiomatic 
 that responsibility for quality of all goods should be 
 centered in the engineering or other technical depart- 
 ment. To this department, in the final analysis, must 
 be referred all questions of quality of raw material 
 or workmanship which affect the serviceability of the 
 product which this department has designed. Since 
 this technical department specifies in the beginning the 
 quality of what is to enter into the finished product, it 
 would seem only right that in it be centered responsi- 
 bility for the inspection of incoming goods to determine 
 
PERSONNEL 31 
 
 whether they be suitable for use in the product. Where 
 a simple count and observation is all that is necessary, 
 as is usually the case with most factory supphes, author- 
 ity for inspection may be delegated by the engineering 
 department to the receiving clerk. ResponsibiUty, 
 nevertheless, for this particular work of the receiving 
 clerk must still be centered in the engineering depart- 
 ment. There is here no occasion for divided or ambigu- 
 ous responsibility in the receiving clerk's work, since 
 quality inspection is a function which may be clearly 
 set off from his other duties and for which he may 
 therefore report without confusion to whomever it seems 
 desirable. ''Divided responsibility" becomes dangerous 
 only when two persons are responsible for the same 
 function or duty. The necessity for central responsi- 
 bility in inspection work was illustrated in one plant 
 where it was perfectly well understood that all technical 
 inspection was to be done by the engineering department, 
 but where it had been tacitly assumed that this office 
 was not interested in or responsible for inspection of 
 materials which did not have to go to the testing labora- 
 tory, such material having been customarily passed by 
 the receiving clerk without specific directions for him to 
 do so. This lack of a clear definiteness of authority 
 caused the loss of many dollars and delayed completion 
 of work because unsuitable goods were passed for storage. 
 Responsibility for Quantity. — The determination of 
 what quantity of material to buy usually rests with the 
 production department, and in any event, must be deter- 
 mined through a consideration of production require- 
 ments. As indicated previously, and as will be discussed 
 in detail further on, there are two kinds of purchasing — 
 speculative and routine. Speculative purchasing, how- 
 ever, when it is done for a manufacturing establishment, 
 should be limited in amount and in time by dictates 
 of manufacturing needs. A safe rule to follow in this 
 respect is that when the purchasing agent is permitted 
 
32 FACTORY STORESKEEPING 
 
 to depart from reasonably immediate needs of production 
 in his purchases, the burden of proof must be distinctly 
 upon him. In routine purchasing the purchasing agent 
 is governed much more strictly by current replenish- 
 ment orders. 
 
 Responsibility for Time Element. — The time element 
 must be similarly divided between production and 
 purchasing — the one specifying when to renew for all 
 items as per material balance sheets (production require- 
 ments), the other to be responsible for the time necessary 
 to secure the article and for seeing that it be secured in 
 this time. 
 
 Responsibility for Cost rests of course with the pur- 
 chasing agent. In practically all cases which I have 
 encountered where losses were frequent due to poor 
 material management, the underlying cause was directly 
 traceable to an illogical or to an ambiguous delegation 
 of these four functions. Too often, indeed, they were 
 all thrown upon the shoulders of one man: the purchas- 
 ing agent. 
 
 Administrative Organization. — As regards the adminis- 
 trative subdivision between the various members of 
 material personnel, there exists considerable difference 
 of opinion. Accepting the concept that materials in 
 the sense in which we use the word exist solely for the 
 benefit of production, it would be logical that the balance 
 of stores (or worked material) clerkj the receiving 
 clerk, and the storekeeper should all be under Pro- 
 duction. This arrangement is not at all universal, 
 however, probably the most common departure being 
 that in which the storekeeper is under the purchasing 
 agent. This has the disadvantages referred to pre- 
 viously of placing a department — the store room — 
 which vitally affects production, under a man whose 
 primary interest lies elsewhere, an arrangement which 
 at times has led to serious consequences. 
 
 The ideal arrangement both for purposes of safeguards 
 
ORGANIZATION 
 
 33 
 
 and for incentive to quick and accurate action would 
 seem to be to have the storekeeper directly under the 
 works manager and the balance clerk directly under the 
 production superintendent or the head of the planning 
 department. Here again practice differs, for instance 
 the balance clerk frequently reports to the head of the 
 cost department. Since the average cost accountant 
 does not ordinarily appreciate the vital relation between 
 manufacturing efficiency and material control, such an 
 arrangement again almost always works out disadvan- 
 tageously. With the arrangement suggested, and partic- 
 ularly in the smaller plants with the receiving clerk 
 under the traffic department, which may in most 
 instances report to the works manager, informed and 
 energetic action as well as ample safeguards against 
 collusion and fraud are provided. Clerical errors, 
 furthermore, are much more readily caught where one 
 department is working against another in this respect. 
 It must be emphasized, however, that these relations 
 must vary with cases; that they are presented only as 
 an arrangement which has been put in effect with excellent 
 results in several different types of plants and which 
 probably furnishes maximum checks with minimum labor 
 and routine. A skeleton organization chart of this 
 arrangement of the material personnel would therefore 
 be as follows : 
 
 GENERAL MANAGER 
 
 Chief Engineer 
 
 RawMoiherlcil Inspecfoi 
 
 Production Supt 
 
 Boiloince Clerk 
 
 Works Moinciger 
 
 Speculoitive 
 Purcnasing Agent. 
 
 Sales Manager 
 
 Routine Purchasing 
 Agent 
 
 Traffic Manager 
 
 Storekeeper 
 
 Receivinqi | | PcKckincil | Shipping] | Raw | | Workeoll 
 
 Fig. 1. — Typical organization of personnel concerned with material handling. 
 3 
 
34 FACTORY STORESKEEPING 
 
 Physical Location of Offices. — The organization chart, 
 Fig. 1, shows one arrangement satisfactory under a wide 
 variety of conditions of the administrative relations 
 between persons concerned with material routine, yet 
 even with a satisfactory organization it is always neces- 
 sary to consider in addition the physical location of 
 offices so that as a whole there may be a convenient 
 working relation between them. The layout of the room 
 room proper is dealt with in Chap. VIII, but since 
 many cases of faulty work-relationship have come to 
 light due simply to an improper physical location of 
 the persons themselves, it may be useful to indicate 
 some of the considerations which should govern the 
 placing of these various functions. 
 
 In many cases the location for any specific department 
 will be self-evident ; for instance in the case of the traffic 
 department or at least that part of it which receives and 
 ships packages, obviously it should be placed immedi- 
 ately contingent to the railroad tracks and trucking 
 platforms. This is both for the incoming and outgoing 
 shipments, and necessarily the packing and shipping 
 department should be immediately adjacent to this office, 
 whether or not these departments be under one head. 
 
 For convenience in the physical handling of packages, 
 as well as for the transaction of the necessary paper 
 routine, the receiving department should also be immedi- 
 ately adjacent to the traffic department. Here goods 
 are received in bulk from the traffic, unpacked, checked 
 with the copy of the purchase order and sent to the store 
 room. They should pass a minimum distance from one 
 to the other. 
 
 The store room, therefore, should be within reasonable 
 truck or elevator distance of the receiving department. 
 This is particularly true of a central store room, and of 
 course the location of detached departmental or subsidi- 
 ary store rooms must be carefully chosen with regard 
 to delivery of incoming and outgoing goods. 
 
LOCATION OF DEPARTMENTS 35 
 
 Many cases have been encountered of faulty operation 
 of the balance of stores function due simply to the loca- 
 tion of the balance sheets relative to the other depart- 
 ments with which the balance clerks deal. I con- 
 sidered it absolutely fundamental for effectiveness that 
 the administrative authority for balance sheets be 
 centered in a production official. Whoever be intrusted 
 with the supervision, however, there is but one logical 
 location for the material balance sheets themselves : — 
 immediately next to the planning manager's elbow or 
 whoever the official may be whose duty it is to look 
 ahead and plan production and material needs. He is 
 the one who has constantly to put future requirements 
 for production against the amount of material on hand, 
 on order, and assigned, and his work is very much 
 handicapped unless balance sheets are instantly accessible. 
 This would seem almost axiomatic, and yet numerous 
 cases have been encountered in which there was a great 
 deal of lost motion on the part of the production manager 
 in sending or phoning to another department for informa- 
 tion about material — information which should have 
 been right under his thumb. The balance sheets, 
 moreover, should not be too far from the store 
 room, even where adequate automatic carriers are pro- 
 vided. There is much work in connection with stores 
 handling and checking which cannot be done either by 
 the regular factory mail system, by telephone, or by 
 pneumatic tube service, but must actually be done in 
 consultation between the storekeeper and the balance 
 clerk. These and similar considerations point to the 
 conclusion that the planning or production office should 
 be situated just as close to the manufacturing depart- 
 ments and as centrally located relative to them as is pos- 
 sible. Follow-up will thereby be made not only easier 
 but also much surer and more systematic. 
 
 For similar reasons the cost department (as distinct 
 from the general accounting department) should be not 
 
36 FACTORY STORESKEEPING 
 
 only under the supervision of the works manager or the 
 production superintendent but should be physically 
 located close to the manufacturing department, and 
 therefore close to the balance sheets. No matter how 
 smooth a working system we may have, there are always 
 innumerable questions which arise in regard to the 
 correctness of time or job tickets, stores or worked 
 material issues and credits, inspection slips and numer- 
 ous other sources of information which have to be 
 adjusted in consultation between the storekeeper, the 
 balance clerk, the cost clerk, and the foreman. Here 
 again, any sort of communicating service will serve only 
 for a portion of the adjustments — ordinarily they must 
 be made in person. When one has but to step out of his 
 door as it were, to adjust some small matter, he is very 
 much more likely to do so, and certainly can be much more 
 readily held to account for not doing so, than would be 
 the case where this adjustment necessitated a long trip. 
 
 The general accounting offices, on the other hand, 
 may be located wherever convenient, and it is somewhat 
 customary to find them in a large city many miles 
 distant from the factory itself. There is no direct 
 connection between general accounting and the shop, and 
 most of the means by which costs are tied into the 
 general accounts through reports of the cost office to 
 the general accounting office and back again, should be 
 worked up in the form of exhibits for the guidance of 
 administrative officers anyhow, so that the general 
 accounting offices may be located wherever desirable 
 without great inconvenience. 
 
 The location of the purchasing agent's office similarly 
 may be wherever desired, although ordinarily this 
 should be much closer to the works than is the case with 
 the general accounting office, because of the constant 
 necessity of consultation and the constant passage of 
 papers between the purchasing agent and numerous 
 other officials of the plant. 
 
LOCATION OF DEPARTMENTS 37 
 
 It will be understood that the above considerations 
 apply to the plant of medium size. With increasing 
 size, the problem of securing a balanced arrangement 
 between various departments becomes increasingly diffi- 
 cult until in a plant of very large size decentralization 
 becomes desirable. We then get back in considering 
 individual units to the problems of the moderate sized 
 plant just discussed. In every case, however, adminis- 
 trative relationships and the physical layout must be 
 arranged so as to secure the greatest serviceability 
 between related departments. 
 
CHAPTER IV 
 THE BASES OF MATERIAL REPLENISHMENT 
 
 Summary: The Market as a Basis. — Production Requirements as a 
 Basis. — Regulation through Amounts on Hand. — Regulation through 
 Amounts Available. Requirements of Balance Sheet. Installation of 
 Balance Sheet; Determining Limits. Replenishment Orders. — Regulation 
 through Schedule. 
 
 There are two bases, other than the whims of the 
 purchasing agent, upon which the routine for replenishing 
 materials rests: I. the market; II. production requirements. 
 
 I. The Market. — For those manufacturers who deem 
 it wise to govern the purchase of materials by the 
 market, little discussion will be given, since such opera- 
 tions fall within the realm of merchandising with which I 
 am not concerned. As indicated previously, I am con- 
 vinced from experience that the business of buying 
 and selling materials in the raw form with a view to 
 profit is no part of the manufacturer's business and 
 should be engaged in only after very thorough considera- 
 tion of each transaction. I do not refer in this to those 
 industries, such as the textile, where speculative or 
 anticipatory purchasing is inherent in the business, but 
 only to speculative buying as an end in itself and for 
 its own sake. It is, of course, true that some manu- 
 facturers have made large amounts of money on the 
 side, as it were, by speculative purchasing and re-sale 
 on a rising market particularly during the continuous 
 rise in prices following the war. It is equally true, 
 however, that fortunes have been similarly lost, and 
 conditions during the war are no criterion for the govern- 
 ment of current production. 
 
 II. Production Requirements. — For the replenish- 
 ment of supplies according to production needs, certain 
 
 38 
 
MATERIAL REPLENISHMENT 39 
 
 definite and convenient working rules may be laid down 
 among which, incidentally, is that concerning the state 
 of the market. In this case, however, so far from the 
 market's being a governing consideration, it is but one 
 of a number of factors which must be taken into account. 
 As will be pointed out in the next topic, there are several 
 means by which replenishment may be controlled for the 
 benefit of production. In all, however, the aim is to 
 have on hand just sufficient materials of the right kind 
 actually needed at a particular time for a particular 
 purpose, no more and no less. Considering the cost 
 of the articles themselves, and the cost of the work 
 involved in handling them, there should, in other words, 
 be a constant flow of supplies to the point of use, with a 
 minimum but always sufficient reservoir as a safeguard. 
 To accomplish this purpose storage is of course usually 
 necessary. 
 
 There are three broad kinds of production which give 
 rise to three corresponding types of material replenish- 
 ment problem. The first arises in plants which run 
 along continuously on an even keel for long periods at a 
 predetermined rate of production. In this case, as 
 illustrated by the sugar mill for instance, material 
 needs are known and the rate of use remains constant 
 throughout the run. The second arises in plants which 
 move up and down in production with actual orders / 
 received from time to time. In this case, under which 
 the great majority of our plants fall, as illustrated by the 
 average machine shop or other plant which manufactures 
 partly to stock and partly to order, material needs 
 cannot be known accurately before the order is received, 
 but on the other hand, delivery cannot always await the 
 purchase of parts specially for each order. The problem 
 then is to keep inventory as low as is consistent with 
 quick delivery. The third kind of production arises 
 in plants which are not so fortunate as the first nor so 
 unfortunate as the second, but which may set definite 
 
40 FACTORY STORESKEEPING 
 
 schedules for production of specific lines during given 
 periods, this schedule being of course subject to change 
 but resulting in a revised schedule as definite as the 
 first. In this case, illustrated by the shoe factory or the 
 specialty contract shop, material needs may be foreseen 
 with definiteness equal to the schedule. 
 
 Each of the problems in material replenishment 
 imposes its own particular mechanism, for it would be 
 poor business to go to the detail in records and routine 
 necessary in the second case, when in reality our problem 
 deals only with the first and simplest case. Resulting 
 from these three kinds of problems, we get three distinct 
 plans by which material replenishment may be governed : 
 
 Plan A. — The ordering of materials governed by the 
 amount on hand in the store bins. This ordinarily 
 presupposes a constant rate of use with the determination 
 of a '' minimum" amount, which when reached in the 
 hin, dictates the issuance of a replenishment order, and 
 which is supposed to serve all needs up until the new order 
 is recieved. 
 
 Plan B. — The ordering of materials governed by a 
 book balance available obtained through keeping a 
 minimum reservoir of materials on hand and looking 
 ahead and apportioning on the books materials to known 
 production or other needs. This provides a safeguard 
 where the rate of use fluctuates, since replenishment 
 orders are governed by a so-called ''low limit" which is 
 set and used so as to dictate the issuance of a replenish- 
 ment order according to actual future needs, whether 
 these be more or less than past averages. 
 
 Plan C. — The ordering of material governed by a 
 schedule of anticipated production worked out for a 
 period as far in advance as possible. This presupposes 
 a known production during a given period, such as that 
 of the shoe factory or the plant manufacturing entirely 
 to stock. 
 
 The plant is fortunate which can work under Plan A 
 
MATERIAL REPLENISHMENT 41 
 
 or Plan C, since in these cases material requirements are 
 definite, and lend themselves to a comparatively simple 
 routine. There is nothing more fatal, however, than to 
 fool ourselves into believing that we may operate under 
 Plan A or C when as a matter of fact our requirements 
 do not lend themselves to quite such automatic regula- 
 tion. This mistake is particularly common as regards 
 Plan A J and to the writer's knowledge many serious 
 losses have occurred through reliance on this simple 
 system when a more complicated one was needed. This 
 point, as well as a consideration of the other plans, will 
 be brought out in the following topics. It frequently 
 happens of course that more than one of these plans 
 may be needed in any one factory — raw materials may 
 require Plan B, while stationary and supphes can be 
 handled through Plan A. 
 
 Plan A . Governing Replenishment by Amount on Hand. — 
 A case occurred in one factory where after considerable 
 statistical study it was found that the average rate of 
 use during the past year for a certain item was 300 pieces 
 per month. It took on the average 1 month to renew 
 the supply. Adding 33 per cent for safety, they obtained 
 a ''minimum" of 400 below which the supply in the bin 
 should not fall without the issuance of a replenishment 
 order for an amount necessary to bring balance on hand 
 up to a ''maximum." This, the manager thought, was 
 being extremely conservative, as indeed it was for the 
 ninety-nine cases. The one-hundredth case caused a 
 serious loss, however, when requirements rose during a 
 given month to 450, when only 400 had been ordered 
 upon reaching the minimum. 
 
 The same sort of thing occurred in a neighboring plant 
 when a succession of orders was received calling for the 
 same material. Upon receipt of each order, an inspec- 
 tion of the bin showed that sufficient materials were on 
 hand to supply it. This information was obtained at 
 different times by different persons, and no record 
 
42 FACTORY STORESKEEPING 
 
 of each of their needs was made, since none was provided 
 for. As a matter of fact, there was sufficient material 
 on hand for only the first three orders, the remaining 
 customers being required to wait until the shortage was 
 made good. 
 
 These occurrences do not prove that this is not a per- 
 fectly good plan of re-ordering material provided condi- 
 tions are such as to make its use effective. It does 
 indicate, however, that it is effective only under condi- 
 tions where the rate of use is reasonably constant. For 
 instance, this method is satisfactory in the case of most 
 factory supplies. Where the rate of use is not constant, 
 this method can be made effective only through the 
 expensive alternatives of making the minimum limit 
 high enough to cover all exceptional demands when for 
 10 months out of the year a much less supply on hand 
 might be adequate, or through eternal vigilance in the 
 revision of minimum limits — a vigilance impossible of 
 fulfilment where any considerable variety is stocked 
 or where changes in rate of use are frequent. On the 
 other hand, if the minimum is based on the 10 months' 
 average, it is almost impossible to guard against such 
 shortages. 
 
 In addition, in considering the inappropriateness of 
 Plan A where rate of use is not constant, it must be 
 remembered that this '^minimum" on the balance sheet 
 or a red rag or other marking of the minimum in the 
 bin which dictates issuance of replenishment order, 
 results in ordering a new supply of the particular item 
 whether it is actually needed in the future or not. 
 Plan B, on the other hand, reorders only according to 
 actual seen or foreseen needs. 
 
 Plan B. Governing Supply by Amount Available. — 
 Where the rate of use fluctuates or where future needs 
 cannot be foretold for a considerable period. Plan B, or 
 that of re-ordering materials by the book balance avail- 
 able after all known needs are provided for instead of the 
 
MATERIAL REPLENISHMENT 43 
 
 actual amount in the bin, should be used. This is by far 
 the most complicated method and yet nine times out of 
 ten it is the method needed in the average factory for all 
 major supplies, and is the simplest one which can ade- 
 quately safeguard supply and yet keep the reserves to a 
 minimum. The only other sure method in this case, 
 which is a cumbersome and expensive one, is a physical 
 apportionment — a physical setting aside of material as 
 needs become known. The detailed operation of such a 
 balance sheet will be given in the next chapter, only the 
 general basis of its operation being outlined here. 
 
 Such operation implies, of course, that we shall have an 
 accurate, up-to-date record or balance sheet for each 
 item of material we carry. The balance sheet under this 
 plan is the governor and safety-valve combined for the 
 whole material routine. Out of experience, the follow- 
 ing list of factors for such a balance sheet has grown : 
 
 Each balance sheet for each item must show: 
 
 1. Material outstanding on purchase orders. 
 
 2. Material now on hand in the store room. 
 
 3. Material apportioned, reserved, or scheduled to 
 
 manufacturing orders now in our hands but not 
 yet in process, or for other purposes. 
 
 4. Material available for apportionment to future needs. 
 
 5. A current measurement of successive requirements 
 
 against amounts still available. 
 
 6. A predetermined but flexible Low Limit below which 
 
 the amount available for apportionment shall not 
 fall before a replenishment order is issued. This 
 figure is based on: 
 
 (a) Probable rate of use during time necessary 
 to renew. 
 
 (6) Time necessary to renew. 
 
 (c) Allowance for safety, considering the impor- 
 
 tance of the article to the business. 
 
 (d) How far the planning department may 
 
 work ahead of the shop. 
 
44 FACTORY STORESKEEPING 
 
 7. A predetermined but flexible Amount to Order when 
 the low limit is reached. This figure is based on : 
 
 (a) The low limit as above. Making the 
 amount to order equal to the low limit 
 would require another replenishment 
 order immediately it is received. This 
 would ordinarily cause unnecessary addi- 
 tional labor, so that the following tend to 
 raise the amount. 
 
 (6) How often it is desirable to issue orders for 
 it. 
 
 (c) The present price. 
 
 (d) The probable future price movement. 
 
 (e) Economical unit of purchase. 
 
 (/) The space available for storage, or the cost 
 
 of rented space. 
 ^g) The money available or expedient for the 
 
 investment. 
 {h) The probable depreciation or obsolescence 
 
 of the item. 
 (i) Necessity of curing or aging different 
 materials. 
 Without becoming involved in detail at this point, it 
 may be explained that the basis upon which the opera- 
 tion of such a balance sheet is built up, is that through 
 a proper setting of the low limit, together with the 
 advanced apportionment of material to orders, the 
 quantity called for on a replenishment order may be 
 considered as being available for apportionment (not 
 issue) the moment the replenishment order is written. 
 All amounts outstanding on purchase orders are there- 
 fore considered thus available. Materials on hand in 
 the store room also form a part of this available 
 reservoir. 
 
 For the operation of the sheet, we therefore get the 
 amount on order, add to it the amount on hand in the 
 store room and subtract from this sum the requirements 
 
MATERIAL REPLENISHMENT 45 
 
 of manufacturing or other orders in our hands. The 
 difference then becomes the amount available for appor- 
 tionment to future orders. 
 
 This apportionment is exactly similar to reserving 
 or setting aside in advance from next month's salary 
 check a sufficient amount of money to meet an insurance 
 bill which we know will be due. The balance of the 
 check plus what we may already have unassigned at 
 the time, will then be available for other uses. 
 
 By setting aside on the sheet or apportioning the needs 
 of an order in advance, and obtaining an amount avail- 
 able which includes both the amount in the store room 
 and the amount on order, we are thus not only working 
 ahead of actual issue requirements during a period which 
 theoretically is covered as regards issue in the setting of 
 the low limit, but also by working definitely to known 
 needs we are keeping the amount of inventory to the 
 lowest possible point consistent with safety. The word 
 ''theoretically" is used in the last sentence, as even under 
 such a method, it is of course not impossible to have a 
 shortage of material, and the further w6 can look ahead 
 the less danger there is of shortage. If a strict follow-up 
 as regards traffic conditions and sources of supplj'^ and 
 other related items is maintained, however, shortages 
 under such a method of operation become exceedingly 
 rare, and with a proper tickler system for following a 
 purchase order, as will be explained, supplemented by 
 frequent inventory checks and current measurement of 
 amounts on hand (col. 2) against amounts apportioned 
 (col. 3) such shortages may always be known several 
 days in advance of the time materials will actually be 
 needed. 
 
 Steps in Initiation of Plan B. — How is such a control 
 set up and maintained, and how are replenishments 
 governed by it? The steps are as follows: 
 
 1. The engineering department must furnish specifi- 
 cations for all articles to be purchased. Responsibility 
 
46 
 
 FACTORY STORESKEEPING 
 
MATERIAL REPLENISHMENT 47 
 
 for quality, in general, should be centered in the engi- 
 neering or other technical department; every item and 
 every requirement should be systematically scrutinized 
 and, after consultation with interested persons, useless 
 varieties discarded. 
 
 2. After standardizing what is to be carried in stock 
 the second step is to secure all information about each 
 article, including the consumption in the past, the prob- 
 able future consumption, the kind and size of containers, 
 the most economical amount to buy, and similar 
 information. 
 
 3. From the purchasing agent and the traffic depart- 
 ment working in conjunction secure in writing the time 
 necessary to renew the supply from the receipt of the 
 replenishment order in the purchasing department to the 
 delivery of the goods at the factory door, including 
 necessary time for securing bids, settling the conditions 
 of sale, drawing up the contract, necessary purchasing 
 office clerical work, and so on. 
 
 4. To this time add the necessary time for the clerical 
 work in the production department, between the knowl- 
 edge of what is wanted and the arrival of the replenish- 
 ment order in the purchasing department; also the time 
 for receiving, unpacking, inspecting, and delivering to 
 stores or to the shop upon receipt of shipment. 
 
 5. Determine percentage for safety. This per cent 
 will naturally vary with conditions of the market and 
 of transportation, and also with the accuracy of estimates 
 on the above items. Ordinarily, from 15 to 25 per cent 
 margin on consumption during time to renew is ample, 
 although during times of emergency these figures may have 
 to be doubled or even quadrupled, and in any event 
 constant vigilance and much judgment is necessary in 
 regulating these allowances. 
 
 The form. Fig. 2, has been found extremely useful in 
 listing and classifying these various sorts of information. 
 
 6. Set low limit. For instance: 
 
48 FACTORY STORESKEEPING 
 
 Suppose the total time necessary to 
 
 renew supply be 3 weeks 
 
 And probable consumption per week 300 units 
 
 Then consumption during time to re- 
 new: 300 X 3 900 units 
 
 Allowance for safety, say 10 per cent. 90 units 
 
 Low Limit 990 or 1,000 units 
 
 If we are planning say 9 weeks ahead of the shop (3 X 
 time to renew) we are approaching conditions applicable to 
 Plan C described below, but if we are planning from hand 
 to mouth, the low limit in this case would be accordingly 
 raised. 
 
 7. Set amount to order: 
 
 Using the illustration in the last topic, it will require 
 approximately 1,000 units (allowing 10 per cent for 
 contingencies) to serve production during the time the 
 purchase order is outstanding — 3 weeks. Thus if we 
 had 1,000 units in the bin when the purchase order is 
 issued, these would normally be exhausted just after 
 the new shipment were received. Had we ordered only 
 1,000, or only a 3 weeks' supply, since it takes 3 weeks 
 to renew, we should immediately upon receipt be forced 
 to issue a new purchase order. Following this procedure 
 it would mean that a purchase order would have to be 
 issued approximately every 3 weeks. Cut the amount 
 in half or to 500 units and a purchase order would corres- 
 pondingly have to be issued every 10 days, and so on. 
 
 The amount to order, therefore, affects directly the 
 frequency of issue of purchase orders, or looking at it 
 the other way, the frequency with which we wish to 
 issue purchase orders is of course one of the factors to be 
 considered in setting amounts to order. On page 44 
 are listed various other considerations in determining 
 how much we should buy when we do buy. For instance, 
 trade custom may make advantageous or even necessary 
 the purchase of the article in 10 gross lots, so that in 
 
MATERIAL REPLENISHMENT 
 
 49 
 
 this case instead of 1,000 the ''amount to order" would 
 be 1,440 and we would purchase this quantity at one time. 
 Considerations regarding any one of these factors may 
 similarly affect the answer and nothing would be gained 
 by following the method further here since in each case 
 it is a matter to be determined in consultation between 
 those who may be entitled to a judgment in this matter. 
 8. Enter on the balance sheet all information called 
 for as explained in detail in the next chapter. 
 
 REQUISITION 
 
 LEWIS MANDFACTDKING CO. 
 DEPARTMENT 
 
 TO THE PUECHASIXG AGEKT 
 
 No 1597 
 
 TVATF 101 
 
 PLEASE OUDER THE FOLLOWING MATERIAL- 
 
 
 SVMBOL 
 
 DESCRIPTION 
 
 CHARGE WANTED^- P.O.Nu. 
 
 OKDEK FROM 
 
 
 
 
 
 
 
 
 
 
 
 
 
 i ' ' 
 
 
 
 1 
 
 
 
 
 SIGNED 
 PER 
 
 
 DATE ORDERE 
 
 D 110. Day m] 
 
 
 PURCHASE OR 
 WRITTEN C 
 
 DER 
 
 
 
 PUBCnASlNO AGENT 
 
 Fig. 3. 
 
 -Replenishment order, for requesting purchasing agent to buy 
 materials. 
 
 We are now prepared to establish accurate regulation 
 of replenishment. It should be unnecessary to state 
 that these measures in themselves will not give control. 
 Accurate control of material or in fact of any work in a 
 factory depends upon many features and upon the 
 cooperation of many persons. In many cases, for 
 instance, the first thing to do is to block out a more 
 definite or logical division of authority and responsi- 
 bility, or to lay out and rearrange the whole physical 
 store room or other departments (see Chap. Ill and 
 VIII). New forms may have to be drawn up and new 
 procedure established. All of such auxiliary measures 
 are here taken for granted because of the unfortunate 
 
50 FACTORY STORESKEEPING 
 
 necessity of discussing one thing at a time. To continue 
 the story at this point, it is necessary only to recall that 
 when the low limit is reached, a replenishment order, 
 Fig. 3, for the predetermined amount is sent to the pur- 
 chasing agent via the proper official for approval. 
 This replenishment order must provide for: 
 
 1. The serial number. This is for purpose of identifi- 
 cation of the replenishment order itself, and for entry on 
 the purchase order and other records of the transaction. 
 
 2. The point of origin of the order, or the department 
 or person who makes the request to purchase. 
 
 3. The date of issue of the replenishment order. 
 
 4. For what use the articles are desired, whether to 
 replenish stock or for some other specific purpose. 
 
 5. The symbol or other short designation of article 
 required. 
 
 6. The quantity, size, weight, length or other dimen- 
 sions as per the balance sheet, amount to order, and the 
 specifications. 
 
 7. Concise but accurate description with reference 
 to the specifications. 
 
 8. When wanted; this is particularly important. 
 The follow-up routine of the purchasing agent is based 
 on this date, and it is of course unreasonable to expect 
 him to give discriminating attention to orders unless he 
 be informed of relative needs. As explained previously, 
 this time must allow the purchasing agent ample oppor- 
 tunity for all of the operations which have to be performed 
 in this office. 
 
 9. A place for entering the purchase order number 
 when this is issued. 
 
 10. Preferably a space for a suggestion on the part of 
 the maker of the replenishment order as to where the 
 article may best be purchased. It must be understood, 
 of course, that the purchasing agent is bound in no man- 
 ner whatever to follow this advice, since otherwise it 
 would not only be usurping the function of the purchasing 
 
MATERIAL REPLENISHMENT 51 
 
 agent but would also open the way for undue discrimina- 
 tion or pave the way for collusion between vendors and 
 various persons within the plant. Its use is usually 
 confined to special or unclassified articles which may 
 have to be made to order or which may be manufactured 
 and obtainable from only one firm — facts which the 
 requisitioner is often in a position to furnish the purchas- 
 ing office. 
 
 11. The signature of the requisitioner. The purchas- 
 ing agent should have a list of all persons (ordinarily 
 only heads of departments) within the plant authorized 
 to sign replenishment orders. No replenishment order 
 should be honored even when approved by a higher 
 authority, unless so signed, because the approving office 
 should not be burdened with who requests, but only with 
 what and how much is requested. 
 
 12. The approval of the works manager, production 
 manager, or other official entrusted with this duty. 
 This may seem a trivial matter to throw upon the 
 shoulders of the works manager, and of course, this 
 particular official does not ordinarily assume this duty in 
 the larger plants, where it would be shifted to the produc- 
 tion superintendent, or to the head material man. No 
 procedure will work of itself, however; constant super- 
 vision is necessary to insure effective results and this 
 requirement definitely places in one man, whomever he 
 may be, the responsibility for exercising supervision and 
 using his judgment in regard to revision of the various 
 factors affecting low limits and amounts to order enumer- 
 ated above. 
 
 In the case of speculative purchasing the decision 
 should ordinarily rest with no single man, but should 
 be reached in conference by the sales, financial, and 
 production officials. 
 
 Any change in traffic or other conditions affecting 
 the time and the amount in which an article should be 
 ordered must be reported to the man held responsible. 
 
52 FACTORY STORESKEEPING 
 
 He is also responsible for stopping replenishment orders 
 inconsistent with probable future production require- 
 ments, for the utilization of substitute or slow-moving 
 articles where possible, and in general for keeping low 
 limit and order points revised up to date in accordance 
 with production requirements. Some one official, 
 furthermore, should be held definitely responsible, and 
 of course given commensurate authority, for the upkeep 
 of the whole material mechanism and these details may 
 well be combined in one man. He must necessarily, 
 therefore, be in close touch with production. 
 
 The replenishment order must be made at least in 
 duplicate, the original going to the purchasing agent, 
 the duplicate to be retained by the requisitioner; other 
 copies may be made if required. Any number of dis- 
 similar items may be entered on the same replenishment 
 order without confusion or additional work in the pur- 
 chasing office. The only requirement here is to see 
 that forms be provided with the necessary cross-refer- 
 ence spaces between replenishment and purchasing 
 orders and that these cross references be systematically 
 made. 
 
 Plan C. Schedule. — Little need be said in regard to this 
 method of controlling replenishment, for if future require- 
 ments for production may be definitely determined, 
 material procedure can be systematically regulated 
 accordingly. The whole supply may be contracted for 
 at once and successive shipments thereafter regulated 
 through Plans A or 5 on the balance sheets similar to 
 Figs. 4 or 5, or the balance sheet described under Plan 
 C in Chap. V and illustrated in connection with Fig. 6, 
 page 65, may be used in order to govern replenishment 
 orders. Another alternative is to keep "Schedule" 
 (Plan C, Fig. 6, page 65) in the front office ordering from 
 manufacturing orders released from there as per this 
 schedule. 
 
CHAPTER V 
 THE MATERIAL BALANCE SHEETS 
 
 Summary : Choice of Balance Sheet. — Sheet for Regulation through Amounts 
 on Hand. — Sheet for Regulation through Amounts Available. Information 
 Necessary. Procedure to Provide this Information. — Sheet for Regulation 
 through Schedule. — Worked Material Sheet. — Unclassified Stores Sheet. — 
 Balance Record Files. 
 
 Choice of Balance Sheet. — The material balance 
 records, as has been indicated, form the heart of the 
 supply service of the factory through which material 
 control is secured, but they should be more than this, 
 for they should serve both production and accounting, if 
 properly set up and regulated, in furnishing quick and 
 accurate information as to the material status at any 
 time — information of increasing value and reference as 
 the business expands. 
 
 In order that production may be adequately served, it 
 follows that the balance sheet must be designed and 
 used according to the need of the particular type of 
 production which it is to aid. It would be just as much 
 folly to accept a balance sheet, wished upon you by an 
 accountant simply because it may fit into his pet 
 accounting scheme, regardless of whether or not it was 
 suitable for the needs of the production manager, as it 
 would be to copy your neighbor's shop committee system 
 or his forms and production plan. On the other hand, 
 elaborate forms and systems have been painfully worked 
 up to meet so-called special conditions when as a matter 
 of fact there was nothing very special about them and 
 when tested, simpler means, modified perhaps with an 
 appreciation of underlying principles and of the purposes 
 to be served, would have been much more satisfactory 
 in every way. 
 
 53 
 
54 FACTORY STORESKEEPING 
 
 Three general types of balance of stores sheets became 
 necessary to meet the three types of production calling 
 for a control of replenishment under one of the Plans A,B, 
 or C, outlined in the preceding chapter. Each of these 
 three general types is found in various forms, embodying 
 different arrangements of columns designed to provide 
 various sorts of information. No attempt will be made to 
 present or discuss all of the possible or existing arrange- 
 ments since the variety is infinite and the particular 
 typography is a matter largely of choice and of compara- 
 tively little moment; only the considerations necessary 
 to the effective use of each will be discussed, illustrated 
 by one example of each type of sheet. 
 
 Balance Sheet for Plan A. — Replenishment Governed 
 hy Amount on Hand in the Store Room. — This is the sim- 
 plest form of sheet in set-up and in operation. It need 
 provide only two main columns: (1) For data relating to 
 material on order, providing sub-columns for date and 
 number of requisition, number of purchase order, amount 
 received and amount outstanding, and (2) for amount 
 on hand in the store room, with sub-columns showing 
 amounts issued, on what date and to what order issues 
 are made, total value and value per unit. If the opera- 
 tion of the balance sheet presented and described under 
 Plan B be thoroughly understood, the operation of this 
 simpler sheet illustrated by Fig, 4 will need no explana- 
 tion; no further description will therefore be given. 
 
 It must be emphasized again that such a method of 
 regulating material has limited applicability. It is 
 entirely safe only when the average rate of use employed 
 in ascertaining the minimum stock to be kept on hand is 
 the actual rate of use throughout the year; in other words, 
 where there is an entirely uniform rate or flow of materi- 
 als. Such a balance sheet must not be expected to prove 
 satisfactory under conditions for which it is not fitted. 
 
 Plan B. — Replenishment of Material Regulated by 
 Amount Available. — The balance sheet here presented, 
 
THE MATERIAL BALANCE SHEETS 
 
 55 
 
 
 
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 UNIT OF PUROHA 
 AVERAGE MONTH 
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56 FACTORY STORESKEEPING 
 
 Fig. 5 (page 61) and a method of control similar to that 
 here described is the one needed for major materials in the 
 overwhelming majority of manufacturing plants since 
 most factories have a fluctuating rate of use. It has been 
 in operation in many plants for a number of years, has 
 proved entirely satisfactory under conditions to which it 
 is adapted, and its use is rapidly increasing. In the 
 particular form here presented it is unnecessary to state 
 that the sheet is not suitable as it is for all manufacturing 
 plants, although it has proved of very wide applicability. 
 Comparatively slight modifications will adapt it to 
 almost any type of industry, however, and I know of cases 
 where it has been installed with success in mercantile 
 establishments. The only situation where its use is 
 unnecessary is when we have conditions described in 
 Plan A, and sometimes C — conditions encountered only 
 in special continuous types of production. This balance 
 sheet is, moreover, suitable for use under Plan A, since 
 all that is necessary in such a case is to use only the first 
 two columns ; and, as illustrated at the end of this chapter, 
 with certain additions it is suitable for use under 
 Plan C. 
 
 Before considering the details of this particular recom- 
 mended sheet, it is well to review its general function 
 in material regulation. A satisfactory regulation of 
 materials under this plan of operation presupposes the 
 ability to answer almost immediately the following 
 questions. Such information may and should be em- 
 bodied in one central place, the balance sheet. For each 
 item — 
 
 1. How much has been ordered? 
 
 ' 2. When was it ordered? 
 
 3. The replenishment order number? 
 
 4. The purchase order number? 
 
 5. How much has been received, and when? 
 
 6. How much is still outstanding on purchase order? 
 
 7. How much does balance sheet show is now in the 
 
THE MATERIAL BALANCE SHEETS 57 
 
 bin, and how does this compare with the amount actually 
 in the bin? 
 
 8. What has been issued, and for what purpose 
 and when was it issued? 
 
 9. What has been returned as credit, and what order 
 or account was credited and when with amount and 
 value of return? 
 
 10. The total value of material on hand (including 
 transportation charges where practicable). 
 
 11. The unit value of material on hand (including 
 transportation charges where practicable). • 
 
 12. What has been apportioned or set aside for manu- 
 facturing or other needs? 
 
 13. When was it so apportioned? 
 
 14. For what purpose is it apportioned? 
 
 15. How much, if any, has already been issued against 
 this reservation? 
 
 16. The balance still on apportionment? 
 
 17. How much is still available for apportionment to 
 other orders? 
 
 18. When did it become so available? 
 
 Besides furnishing answers to these questions, the 
 balance sheet must: 
 (a) be easy to operate. 
 (6) be up to the minute in record of transactions. 
 
 (c) provide an easy means of tracing each transaction. 
 
 (d) enable compilation of statistics covering rate of 
 use, time necessary to renew supply, cost, and other 
 information. 
 
 (e) provide a means for checking clerical accuracy 
 of entry and balances. 
 
 In order that answers to these questions may be 
 instantly available, around the balance sheet must 
 revolve the following procedure : The topics are numbered 
 to correspond with and answer the preceding list of 
 questions : 
 
 1 , 2 and 3 . Replenishment orders must be originated by or 
 
58 FACTORY STORESKEEPING 
 
 pass through the balance clerk for entry. Besides 
 showing the amount ordered, on the sheet must also be 
 noted the date replenishment order is issued and the 
 replenishment order number for identification. 
 
 4. Upon issuance of the purchase order, a copy must 
 be sent to the balance clerk showing amount actually 
 ordered; this must be checked with the amount ordered 
 as per the replenishment order, and any necessary adjust- 
 ments made, the purchase order number must also be 
 entered for identification. 
 
 5. Upon -receipt of a shipment, a notification of 
 materials received must be sent to the balance sheet. 
 This must be identified with the purchase order, and 
 must show the amount actually received, and, if conven- 
 ient, also the amount passed and the amount rejected 
 upon inspection, although this information may be 
 sent forward later. It is important that the notification 
 of materials received go forward just as promptly as 
 possible after the shipment is in since requests for the 
 issuance of material not on hand lodge with the balance 
 clerk until they may be filled. 
 
 6. Notification of cancellation of purchase orders or 
 of parts of purchase orders so that in conjunction with 
 notation of orders and of receipts a running balance of 
 amounts still due may be kept. 
 
 7. Stock count: The result of an actual physical 
 count by the store keeper or his representative for the 
 item, made entirely independently of any knowledge of 
 balance as shown on the balance sheet for that item. 
 This is one of the means by which accuracy of the perpet- 
 ual inventory may be maintained, and such count 
 may be made on a few items daily so that in the course of 
 at least four or five months the whole store room may be 
 covered, when the process is repeated, or the same object 
 may be accomplished in one of the other ways discussed 
 under Inventories, Chap. X. 
 
 8. Stores and worked material issues which have 
 
THE MATERIAL BALANCE SHEETS 59 
 
 been filled, showing amount actually taken from the 
 store room and issued to the shop or other department. 
 These may show also, if desirable, the remaining balance 
 in the bin after such issues have been subtracted as an 
 additional current check on inventory. 
 
 9. Stores and worked material credits showing the 
 amount of goods actually returned to the store room as a 
 credit to some previously debited charge account. 
 
 10 and 11. Original or duplicate invoice, showing 
 purchase price of the goods. 
 
 Record of express or freight, or other transportation 
 charges against the shipment. Dividing total cost includ- 
 ing these transportation charges by number of units 
 on hand, gives unit cost. 
 
 12-14. Bills of material, manufacturing orders, stores 
 issues, worked material issues, or other forms of informa- 
 tion, showing what materials and how much will be 
 needed in the future for manufacturing or other needs. 
 This information is for the purpose of apportioning such 
 demands against the material. Such information must 
 include, for entry on the sheet : The date of these requests, 
 and the account number or symbol to which supplies are 
 to be charged when finally issued. 
 
 15. From the issues mentioned in 6 above, after pass- 
 ing through the store room for issue, is obtained and 
 entered what has actually been issued for this use. 
 
 16. By subtraction we obtain the total outstanding on 
 apportionment after deducting this particular issue. 
 
 17-18. By subtraction and notation of date. 
 To make such a record intelligible : 
 
 (a) The sheet must be so arranged as to be readily 
 understood and followed. 
 
 (b) There must be a continuous flow of such records 
 currently through the balance sheet. 
 
 (c) Each transaction must be complete in itself and so 
 entered, complete identification of each entry being 
 insisted upon. 
 
60 FACTORY STORESKEEPING 
 
 (d) The balance sheet must form a permanent record. 
 
 (e) The balance of amount ordered, plus the amount 
 on hand, minus the amount apportioned, must equal the 
 amount available at any time. 
 
 In order to conform to all of these requirements, the 
 balance sheet must have a minimum of four columns; one 
 for entries relating to orders, the second for entries 
 relating to amounts on hand, the third for amounts 
 apportioned, and the fourth for amounts available. 
 Although extremely common, the four column balance 
 sheet is by no means universal for this purpose, and 
 various numbers of columns from four to possibly a 
 dozen are encountered. The features embodied in the 
 more elaborate and clumsy sheets usually can be 
 incorporated in the four-column sheet, and for clearness, 
 small amount of clerical work, and general ease of opera- 
 tion, it is usually to be preferred. The objection most 
 usually made to it is that it does not provide separate 
 columns for entry of amount received, amount issued 
 and amount still on hand, for ease in tabulation. As will 
 be seen on the sheet itself, however, each of these entries 
 may be readily picked out by paying attention to the 
 respective date entries which identify each transaction 
 in the different columns. 
 
 A review of the preceding summary of transactions 
 necessary to the operation of this balance sheet will 
 immediately emphasize the point so often made that the 
 balance clerk is the hub of the material procedure. 
 Hardly a transaction of importance occurs from replen- 
 ishment to issue which does not spring from or lead to 
 the balance sheets, and if they are properly used they 
 constitute an encyclopedia of information to anyone who 
 desires to know anything about the state of materials. 
 It should be unnecessary to add that such work should 
 not be intrusted to an inexperienced clerk, and that the 
 most beautiful records in the world will not of themselves 
 prevent material shortages. 
 
THE MATERIAL BALANCE SHEETS 
 
 61 
 
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62 FACTORY STORESKEEPING 
 
 The detailed operation of this sheet may be more 
 readily seen by following the typical transaction shown 
 on the sample sheet. These transactions are entered 
 on Fig. 5. 
 
 Explanation op Entries 
 
 For examples on 4-Col. Balance of Stores Sheet, Fig. 5 
 Opening 1. Inventory April 20, 1920; 250' On Hand; Value $1000.00 
 
 (Obtained by physical count of bin contents) 
 Col. 1-2 Date Rec'd.: 1920, 4.20, Inv. 
 CoL. 2 Quantity: 250 
 
 Total Cost: 1,000.00 
 Cost per unit: 4 . 0000 
 
 2. Apportion April 20; 50' to Order A 
 (Obtained from manufacturing office) 
 CoL. 3 Date Appor.: 4.20 
 
 Quantity: 50 
 Order No.: A 
 
 3. Determine Amount Available (1 + 2 — 3 = 4; or 250 
 
 -50 = 200) 
 CoL. 4 Date: ' 4.20 
 Quantity: 200 
 
 Transactions 4. Apportion April 25; 15' to Order B 
 
 (Obtained from current manufacturing orders going 
 
 through) 
 Col. 3 Date: 4.25 
 
 Quantity: 15; enter sum 65 
 Col. 4 Quantity: 15; enter difference 185 
 Date: 4.25 
 
 Check to see that 1 + 2 — 3 = 4, in this case 250 — 
 65 = 185 
 5. Apportion May 1; 40' to Order C 
 Col. 3 Date Appor.: 5.1 
 
 Quantity: 40; enter sum 105; make full 
 
 check opposite previous balance 65 
 Order No.: C 
 Col. 4 Quantity: 40; enter remainder 145 
 Date: 5.1 
 
 This reduces balance available (145) below the order point indicated 
 at top of sheet "When Quantity Available Falls To," (150), so that 
 replenishment order must be issued at once on the purchasing agent for 
 the quantity indicated in the "Issue Order For" (300). Therefore: 
 (see transaction #6) 
 
THE MATERIAL BALANCE SHEETS 63 
 
 6. Order May 1; 300; Requisition #1052 
 Col. 4 Quantity: 300: enter sum 445 
 
 Remarks: Req. #1052 
 Date: 5.1 
 
 Col. 1 Date of Req.: 5.1 
 J?eg. iVo.; 1052 
 Quantity: 300 
 Check 1+2-3=4 
 
 7. Copy o/ Purchase Order #2 is received from purchasing 
 
 agent. 
 Col. 1 Pw. Order No.: 2 
 
 8. /sswd May 2; 50' /or Order A 
 
 (Obtained from properly signed stores issue from the 
 
 store room) 
 Col. 2 Quantity: 50; enter remainder 200 
 Date Issued: 5.2 
 Issued For: A 
 
 Total Cost: 200.00 (50@ $4.00 each) 
 Col. 3 Quantity: 50; enter remainder 55; make full 
 check opposite original apportioning entry 
 (top line) and opposite previous balance 
 105, since these are now dead figures. 
 This leaves 55 still outstanding on apportionment; the breaks in the 
 vertical check show that 15 of this was reserved for Order B on April 25, 
 and 40 for Order C on May 1. 
 
 Order No.: A 
 Date Issued: 5.2 
 Check 1+2-3=4 
 
 9. Issue May 10; 15' for Order M 
 
 Since this has not been previously apportioned it must be subtracted 
 both from amount on hand and amount still available : 
 
 Col. 2 Quantity: 15; enter remainder 185 
 Date Issued: 5.10 
 Issued for: M 
 Total Cost: 60.00 
 Col. 4 Qiiantity: 15; enter remainder 430 
 Date: 5.10 
 
 Check 1+2-3=4 
 10. Issue May 15; 30' for Order C 
 
 Col. 2 Quantity: 30; enter remainder 155 
 Date Issued: 5.15 
 Issued for: C 
 Total Cost: 120.00 
 CoL. 3 Quantity: 30; enter remainder 25; since this 
 issue was for 30 whereas the original 
 apportionment for Order C called for 40, 
 draw a % vertical check opposite original 
 apportioning entry to show that part (10) 
 
64 FACTORY STORESKEEPING 
 
 of this apportionment is still outstanding; 
 draw full check opposite previous balance 
 55, and the entry just made for the issue 30. 
 OrderlNo.: C 
 Date Issued: 5.15 
 Check 1+2-3=4 
 11. Received Shipment May 20; 300' on Purchase Order #2, 
 Requisition 1052; cost $250 per lb., plus $3.00 expenses. 
 
 Quantity: 300; enter balance out- 
 
 standing on order 00; make full check down 
 to and including this balance. 
 Col. 1-2 Date Rec'd.: 5.20 
 Col. 2 Quantity: 300; enter sum 455 
 
 Total Cost: 1,430.40 (at 1.83 lb. per foot, this 
 gives 549 lb., which at $2.60 per lb. = 
 $l,427.40cost of steel 
 3 . 00 express 
 
 $1,430.40 total cost for 300 ft. 
 Enter sum $2,050.40 
 
 Cost per Unit: $4.5064 (total quantity on 
 
 hand 455', divided into total value 
 
 $2,050.40). Future issues are made at this 
 
 new unit price. 
 Check 1+2-3=4 
 
 12. Credit May 22; 5' to Order C 
 
 (Obtained from properly signed stores credit from the 
 
 store room) 
 Col. 1-2 Date Rec'd.: 5.22 
 Col. 2 Quantity: 5; enter sum 460 
 Issued for: C Credit 
 Total Cost: 22.53 ; enter sum $2,072.93 
 (5 Pieces at new unit price of $4.5064) 
 Col. 4 Quantity: 5; enter sum 435 
 Remarks: Credit C 
 Date: 5.22 
 
 Check 1+2-3=4 
 
 13. Cancel May 23 balance apportioned to Order C — 10' 
 (Obtained from cancel notice from manufacturing office) 
 CoL. 3 Quantity: 10; enter difference 15; complete 
 
 half check previously made opposite origi- 
 nal apportionment; make full check opposite 
 previous balance 25, and entry just made 10. 
 This leaves 15 still outstanding on apportionment. The break in the 
 vertical check shows that this was reserved for Order B on April 25. 
 Order No.: C Cancelled 
 Date Issued: 5.23 
 
THE MATERIAL BALANCE SHEETS 
 
 65 
 
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66 
 
 FACTORY STORESKEEPING 
 
 Col. 4 Quantity: 10, enter sum 445 
 Remarks: Cancel Balance C 
 Date: 6.23 
 
 Check 1+2-3=4 
 14. Bin tag received May 25, hand count shows 460' on hand 
 CoL. 1-2 Make full check down to and including book 
 balance of 460, since the two agree. If they 
 do not agree, find out why and make necessary 
 adjustment in accordance with instructions 
 for such cases. 
 Col. 4 Check to see that balances 1+2 — 3=4, and 
 if so make full check to and including last 
 balance 445. 
 
 Plan C. — Replenishment on Schedule. — Once require- 
 ments in materials for a considerable period in the future 
 
 UNCLASSIFIED 
 
 CONSECUTIVE 
 NO. 
 
 1 
 
 DESCRIPTION OF ARTICLE 
 
 1919 
 
 BEQUISITION 
 
 PURCHASE 
 ORDER 
 NUMBER 
 
 UNIT 
 
 RECEIVED AND ISSUED 
 
 DME 
 
 NuMOtR 
 
 cu.T 
 
 C.A,.E 
 
 S561 
 
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 Fig. 8. — Unclassified stores sheet. 
 
 are known, there are several ways in which the desired 
 flow may be secured. Where plans may be followed 
 without variation, the simplest method is to list or put on 
 
THE MATERIAL BALANCE SHEETS 
 
 67 
 
 ticklers the dates when the various purchases are to be 
 made. This method, however, provides for no follow-up 
 in case production becomes more or less than planned, 
 and in such cases the balance sheet described for Pan A 
 may be satisfactory where production is not too irregular 
 or that illustrated in Fig. 6, may be more serviceable 
 where we can look ahead a long time, but where rate of 
 production is not predictable. This sheet is similar to 
 that of Plan B, with the addition of a ''schedule" column. 
 Worked Material Balance Sheets. — The balance of 
 worked materials sheet, in design and operation may in 
 many cases be very similar to that of stores. In other 
 
 STORES 
 
 
 
 BALANCE AND ISSUED 
 
 BAl ANCE AND CSSUZO 
 
 BALANCE ANJ ISSUED 
 
 OATE 
 
 NUMBER 
 
 «., 
 
 C„.».E 
 
 »T, 
 
 ..MBE„ 
 
 O.ST 
 
 o..,.< 
 
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 1 
 
 
 1 
 
 
 
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 cases the need is felt for two additional columns, which 
 are shown and explained in Fig. 7. 
 
 Unclassified Stores Balance Sheets. — Little need be 
 said in regard to the balance sheet for unclassified stores, 
 
68 
 
 FACTORY STORESKEEPING 
 
 since its operation will be entirely clear from the sample 
 sheet shown in Fig. 8. This is used only for items which 
 are not regularly stocked, but which are ordered for 
 special purposes and ordinarily issued for those purposes 
 just as soon as received. This sheet should be inspected 
 from time to time to catch recurring items which may be 
 transferred to the classified list and kept regularly in 
 stores. 
 
 Fig. <J.— Balance 
 
 record liles, containing over 
 balance sheets. 
 
 .5,000 separate material 
 
 Balance Record File. — Although loose cards of various 
 sizes instead of sheets are frequently found in use, it is 
 felt that in general the use of the latter is much safer and 
 more satisfactory. The danger of misplacing a card 
 where there are possibly thirty thousand items in the 
 store room, each requiring at least one card, is very 
 considerable and causes extreme annoyance when it 
 occurs. Loose-leaf binders of this number of sheets, 
 however, also have the disadvantage of taking up a great 
 deal of room and of being either heavy or involving a 
 great number of volumes. Some of the improved card- 
 filing devices remedy both of these defects quite satis- 
 
PURCHASING MATERIAL CONTROL 69 
 
 f actorily, giving a maximum number of sheets or cards in a 
 minimum space, making it impossible to misplace a card, 
 and avoiding the lifting of heavy volumes since entries 
 are made in position. Figure 9 shows a compact 
 arrangement accommodating over 5,000 separate balance 
 sheets. 
 
' CHAPTER VI 
 
 THE PURCHASING DEPARTMENT AS RELATED 
 TO MATERIAL CONTROL 
 
 Summary: Importance. — Speculative Purchasing. — Routine Purchasing. 
 — The Purchase Order. Distribution of Copies. — Follow-up of Orders. — 
 Other Purchase Records. 
 
 The Importance of the Purchasing Office in Material 
 Routine. — The regulation of material is logically and 
 necessarily the job of the production department. 
 There is no more important function in material work, 
 however, than that performed by the purchasing depart- 
 ment, since irregularities here will destroy the effective- 
 ness of an otherwise perfect stores routine. In modern 
 business it is no longer the exceptional and spectacular 
 transactions which make one plant stand out above 
 another — it is largely the pennies saved here and there 
 which go to form dividends. Such savings may be 
 accomplished only through a well rounded and balanced 
 organization, and since material routine heads into 
 purchasing at so many points it is essential to take the 
 viewpoint that ''material control" includes all officials 
 who in any way are responsible for or deal with this 
 part of the business. From this viewpoint, therefore, 
 purchasing forms a most important link in this chain. 
 It does not follow that the purchasing agent must in all 
 cases report to production from an administrative 
 standpoint (see Chart of Organization, Chap. Ill, 
 page 33). 
 
 The purchasing office has a chance to affect profits 
 at every turn, and at many times the difference between 
 dividends and bankruptcy may rest upon the transac- 
 tions of this department. One instance will illustrate 
 
 70 
 
PURCHASING MATERIAL CONTROL 71 
 
 the directness of this effect, where, by a decrease of 6.37 
 per cent in the cost of the raw materials themselves the 
 net profit was increased 9.7 per cent. 
 
 Table I 
 
 Ohiginal New 
 Per Per 
 
 Piece Piece 
 
 Material $ . 63 f . 59 Decrease of 6.37 per cent 
 
 Labor 10 .10 
 
 Overhead 05 .05 
 
 Total cost $ . 78 $ . 74 
 
 Selling price $1.40 $1.40 
 
 Profit $ .62 $ .66 
 
 Per cent of cost 79 . 5 89 . 2 Increase of 9.7 per cent 
 
 It is not with technical purchasing, however, that this 
 chapter deals. This part of the work of the purchasing 
 office in the average plant is conducted extremely well, 
 for the modern purchasing agent has been trained to the 
 specific duty of securing suitable material at the best 
 price, and various works upon the subject may be found 
 in any library. The more routine part of his work, 
 however, has not been sufficiently emphasized particu- 
 larly as it affects the degree of control which may be 
 exercised over functions other than buying proper. 
 Many purchasing agents can really be lifted out of the 
 rut into which they have fallen through standardizing 
 the many little irregularities which distract so much 
 attention from the work which constitutes their main 
 interest. The importance of the many points of contact 
 between the purchasing office and the rest of the organi- 
 zation dealing with materials, and some of the means by 
 which this contact may be made more effective in practice, 
 should become clear from the following discussion. 
 
 After the engineering department has furnished lists 
 and specifications of material to be kept on hand, after 
 the traffic and purchasing departments have in conjunc- 
 tion furnished time necessary to renew, to which has been 
 added other allowances for clerical work and for necessary 
 
72 FACTORY STORESKEEPING 
 
 delays, and after the material balance sheets have been 
 put in operation through a passage for entry of all 
 necessary papers, the replenishment order originating 
 from the balance sheet or otherwise sets the purchasing 
 machinery in operation. The characteristics and re- 
 quirements for such a replenishment order were treated 
 in Chap. IV. It is not strictly the purchasing agent's 
 province to originate requests for material, although it 
 is his duty to notify the production department or the 
 specific man responsible for material control routine, as 
 to any probable changes in the market or other factors 
 which in his judgment make purchase desirable, and in 
 the case of speculative purchasing he may originate 
 replenishment orders. In general, however, his duties 
 start with the receipt of replenishment order, and on this 
 authority all of his future actions are based. It therefore 
 follows without argument that no oral requests for replen- 
 ishment must be acted upon by the purchasing agent 
 unless they be immediately followed with a written 
 confirmation on the proper form properly approved. 
 A relaxation in this respect will soon put the purchasing 
 agent on the defensive if he has not the replenishment 
 order to fall back upon. 
 
 The discussion up to this point applies equally to 
 speculative and to routine purchasing. Upon the receipt 
 of the replenishment order, however, the procedure varies 
 until the contract is closed. It is therefore necessary to 
 treat this intermediate stage under two divisions. 
 
 1. Speculative Purchasing. — Whether or not both 
 kinds of purchasing are done by one man or by different 
 men, the only difference in procedure between specula- 
 tive and routine purchasing is that in the former case 
 the amount of any item in the speculative class called 
 for on the replenishment order must be looked upon simply 
 as indicating production's actual needs for the time being 
 and not as a hard and fast amount which must be bought. 
 In other words, the purchasing agent is not governed so 
 
PURCHASING MATERIAL CONTROL 73 
 
 strictly by amount called for on the replenishment order 
 as he is in the case of routine purchasing; depending on 
 the state of the market and other factors, he may order 
 either more or less, at a given time, than there called for. 
 The replenishment order, however, is production's best 
 judgment as to how much of any material should be 
 ordered, and if the purchasing agent wishes to depart 
 from this judgment in any specific case, he may (1) 
 consult the production department or possibly the general 
 
 To Mr :_ 
 A 
 
 APPKOVAL TO CHANGE AMOUNT 
 
 REliUIBI HONED 
 
 of 
 
 -Jl 
 reDlcDisbineut order for 
 
 has beeu 
 purchased 
 
 (descripiion of Article) 
 received from tlie balauee clerk. It is reronnmeudedthat the amount to be 
 
 on this requisition be changed to lea the following reasons 
 
 ( revised quantity) 
 
 1 
 
 1 
 
 
 
 Siaued 
 
 ( Purchasing A 
 
 gent ) 
 
 Action: 
 
 
 3igued', 
 
 
 Fig. 10. — Approval for purchasing agent to change amount of material 
 specified on replenishment order. 
 
 manager, or both, or (2) have blanket authority to in- 
 crease by a definite amount or a certain percentage the 
 amount called for on the replenishment order, or (3) 
 he may if desired be required to secure written approval 
 for each transaction, on a form similar to that shown 
 in Fig. 10. 
 
 In any event, however, it must be made perfectly clear 
 to the purchasing agent that it is not only his privilege 
 but his duty to take up such cases as he thinks desirable, 
 since production is not infallible in these matters, and 
 since any one of the following factors may, in the pur- 
 chasing agent's opinion, justify buying more or less than 
 the quantity called for: 
 
 1. Traffic conditions. A freight embargo which gives 
 appearance of lasting any considerable period would 
 
74 FACTORY STORESKEEPING 
 
 immediately call for an adjustment upward of the 
 amount to order. Here cooperation with the traffic 
 department is called for. 
 
 2. The supply and demand for the particular article 
 to be purchased. The purchasing agent should keep 
 informed as to the state of production in each article 
 and as to the probable demand throughout the country 
 for it. 
 
 3. The probable price movement — particularly in 
 articles which are subject to stock market speculation or 
 which are particularly sensitive to business conditions. 
 
 4. Sales tendencies for the product in which the article 
 is to be used. Is the demand increasing or diminishing, 
 and is production able to keep up with or ahead of any 
 increase? In such matters, guidance from finance, sales, 
 and production is necessary, but such conditions must 
 not be overlooked by the purchasing agent, and keen 
 insight into vagaries of the business cycle is necessary to 
 relate purchases to price and sales trends. 
 
 5. The labor market. Is an ample supply of labor 
 available? Here again this is primarily production's 
 concern, and yet the purchasing agent from his contact 
 with traveling salesmen and others is in a position to 
 furnish production accurate and current information in 
 regard to such conditions. 
 
 6. Storage considerations. Have we sufficient room 
 to store all that we would like, and if not, where and at 
 what cost may adequate accommodation be secured? 
 Will the additional cost of such storage counterbalance 
 any probable saving due to buying in quantities far in 
 excess of known production needs? 
 
 7. The state of the finances of the company. Is 
 money available for buying an excess of material, no 
 matter how desirable, and will the loss of interest on such 
 idle money counteract any price reduction from buying 
 in quantity? 
 
 Since most of these matters are largely questions of 
 
PURCHASING MATERIAL CONTROL 75 
 
 judgment, the only safe procedure is for the purchasing 
 agent to be furnished the regular replenishment orders 
 emanating from the balance sheets. This will back up 
 production, and in order to back up the purchasing agent, 
 he may secure the written approval of the general 
 manager or some other official when the amount called 
 for on the replenishment order is departed from. In 
 times of hand-to-mouth buying, the replenishment order 
 will assist in preventing overstocking; on a rising market 
 where long contracts may be placed it may still serve to 
 secure deliveries in accordance with production needs. 
 It may, therefore, serve a useful purpose at all times. 
 As indicated previously, the purchasing agent is expected 
 to initiate action even before receipt of replenishment 
 order if, in his judgment, conditions appear to require or 
 render advisable immediate or heavy purchase. 
 
 After a decision to purchase is made and approval 
 secured, technical purchasing then comes into play until 
 the terms are made and the contract closed. The pro- 
 cedure from then on is identical under both speculative 
 and routine purchasing, and it is therefore continued 
 under : 
 
 2. Routine Purchasing. — It may be objected that such 
 a division of work and responsibility is limiting the pur- 
 chasing agent and giving him a smaller place within the 
 organization than that to which he is rightfully entitled. 
 Such, indeed, is almost the invariable reaction when 
 such a reorganization is proposed to an existing pur- 
 chasing agent. That the reverse is actually true, how- 
 ever, in that the purchasing agent is given a much better 
 opportunity to measure up to his responsbilities would seem 
 to be proved by the number of plants and purchasing 
 agents who have found such an arrangement entirely satis- 
 factory. By such a clear definition of duties according 
 to functional lines and abilities, assisted and controlled 
 through a logical and simple routine, many purchasing 
 agents have found that they could give more attention 
 
76 
 
 FACTORY STORESKEEPING 
 
 REQUISITIONER 
 
 PURCHAS£ REQ. 
 NO. 
 
 C STORES SYMBOL 
 
 SHIPPING DIRECTIONS 
 6MIP TO THE COMPANY AT 
 W^^^^^^M I MASS. 
 6H0W JfO 5 ORDER 
 
 THIS 
 
 ON EACH PACKAOE 
 
 WANTED 
 
 NUMBER 
 
 PUT THIS NUMBER 
 
 ON YOUR INVLICE8 
 
 RENDER INVOICES 
 
 IN DUPLICATE 
 
 PLEA-IE FURNISH SUPPLIES LISTED BELOW, SENDING SHIPPING 
 RECEIPT TO US ON DATE OF SHIPMENT, 
 
 BALANCE CLERK 
 
 o 
 
 — 
 
 
 
 
 RECEIVING DEPARTMENT 
 
 
 
 o 
 
 
 No 
 
 5 
 
 
 PURCHASING AGENT 
 
 o 
 
 
 ORDER FILE 
 
 
 
 
 o 
 
 
 No. 
 
 '^ 
 
 — >. PURCHASE TICKLER 
 
 COMPLETED- 
 
 URGED 
 
 PROMISED 
 
 
 
 
 
 
 
 
 
 
 
 Fig. 11. — The purchase order, in this case made out in 6 copies. The last 
 one is the Tickler. 
 
PURCHASING MATERIAL CONTROL 77 
 
 to those features of the work for which they have long 
 desired more time, can stand absolutely within their own 
 ground as defined, and yet have ample chance to influence 
 others with whom their work is connected. It is simply 
 a further logical extension of the modern sub-division in 
 administrative duties whereby each man may become a 
 real specialist in his own particular line, unhampered by 
 irrelevant or distasteful routine, or wrongly placed 
 responsibility. 
 
 The Purchase Order. — After decision to purchase is 
 reached, therefore, the formal purchase order, Fig. 11, 
 is issued. 
 This must provide for. 
 
 1. The serial number of the purchase order. This 
 gives a cross index between replenishment order and 
 purchase order, since when the latter is made out its 
 number must be entered to the replenishment order and 
 the replenishment order number entered to the purchase 
 order. In case one replenishment order calls for several 
 articles requiring several corresponding purchase orders, 
 care must be taken to see that these cross reference 
 entries be completed. 
 
 2. The name of the company who is making the 
 purchase. 
 
 3. The date of the order. 
 
 4. The name of the vendor from whom the purchase 
 is to be made. 
 
 5. The quantity and description of the goods ordered. 
 This should be specific, so that if there is any mistake in 
 the goods the vendor cannot lay it to our lack of definite- 
 ness or detail. 
 
 6. The date delivery is wanted. This again is just 
 as important on the purchasing order for the information 
 of the vendor as it is on the replenishment order for the 
 guidance of the purchase agent. 
 
 7. Shipping and billing directions. Much trouble 
 is caused in every receiving department because incoming 
 
78 FACTORY STORESKEEFING 
 
 packages are improperly marked. The necessity of 
 marking all packages on the outside with the purchase 
 order number should be emphasized in a prominent 
 place on the face of the purchase order. 
 
 8. The symbol or other short designation of the 
 article ordered. This is for definiteness and to save 
 clerical work in writing and re- writing long names. 
 
 9. The name of the requisitioner. 
 
 10. The department or person for whom ordered. 
 
 11. The replenishment order number (see use under 
 1 above). 
 
 12. The signature of the purchasing agent. 
 
 The matter listed under numbers 1, 2, and 7 as far as 
 standard shipping and billing directions go, may of 
 course, be printed on the form when it is set up. 
 
 The purchase order must be made in varying numbers 
 of carbon copies according to circumstances and proce- 
 dure. Ordinarily there should be the following : 
 
 1. The original to be mailed to the vendor. 
 
 2. A copy for the requisitioner. 
 
 3. A copy for the purchasing agent's office to be filed 
 by serial number of the purchase order. 
 
 4. A copy for the purchasing agent's office to serve as a 
 follow-up tickler. 
 
 5. A copy for the balance and receiving men. 
 
 In addition to these, various other copies may be 
 needed; for instance one for each department foreman 
 who is to work upon the material ordered, one for the 
 auditor, and the commitment record, and so on. 
 Ordinarily, however, the five copies listed serve as a 
 simple and effective basis for strict control and follow 
 up. These will be commented upon in the next topic in 
 the order in which they usually come into use. 
 
 The Follow-up of Outstanding Purchase Orders. — 
 The purchasing agent's obligation should by no means 
 cease with the dispatch of the purchasing order. Upon 
 him falls the duty of specifying time necessary to renew ; 
 
PURCHASING MATERIAL CONTROL 79 
 
 his responsibility, therefore, commences with the receipt 
 of the replenishment order and, together with that of 
 the traffic department, continues until the goods are 
 laid down at the factory door in the time set. It 
 therefore behooves him not only to allow himself plenty 
 of margin in quoting such delivery time, but also to 
 notify the production department immediately if for 
 any reason he receives a replenishment order calling 
 for delivery at a date which he knows cannot be lived up 
 to, for his acceptance of this date throws upon him the 
 responsibility of having the goods on hand at the time 
 set provided the request is made within the allowable 
 time. 
 
 In order that all data in regard to each transaction be 
 readily available, and that adequate supervision of 
 outstanding orders be possible, it is necessary first that 
 an automatic follow-up of each order be secured, second 
 that complete information covering the articles ordered 
 themselves and amounts of various articles outstanding 
 with any vendor be obtainable, and third that adequate 
 files of catalogs, specifications, quotations and similar 
 material be readily available. 
 
 The use of the copies of the purchase order enumerated 
 above by which this follow-up of each order is obtained 
 follows : 
 
 1. The Original. — This goes to the vendor and should 
 leave no doubt in his mind as to exactly what and how 
 much is wanted, when shipment is desired and how it is 
 to be made, and terms of purchase. 
 
 2. Requisitioner^ s Copy. — Upon receipt of this copy it 
 is the requisitioner's duty to check its accuracy and to 
 report back immediately to the purchasing agent if it is 
 not satisfactory in every way. His failure to do so 
 throws back upon him responsibility for mistakes in the 
 order itself, since the purchasing agent becomes relieved 
 of this responsibility by forwarding a duphcate copy of a 
 correct transcription of the replenishment order. This 
 
80 FACTORY STORESKEEPING 
 
 copy carries back to the requisitioner the only notifica- 
 tion he has of the purchase. It must bear the purchase 
 order number so that this number may be given the 
 purchasing agent when requesting information as to the 
 transaction. 
 
 3. The Purchasing Agent's Copy hy Purchase Order 
 Number. — This copy should be made out on paper suitable 
 for permanent filing in a loose-leaf binder, where each 
 new order should be filed by serial number when issued. 
 On this copy should be entered all notations of action 
 taken in the case, so that a summary of all transactions 
 may be instantly available. If the terms of purchase are 
 modified after the original order has been mailed, if a 
 new delivery date has been agreed upon, or in fact if 
 anything has occurred to modify the original agreement, 
 notation to this effect should be made on this copy. 
 Progress of fulfilment of the contract should appear 
 here, and when it has been completed this copy should be 
 so stamped. It remains as the permanent purchasing office 
 record of the transaction, supplemented by correspond- 
 ence and other matter in the letter file, 
 
 4. The Purchasing Agenfs Tickler Copy. — Every pur- 
 chase order sent out should have a delivery date indicated 
 on it. This date may be of vital concern or of compara- 
 tively little moment as the case may be; nevertheless 
 some date must appear. This date, moreover, must go 
 out with the expectation that the vendor will live up to 
 it or notify us to the contrary immediately upon its 
 receipt or when he finds it impossible to do so. The 
 burden of the follow-up, however, must rest upon the 
 purchasing agent, since no one will look after our business 
 for us if we fail to do our part. Depending upon the 
 urgency of the order, therefore, the purchasing agent 
 will enter a date on the tickler copy when he wishes the 
 transaction brought to his attention. The date of deliv- 
 ery may be, say, August 1, and since it is imperative that 
 the goods be received not later than that date it is desir- 
 
PURCHASING MATERIAL CONTROL 81 
 
 able to follow up the order on July 25. This date, July 
 25, would then be entered as the tickler date, see Fig. 1 1 
 (page 76) . The tickler copy would then be filed in a special 
 tickler cabinet with drawers or guides for each month 
 
 Form No. SF 5 AR 
 
 
 
 
 
 
 
 
 
 
 192 
 
 Gentlemen : 
 
 Please 
 date 
 
 advise by return mail, 
 and wanted 
 
 when our order No. 
 
 will be 
 
 shipped. 
 
 
 
 
 LEWIS MANUFACTURING COMPANY 
 MAKERS OF (^tty PRODUCTS 
 WALPOLE, MASS. 
 
 
 Address reply to 
 
 Purchasing Department 
 
 
 
 Fig. 12 a. — Postal Follow-up: for requesting shipment date of outstanding 
 
 purchase orders. 
 
 
 
 192 . 
 
 Gentlemen: 
 
 
 
 Your Order No. 
 
 
 will be shipped 
 
 from 
 
 on 
 
 
 Freight 
 by Express 
 
 Parcel Post 
 
 
 
 
 
 - - 
 
 
 
 Fig. 12B. — Postal Follow-up: for vendor to report shipment date of out- 
 standing purchase orders, 
 
 of the year and folders for each day of the month. When 
 July 25 arrives, the clerk will remove all papers in that 
 folder, which may contain not only this copy of the pur- 
 chase order but also any other matters to which the 
 purchasing agent desires his attention called on this 
 date. The tickler copy will be laid on the purchasing 
 
82 FACTORY STORESKEEPING 
 
 agent's desk, when he will take such follow-up measures 
 as he deems desirable. Figure 12 has been found satis- 
 factory for this purpose, and results in a considerably 
 higher percentage of replies than where the routine 
 formal letter, requiring on the part of the vendor the 
 repetition of information identifying the order, is used. 
 
 When delivery of an outstanding order is delayed, or 
 when the purchasing agent obtains information that it 
 will be delayed, he must immediately notify the requisi- 
 tioner to this effect. It may of course not be considered 
 necessary to follow up every order before shipment is due 
 from vendor, for to do so entails much additional work. 
 On the other hand, some plants find it advisable to 
 follow up systematically all orders 3 or 4 days before they 
 are due. Such procedure is recommended particularly 
 during upset traffic conditions. In any event, however, 
 the purchasing agent is not ordinarily in a position 
 to, and should not be expected to differentiate 
 between those articles for which there is urgent need and 
 those which may come along somewhat after the date 
 promised, so that if receipt is to be delayed he must 
 immediately send to the requisitioner a notice to that 
 effect. Then, according to the requisitioner's reply as 
 to urgency of delivery, he may deal with the exceptions 
 only, letting the shipment go for a few days or bringing 
 all possible pressure to bear for quick delivery as the 
 particular case demands. 
 
 After the follow-up is obtained and a new delivery 
 date is set, another follow-up date is entered on the 
 bottom of tickler copy and it is again filed under that date 
 and when shipment is complete it may be destroyed or 
 otherwise filed as desired. 
 
 5. The Receiving ClerFs Copy. — This copy of the pur- 
 chase order may first pass through the balance clerks for 
 posting to the proper balance sheet, either classified or 
 unclassified. It then goes to the receiving man who 
 posts it temporarily for the inspector to note and then 
 
PURCHASING MATERIAL CONTROL 83 
 
 files it by name of vendor, or a separate copy may be 
 made for information and retention by the balance clerk. 
 
 It is well to let the inspector look over the receiving 
 man's copy of the purchase orders as soon as they are 
 received, particularly in the case of large orders, so that 
 he may make arrangements for inspection himself, 
 delegate this work to another, or give any necessary 
 directions for it. 
 
 Other Purchase Records. — Before taking up the final 
 stages in the receiving of goods, the other records neces- 
 sary to adequate purchasing regulation may be pointed 
 out. We have described so far the following records : 
 
 1. Original replenishment order. After the resulting 
 purchase order is made out, this replenishment order is 
 filed by date of requisition. 
 
 2. Copy of the purchase order filed by serial number. 
 
 3. Requisitioner's copy of purchase order. 
 
 4. Tickler copy of purchase order. 
 
 5. Balance and receiving clerk's copy of purchase order. 
 In order to conform to the requirements listed on 
 
 page 79, it is necessary further that the purchasing 
 departments have records as follows : 
 
 6. Alphabetical letter file for correspondence with 
 various vendors. This file should be supplemented by 
 a tickler file. 
 
 7. A card index or other record by material. These 
 may be filed either by name of material, or preferably 
 by symbol if symbols be used. In any event, this form 
 should show description of material, date of various 
 replenishment and purchase orders, from whom pur- 
 chased, quotation and delivery. Such extensive data 
 is unnecessary in smaller plants and I have found some 
 purchasing offices conducted perfectly satisfactorily 
 where this record shows only name of article and changes 
 in price. 
 
84 FACTORY STORESKEEPING 
 
 8. Vendor's file, showing name and address of each 
 vendor with whom we deal, articles purchased, terms 
 and deliveries. This record again may be unnecessary 
 in smaller plants. 
 
 9. Catalog file. Some systematic method should be 
 adopted for filing catalogs, since in the average purchas- 
 ing office constructive use is not made of them due simply 
 to their inaccessibility. A system of numbering at least 
 each catalog should be employed, and a card index by 
 article should refer to every catalog in which this article 
 is described. Another card index by manufacturers 
 should show the file number of each manufacturer's 
 catalog. 
 
 Depending on the type of balance sheet used and the 
 information which is summarized on it, some of the above 
 records can be eliminated. For instance, suppose it is 
 desired to find the names of the various vendors from 
 whom we have ordered a certain article during the past 
 year; instead of the purchasing agent's being required to 
 keep such data, a request to the balance clerk to give us 
 from the proper balance sheet the purchase order numbers 
 for each purchase of this article will enable us to turn at 
 once to the copy of the purchase order filed by serial 
 number. Similarly information covering delivery times 
 may be obtained from the balance record. No attempt 
 is made here to specify what shall and shall not be kept 
 in each case, since this is a question to be determined in 
 each instance and depends on various factors. With 
 these records, however, or with suitable combinations or 
 substitutes, any question in regard to material, vendors, 
 prices, or follow-up may be readily ascertained. 
 
CHAPTER VII 
 
 TRAFFIC, RECEIVING AND INSPECTION 
 DEPARTMENTS 
 
 Summary: Importance — Function in General — Place in the Organiza- 
 tion—Traffic Function — Receiving Function — Inspection Function — Check- 
 ing Invoice and Paying for Goods. 
 
 Importance. — In considering one after another the 
 various departments upon which the adequacy, of 
 material handUng depends, there is a temptation to say 
 as regards each that its function is "particularly impor- 
 tant." The statement in each case, however, is literally 
 true, for as emphasized previously the material cycle 
 consists of interdependent operations, a weak link in any 
 one of which may neutralize exceptional carefulness in 
 all of the others. The work of receiving and inspecting 
 incoming materials is often performed in a perfunctory 
 manner, with the result that we sometimes accept what 
 was not ordered, we pay for more than was actually 
 received, or we think some item has not been received 
 when it may actually be on hand, or vice versa. 
 
 A case in point may be mentioned : In one factory the 
 apparently harmless fact that the receiving department, 
 a large room on the lower floor of the storehouse, had two 
 entrances instead of one, caused trouble until one of them 
 was permanently locked. Receiving customarily was 
 done through the front entrance, but on one occasion a 
 strange driver left some much needed material just 
 inside the side entrance, gave a whistle, and departed. 
 A frantic search some days later revealed the parts, but 
 only after three machines had been shut down for 2 
 days. All the care in establishing limits, in accuracy of 
 inventory and in keeping correct balance sheets is of no 
 avail along side of some of these ''tremendous trifles." ^ 
 
 85 
 
86 FACTOBY STORESKEEPING 
 
 The Function of Traffic and Receiving Departments. — 
 
 Some comments on the administrative relationship of 
 the Traffic and Receiving Departments will be found 
 in the next topic. Whether these two departments, 
 together possibly with packing and shipping, be concen- 
 trated in one department to whom each of the men in 
 charge should report, does not concern us as regards the 
 general functions of this part of the process. For con- 
 venience, traffic and receiving functions are summarized 
 together, followed by discussion of some of the details of 
 the work of each office. 
 
 The duties devolving upon these departments are as 
 follows : 
 
 1. Unload cars quickly, and check for accuracy of way- 
 bill and transportation charges, and for condition of 
 packages. 
 
 2. Unpack packages promptly and check for amount 
 of goods actually received. 
 
 3. Check for quality of goods actually received (by 
 regular inspector when necessary). 
 
 4. Notify the proper authority as to unacceptable 
 goods. 
 
 5. Dispose of rejected materials as directed. 
 
 6. See that all goods delivered are properly recorded, 
 notify the proper person of receipt, and forward accepted 
 goods as directed to the store room or elsewhere. 
 
 7. Report embargoes or other traffic upsets. 
 
 8. Trace shipments as requested, and conduct all 
 business with the railroad or other transportation agents. 
 
 The various considerations necessary to making these 
 operations effective in practice will be taken up in 
 succeeding pages, but before doing so the general back- 
 ground of this work as related to the other departments 
 concerned with material, may be touched upon. 
 
 The Place in the Organization of the Traffic and 
 Receiving Departments. — In order that the officials 
 charged with carrying out the requirements listed above 
 
RECEIVING AND INSPECTION DEPARTMENTS 87 
 
 may be free to exercise this function to the best advan- 
 tage without vexatious restrictions of red tape or per- 
 sonahties on the one hand, and with due regard for 
 disinterested supervision and sense of responsibihty on 
 the other hand, it is necessary in each case to consider 
 carefully just how these functions are to be hned up. 
 
 Almost every conceivable arrangement of personnel is 
 found in practice, varying all the way from those which 
 would seem suitable for almost any business to those 
 which unquestionably are unsuitable for even the busi- 
 ness where they are in operation. In the latter class 
 would fall cases where the storekeeper acts also in the 
 capacity of traffic manager, conducting all transactions 
 with transportation agencies, and in the capacity of 
 receiving clerk, opening, inspecting, and recording all 
 goods actually received. This arrangement violates a 
 cardinal principal of organization — balance — in that 
 there is a too great concentration of authority in one 
 subordinate's hands leading not only to the possibility 
 of fraud but also to a minimum amount of automatic 
 checks in clerical errors or other mistakes. There is 
 ordinarily no objection to having both kinds of receiving 
 — that is receiving from the railroad in bulk, and the 
 receiving which constitutes the detailed count — in one 
 man's hands, or in two person's hands both of whom 
 report to one man, since the two operations deal with 
 distinct items in that one is entirely in bulk and the 
 other entirely by piece. This arrangement is frequently 
 found and is not nearly so bad as that in which the store- 
 keeper is asked to perform all these functions. 
 
 An arrangement which has been found satisfactory 
 in numerous cases is to concentrate all inspection of 
 incoming materials in the engineering department; to 
 have the traffic manager, under whom falls bulk receiving, 
 packing and shipping, reporting, except in the larger 
 plants, to the works manager, the storekeeper being 
 also under the works manager; while the balance 
 
88 FACTORY STORESKEEPING. 
 
 clerk is removed from the influence of the storekeeper 
 and reports to the production superintendent. Al- 
 though this arrangement naturally is not to be recom- 
 mended indiscriminately for all cases, it serves to 
 illustrate the breaking up of responsibilities so that 
 adequate supervision and checks may be provided for. 
 This arrangement is shown in the chart in Chap. Ill, 
 page 33. 
 
 The Traffic Function. — It should be the duty of some 
 one official in the plant, who should be held responsible 
 for the proper exercise of his duties, to conduct all 
 dealings with transportation agents, certifying to 
 charges, unloading cars promptly so as to avoid demur- 
 rage charges, certifying as to condition of packages upon 
 receipt, keeping interested persons informed of the 
 traffic situation generally, and tracing shipments, both 
 incoming and outgoing, as requested. Where detailed 
 receiving comes under traffic, he would also be responsi- 
 ble for the other activities listed at the beginning of this 
 chapter; these, however, are treated under the receiving 
 functions below. 
 
 The details of the procedure in the traffic department 
 will be touched upon only so far as necessary to get a 
 clear idea of its part in the whole material routine and 
 the duties here listed are by no means inclusive of its 
 whole function. When the car or other load of incoming 
 goods arrives at the receiving platform, it is the duty of 
 the traffic department to unload all packages, reporting 
 car and seal number to the traffic manager. If seals or 
 packages are broken or missing this fact is noted and the 
 seal or package number recorded. A record of all 
 packages unloaded is made by the receiving crew fore- 
 man. This record, or freight register, shows the date, 
 the shipper, the point of shipment, a description of the 
 packages, with case numbers if any, the weight, the 
 charges where these are known, the way-bill number, 
 the car number and initial, with time of placing, un- 
 
RECEIVING AND INSPECTION DEPARTMENTS 89 
 
 loading and releasing. It may also provide for notation 
 as to charges against which cost of material shall be 
 made. The original of the freight register should be 
 sent to the traffic manager, who may add transportation 
 charges, whence it goes to the balance clerk for entry of 
 such charges on the balance sheet. It may then be 
 returned to the traffic office for filing. 
 
 Similarly, express and parcel post matter as well as 
 periodic trucking charges, may be entered on the freight 
 register if desired. Any claims for damages, shortage, 
 and so on, are taken up later by the traffic manager. 
 
 The Receiving Function. — The general function of 
 this department is to unpack all packages and check 
 amount of goods actually received against goods ordered; 
 to see that an inspection for quality is made by the proper 
 person in accordance with inspection instructions; to 
 send a notification of receipt to the proper person; to 
 report upon unacceptable goods and to dispose of them as 
 directed, and to forward all accepted goods for storage or 
 use. 
 
 In order that this work may be performed expedi- 
 tiously and accurately, it is important that the receiving 
 clerk be furnished with a complete copy of the purchase 
 order. Some firms refuse to tell the receiving clerk 
 the quantity ordered, but by using a short carbon 
 above the receiving copy omit the record of quantities 
 expected under the supposition that his count will be more 
 carefully made, and that there is less chance for mistakes 
 or fraud when he has no knowledge whatever of the 
 quantity due. This practice in general is not to be com- 
 mended. Depending on the type of personnel available, 
 and the character of goods handled, there may in some 
 instances be an excuse for thus leaving the receiving 
 clerk to work in the dark, but ordinarily a man of proper 
 caliber should be secured for these duties, allowed to work 
 in the most expeditious manner possible, and held 
 strictly accountable through other means. To avoid 
 
90 FACTORY STORESKEEPING 
 
 unnecessary loss of motion through a double handling of 
 papers at both ends, he really needs this information so 
 that he may make an immediate recount, which the 
 proper type of man will make of his own accord, in case 
 his first count does not agree with the quantity called for 
 on the purchase order, without having to report back to 
 the purchasing agent and make the recount only some 
 hours later after that official requests it. He often needs 
 it to identify each item received with the corresponding 
 item on the purchase order, and if inspection is to be 
 expedited, the quantity as shown on the purchase order 
 and on the receiving slip should be brought into agree- 
 ment before goods are forwarded to the inspector. An 
 additional copy of the purchase order, furthermore, must 
 be made for the balance clerk's check of quantity ordered 
 in case the receiving clerk's copy cannot be used for this 
 purpose. On the other hand, the practice of forwarding 
 complete information must be surrounded with ample 
 safeguards. 
 
 One of these copies of the purchase order, then, should 
 be forwarded to the receiving clerk, and as indicated, 
 this may, if desired, go via the balance clerk for notation 
 on the balance sheet of purchase order number and 
 amount ordered, and then be forwarded to the receiving 
 clerk. In case separate copies are furnished receiving 
 and balance clerks, the balance clerk would file his 
 copy according to vendor until notification of receipt 
 reaches him, the receiving clerk filing his copy by name 
 of vendor. 
 
 Packages are delivered from the traffic department to 
 the receiving clerk, together with an accompanying 
 copy of the freight register when it is considered necessary 
 to secure an additional check by having the receiving clerk 
 see that all bulk items on the register are accounted for 
 — a precaution necessary only in very large plants. It then 
 becomes the duty of the receiving clerk immediately to 
 unpack each package, check actual contents with his 
 
RECEIVING AND INSPECTION DEPARTMENTS 
 
 91 
 
 copy of the purchase order, and for each purchase order 
 make out a Notification of Materials Received. This 
 notification must show the name of the vendor, the 
 number of the purchase order, the date received, the 
 name or symbol of each article, the quantity received, and 
 the quantities accepted and rejected, the last two items 
 being filled in by the inspector where necessary. Besides 
 the signature of the receiving clerk, therefore, the form 
 must provide for the signature of whoever does the 
 inspection, and finally, if the notification is to accompany 
 
 NOTIFICATION OF MATERIAL RECEIVED 
 
 On Purchase Order No, P_ 
 Following Total Quantities 
 
 I have this daj received the 
 Dale 
 
 I have inspected the ahove material and find them as stated 
 
 Signc 
 
 loMpe.tor or Ueqai 
 
 I have entered the accepted quantities on Store Tags 
 
 Signe-d- 
 
 SiorelieBiJBr or hiBRepregeptatiTf 
 
 jl'ur, AajitpJ I have entered tiic accepted quantities on Balance Sheets, including the price I 
 
 Freight 
 
 : Cot — Express Signed 
 
 Mail B«l"" CU'i 
 
 Plus $ 
 
 Fig. 13 — Notification of receipt. 
 
 the goods themselves, for the signature of the storekeeper 
 when goods are delivered to him. This notification of 
 material received may take any convenient form, and 
 for illustration Fig. 13 shows an example of one found 
 satisfactory under many different conditions. 
 
 The notification of receipt must always be made in at 
 least two copies, sometimes in more depending on the 
 exact procedure decided upon. If bin tags for each item 
 are in use in the storeroom, as I believe they should 
 almost invariably be, two copies of the notice of receipt 
 will serve; one to be sent immediately to the balance 
 clerk, the duplicate to be filled according to vendor in re- 
 ceiving clerk's file, and the bin tags after being made out 
 
92 FACTORY STORESKEEPING 
 
 by the receiving clerk are forwarded with the goods, after 
 they have been inspected, to the storekeeper who must see 
 that tags and materials agree. As goods are counted by 
 receiving clerks his copy of the purchase order is checked 
 to show full or partial receipt, and if shipment is com- 
 plete for this purchase order it is so stamped and attached 
 to the original of the notification of receipt and forwarded 
 with the goods to the inspector thence to the balance of 
 stores clerk; if partial receipt, it is so checked and refiled 
 until the full shipment arrives. 
 
 In addition, a summary of receipts may be found useful. 
 A report of all items received is sent daily to the purchas- 
 ing agent so that he may more quickly follow up his 
 outstanding purchase orders. If this report was not 
 made to him, he would undoubtedly get into considerable 
 difficulty as the copy of the notification of material 
 received which is eventually sent to him is often held 
 up at the balance cards for a few days waiting for the 
 invoice. 
 
 The Inspection Function. — It is the duty of the person 
 responsible for inspection to see that all incoming goods 
 are suitable for the respective uses to which they are to 
 be put. The designation of the quality of the goods, 
 where such designation aside from trade names is 
 necessary, should and ordinarily does fall to the engineer- 
 ing department; for that reason concentrating under the 
 authority of the engineering department the final 
 determination of whether any particular item conforms 
 to the original specification, is recommended. 
 
 There are two general classes of specifications : First, for 
 those materials which it is necessary to define in detailed 
 technical terms and which may have to pass inspection 
 other than that usually given to incoming material, or 
 which may be subject to special laboratory tests; second, 
 for those materials for which there exists well recognized 
 standard commercial trade names and qualities. For the 
 first class of materials, specifications must be carefully 
 
RECEIVING AND INSPECTION DEPARTMENTS 93 
 
 drawn up, reduced to writing and rigidly maintained. 
 Judgement, however, must be exercised to prevent over- 
 refinement, and care must be taken to see that some 
 special qualifications are not inserted when an existing 
 trade article would as well serve the purpose. In the 
 latter class, the standardization may often stop with a 
 simple designation of a few standard kinds which are to 
 be thenceforth carried. Even in this case, however, 
 every item and every use should be scrutinized in an 
 effort to reduce just as far as possible the varieties to be 
 retained. Upon such a house cleaning, it is not uncom- 
 mon to find the number of varieties cut in half. 
 
 Depending on the type of industry, and the resulting 
 type of materials, much of the work of inspection can be 
 delegated to others; for instance, the receiving clerk can 
 inspect (really count) much of the stationery and factory 
 supplies. He should be delegated to sign the inspection 
 report in the name of the engineering department for this 
 part of his work. It is customary in many plants to 
 put upon the purchasing agent the determination of 
 quality. Aside from the fact that this places upon that 
 official a function for which the engineering or other 
 technical department may reasonably be considered 
 better trained to perform, it has the same objection that 
 entrusting inspection of work in process to the foreman 
 or production superintendent ordinarily has, in that it 
 is a concentration of inconsistent functions under one 
 head; the foreman and production manager on the one 
 hand are held for volume of production and low cost; 
 the purchasing agent on the other hand is held for 
 securing specified articles in the specified time at a 
 proper cost. Although neither the production nor 
 the purchasing officials can consider their work properly 
 done unless quality is maintained, it nevertheless follows 
 that the main part of their attention must be directed 
 elsewhere than to quality, and that it is leaving in the 
 hands of interested persons the determination of a 
 
94 FACTORY STORESKEEPING 
 
 factor upon which it is difficult for them to give an 
 unbiased opinion where it may reflect upon their own 
 competence in handUng their main function; in cases 
 of doubt they are too hkely to accept materials which 
 should be rejected. Inspection is often the weakest 
 link in the material cycle; only by entrusting it to dis- 
 interested officials operating under a systematic routine 
 may it be brought to the state of effectiveness necessary 
 for strict material regulation. To insure systematic 
 handling of this important work of inspecting incoming 
 goods and definitely to fix responsibility in case of 
 delegated inspection, the inspector may use a rubber 
 stamp which, when placed on the receiving man's copy of 
 the purchase order, serves as a record of the inspector's 
 having noted the order, as directions for the man who is 
 to make the inspection, and for what kind of an inspection 
 is necessary, and serves to fix responsibility in case defect- 
 ive materials are passed. 
 
 It is necessary not only that inspection be done 
 thoroughly and systematically, but that it be done 
 promptly. Losses in production due to the lack of the 
 necessary material on hand are all too common. Losses 
 due to improper materials put into work in process 
 without inspection are also common. The longer the 
 time elapsing between receipt of goods and final disposi- 
 tion in the storeroom or other department, the more 
 chance there is for confusion and for unnecessary storage. 
 In case of defective material, furthermore, the vendor 
 must be notified within a reasonable time if claims for 
 adjustment are to be entertained. Everything consis- 
 tent with thorough work should be done to shorten the 
 time between arrival - of goods and completion of 
 inspection. 
 
 Inspection consists of several types, differing consider- 
 ably in the amount and character of work necessary. 
 Inspection for superficial surface defects, scratches, 
 atmospheric action and so on, is of the simplest type 
 
RECEIVING AND INSPECTION DEPARTMENTS 95 
 
 and ordinarily may be cared for by the receiving clerk. 
 The second type of inspection, that of passing upon 
 quality, size, finish, texture, color, and so on, is usually 
 of a more technical nature, and should be entrusted to 
 a representative of the engineering or other technical 
 department. The third type of inspection, that of the 
 determination of composition and tensile properties, 
 similarly must be left to the technical department 
 through its testing laboratory. 
 
 Similarly the time and place of inspection may vary 
 according to the circumstances. Inspection of certain 
 classes of work may more readily be made in the maker's 
 plant than in our own receiving room. Thus, in the 
 maker's plant we may have our own representative to 
 pass on the quahty of goods during manufacture. Again, 
 such inspection may be made at the maker's plant when 
 the goods are finished, or samples may be forwarded to 
 our own testing laboratory before the goods are shipped 
 to us. In cases where inspection is made prior to receipt 
 in our receiving room, a certificate of inspection should 
 accompany the goods, which certificate will then be 
 attached to the notification of material received and 
 serve the same purpose as the inspector's signature on 
 the notice. 
 
 Checking the Invoice and Paying for Purchases. — As 
 soon as the notification of receipt has been properly 
 filled in and signed by the inspector, the original copy 
 together with receiving clerk's copy of completed pur- 
 chase order, should be forwarded as promptly as possible 
 to the balance clerk. Either before or after the goods 
 themselves are actually received the invoice may arrive 
 at the purchasing agent's desk. This invoice preferably 
 should be rendered in duplicate, one copy being sent by 
 the purchasing agent immediately to the auditor for 
 payment so as to secure any cash discount, the other 
 copy going to the balance clerk. If the copy of the 
 invoice arrives at the balance clerk's desk before the 
 
96 FACTORY STORESKEEPING 
 
 notification of receipt, the invoice is filed by name of 
 vendor. In case the notification of receipt arrives first 
 the entry as to amount may be made on the balance 
 sheet and actual issues against goods may be made. 
 Since there is no price available in such cases, all such 
 issues have to be held at the balance clerk's desk, upon 
 their return from the storeroom after materials have 
 been disbursed, for later entry of issue price before tjiey 
 are finally forwarded to the cost department. This 
 allows one to proceed with the work for which the goods 
 are needed but holds up the final closing of the books in 
 the cost department until the invoice is received and 
 the stores issues are priced, unless an estimated or standard 
 price be entered on the issues so as not to hold them up. 
 As soon as both invoice and notification of receipt are 
 received the balance clerk checks goods billed on the 
 invoice against goods receipted for on the notice of 
 receipt, returns duplicate invoice to purchasing agent 
 for adjustment in case of discrepancy in amounts, enters 
 the actual amount in the received column of the balance 
 sheet, adds transportation charges (obtained through 
 the freight register)^ to the invoice price and obtains 
 new unit price for issue. Any stores issues for goods 
 previously issued may then be withdrawn, priced and 
 forwarded to the cost department. The notification of 
 receipt and receiving copy of purchase order, together 
 with duplicate invoice should then be immediately for- 
 warded to the purchasing agent who should independ- 
 ently check all invoices and notices of receipt. Notation 
 of all adjustments or other transactions with the vendor 
 should be made on copy of purchase order filed in the 
 purchasing agent's file by serial purchase-order number. 
 The receiving clerk's copy of purchase order may then 
 be forwarded to the auditor (with or without notification 
 of receipt, as seems desirable), but finally the original 
 
 ^ Monthly bills for trucking charges may either be carried through the 
 freight register, or taken to an overhead account. 
 
RECEIVING AND INSPECTION DEPARTMENTS 97 
 
 notification of receipt together with receiving copy of 
 purchase order and duphcate invoice are filed in the 
 purchasing agent's office by name of vendor. In case 
 we are deaUng with vendors where we are not sure that 
 satisfactory adjustment will be readily made, it is neces- 
 sary, of course, to hold voucher for payment of invoice 
 till notification of goods actually received has arrived. 
 
CHAPTER VIII 
 
 THE STORE ROOM— LAYOUT, EQUIPMENT STOWAGE 
 AND PROTECTION. MAINTENANCE STORES 
 
 Summary: General Requirements — Layout: Location and Responsi- 
 bility. Centralization vs. Decentralization. Responsibility. Depart- 
 mental Supplies. Arrangement. Indexing. — Equipment : Racks and 
 Bins. Double Binning. Minor Equipment — Stowage : Definitions. 
 Rules for Stowage — Protection: Fire and Explosion. Rust. Deteriora- 
 tion. Pilfering. Maintenance Stores: Supplies and Spare Parts. Tools 
 and Fixtures. 
 
 As is true of most other phases of material handhng, 
 the details of the arrangement and operation of the 
 store room must naturally be developed to meet local 
 needs. The store room, however, serves the same 
 purpose in the factory that the bank vault does in the 
 storage and safeguarding of money, and no material 
 procedure can be considered complete unless a thorough 
 study of needs as regards the store room has been made 
 and unless its operation has been systematically tied 
 into the rest of the routine. 
 
 The requirements for the storage of different materials 
 in different types of industry may vary tremendously. 
 Thus, in some cases much material may be stored in 
 the open and under such conditions it would be money 
 wasted to build a house for its accommodation. Other 
 supplies may be stored out-of-doors provided a roof be 
 erected to keep rain and snow from coming into direct 
 contact with the material. In other cases, however, 
 adequate housing must be provided if losses are to be 
 guarded against, and it is with particular reference to 
 this latter class of goods that the following remarks 
 apply, although the problems of storage outside or inside 
 are in many respects similar. 
 
 98 
 
THE STORE ROOM 99 
 
 Layout. — Location and Responsibility. — In considering 
 the physical location of the one or more store rooms 
 which may be necessary and the responsibility for the 
 operation of each one, a great many different things have 
 to be taken into account. On the one hand, the obvious 
 benefits of centralization in one storage place have got 
 to be weighed carefully against the offsetting cost of 
 transportation and the often less efficient service to the 
 departments where materials are needed if complete 
 centralization is in effect. A careful study of floor plans 
 and of the paths of travel of materials must be made to 
 give the best location, all things considered, for the store 
 room, and at best in any large factory this question is a 
 perplexing one. 
 
 Somewhat akin to the foregoing considerations are 
 those affecting the determination of whether raw materi- 
 als and partly worked or finished parts are to be stored 
 in the same room. Are factory supplies, furthermore, 
 such as clean cotton waste, oils, lubricants etc., to be 
 kept in the same store room with raw materials? Are 
 special stores used only in one department to be stored 
 in or contiguous to that department or in the central 
 store room? If, through considerations of service to the 
 departments concerned, departmental supplies are to 
 be stored in the. department, how is accurate control of 
 inventory and of receiving and issuing in general, to be 
 obtained? On the other hand, if such supplies are to be 
 kept in the central store room because of concentration 
 and more accurate control possible through such arrange- 
 ment, how is the procedure to be arranged so that service 
 to departments be not sacrificed? 
 
 The same questions arise as to the storage and respon- 
 sibility of spare parts for machines and for all the 
 miscellaneous items of supplies used in the maintenance 
 department. Since the latter department is itself strictly 
 a service department for the whole establishment, very 
 careful consideration must be given to the storage and 
 
100 FACTORY STORESKEEPING 
 
 handling of maintenance supplies so that this department 
 and therefore the rest of the plant may not be handi- 
 capped through restrictions in the material supply. 
 
 One may not safely generalize in answer to such 
 questions. On the other hand, however, there are 
 certain considerations which must not be overlooked 
 in the answer to any one of them under given conditions, 
 and the following observations may assist in avoiding 
 some of the mistakes frequently encountered in practice 
 because of superficial attention to the various points 
 involved. 
 
 Centralization vs. Decentralization. — There are many 
 undoubted advantages of centralizing the storage of 
 all materials in one place. Serious consideration, par- 
 ticularly in small and medium-sized plants, should be 
 given to this possibility. Foremost among these advan- 
 tages is that of being able to fix responsibility for all 
 functions which a store room is supposed to perform. 
 Supervision under such circumstances may be much 
 more easily obtained and of a stricter and more detailed 
 nature than is possible with scattered storage. Inven- 
 tory, furthermore, may ordinarily be kept not only 
 more accurately but also at a lower figure through the 
 avoidance of the duplication almost inevitable with 
 several store rooms. Better space utilization may, for 
 che same reason, be secured, and clerical help needed in 
 store room attendance and in balance sheet and all 
 other clerical operations may be lessened. 
 
 As opposed to these advantages are the disadvantages 
 of additional transportation and a less intimate knowl- 
 edge of local departmental needs and customs on the 
 part of the central storekeepers. 
 
 Responsibility. — Whether centralized or decentralized 
 storage is decided upon, the responsibility for all receipts 
 into stores, storage, custody while in stores, and issue 
 from stores, should be strictly centralized. If there are 
 subsidiary store rooms, they should be all definitely 
 
THE STORE ROOM 101 
 
 placed under the supervision of a head material man for 
 the whole establishment. In no other way can the 
 uniformity in practice necessary to strict control be 
 secured. There may be one storekeeper required on 
 full time for each subsidiary store room, possibly more, 
 but all of the storekeepers and assistants should look up 
 to one man, who in turn is held responsible by the 
 manager for the upkeep of the whole material end of the 
 business. Just so far as possible the same routine in 
 receiving, accounting for, and issuing materials should be 
 followed throughout all store rooms. 
 
 Departmental Supplies. — In general it has been my 
 experience that whether we have departmental store 
 rooms from which articles are issued to the workplace, 
 or whether we have no departmental store room but 
 everything centralized, the best way to handle depart- 
 mental supplies is to issue to the department (whether to 
 the workplace itself or to the subsidiary departmental 
 store room) only enough supplies to last a reasonable 
 length of time, say from one to two weeks, the main 
 reservoir of material for this department being retained 
 in the central store room. Depending furthermore upon 
 the type of material used in the department, after 
 supplies have been forwarded from the central store room 
 no further paper records of the transaction are necessary 
 when these supplies are put to use; for instance, nails, 
 bolts, tacks, and similar articles may be issued to the 
 department in considerable quantities, being charged at 
 the time simply to departmental supplies and issued 
 thereafter, without additional paper work, to the work- 
 men as needed. Or, where it is desirable from a cost- 
 finding standpoint to charge each job with its exact 
 amount of material used, it is necessary to require a 
 store issue for each lot of material furnished. In this 
 case the original stores issue made out when the materials 
 were transferred from the central to the departmental 
 store room may serve simply as records for the balance 
 
102 FACTORY STORESKEEPING 
 
 sheet, and the stores issues made out in the department 
 when goods are issued to specific orders form the basis of 
 cost records. Additional discussion of this question will 
 be found at the end of this chapter under Maintenance 
 Stores. 
 
 The important point in this connection, however, is 
 that a simple yet sufficient procedure be worked out and 
 standardized to the end that responsibility may not be 
 lessened through having as many different ''systems" as 
 there are persons concerned with the handling of 
 materials. 
 
 Arrangement. — The requirement of the store room as 
 regards varieties of articles to be stored and therefore as 
 regards the size and exact arrangement of aisles, bins, 
 and other store room equipment, are so varying that it is 
 out of the question to indicate any arrangement which 
 will be best under all circumstances. Some general 
 points in regard to the arrangement of the store room 
 will be discussed before the question of equipment is 
 taken up in detail. 
 
 The location and layout of a store room is in many 
 respects analogous to the location and layout of a modern 
 city. When the location is decided upon, after taking 
 into consideration maximum accessibility to the various 
 lines of travel, it is necessary to have an internal lay- 
 out which will best serve the needs of the travel and the 
 general convenience of articles to be accommodated. 
 In the store room there must be a definite and prefer- 
 ably only one point of ingress for all material. There 
 must be provided broad avenues for the heavy traffic 
 back and forth from the various "streets," and a sys- 
 tematic method of numbering racks and bins is just 
 as necessary as in numbering streets and houses, and it 
 should be just as easy for a stranger in the store room 
 to find a given item by knowing its index location as it 
 would be for him to find a particular room number in a 
 given house number on any street in a city. Adequate 
 
THE STORE ROOM 103 
 
 provision must be made for plenty of receiving and 
 unpacking room, for office space, and for all auxiliary equip- 
 ment needed in the transaction of business. Adequate 
 protection must be insured through the exclusion of 
 combustible material, through sprinklers, fire extinguish- 
 ers and similar measures, and through all other pre- 
 cautions against damage by fire, and means must be 
 taken to see that unauthorized persons be excluded 
 from the store room, and that the whole place be 
 adequately lighted and heated. Cleanliness and neatness 
 are imperative. 
 
 After information covering these numerous points has 
 been collected, and after the requirements in kinds and 
 amounts of store room equipment have been determined, 
 the actual process of arranging all of these in proper 
 relation begins. For this purpose, accurate floor plans 
 on a scale of one inch equaling, say, 10 feet, should be 
 prepared on which are carefully located all permanent 
 obstructions such as columns, stairways, elevator shafts 
 and the like, as well as all windows and doorways. On 
 the same scale on another tracing, so that templates may 
 later be cut out, are drawn plan views of each different 
 kind of equipment to be used, such as standard racks and 
 bins, bar stock racks, belting racks, trucks and all other 
 movable apparatus. As many templates of each of these 
 should be provided as there are actual pieces of each to 
 be used. On floor plans showing permanent obstruc- 
 tions, these templates are arranged tentatively and held 
 in place by pins, being shifted experimentally to obtain 
 finally the best possible arrangement. Necessary width 
 of aisles, and location of equipment relative to windows 
 must be carefully considered, the general object of course 
 being to get maximum equipment suitably arranged in 
 minimum floor space. A little ingenuity in arrangement 
 will often save many square feet of floor space. 
 When the final layout has been worked out on paper, the 
 templates may be securely fastened to floor plans and 
 
104 
 
 FACTORY STORESKEEPING 
 
 this paper layout used as a basis for the actual moving. 
 The transition from the existing to the new arrangement 
 may then actually occupy as long or as short a time as 
 seems desirable to prevent disrupting continuous and 
 effective service to the shop. 
 
 Indexing. — Figure 14 illustrates a method of index- 
 ing which will be found convenient under many conditions. 
 
 ••.•^y:^ 'M'A WJJW.w.w'".- •• >>w>)p>.'mMm>^»>W!M>.''m<.i'>'.-'i^>.>>>,v>/^.'.>)//M?y,>>w?»VM'>''''W/7. 
 
 \ Z'?! i II i IM IM II i 1 ' 
 
 ) //| i IN II 1 IN IM n 
 
 ? . ;; 
 
 \' ^|i 11 i IM II MM n 
 
 \ 9| i IM IM IM IM H 
 
 ^ J 
 
 smLncDmci:: 
 
 'mojmmca^ 
 
 ', ; 
 
 \ LUXW ^mCDLDLaLXl 
 
 '\ znDJLD^ -^mLDLGajDj: 
 
 \ D ^C -^ -A , 
 
 ^QDmDJDJnJ^ ^QHLaCDLnLD^ 
 
 ^M Hi l^^l M i 1^ -3M IM IM IM IM h 
 
 \ -A '^B 'c D 'f ^S> ^C ^B -. : 
 
 M i ILUQJLlJI M2 ^m im im im im 
 
 \ LpLDQJLDLp^ /mLDLDHDI ' 
 
 , A £ C D " jt- ' s a c S A ,^ 
 
 
 Fig. 14. — Indexing method to give flexibility in case of rearrangement of 
 
 store room. 
 
 It will be noticed that the following general principles 
 are taken into consideration : 
 
 1. Use letters and numbers alternately. 
 
 2. Use letters for those things of which there are fewest 
 to designate (different buildings, different portions of 
 the store room, different rows of racks along shortest 
 dimensions, etc.). 
 
 3. Use numbers for those things of which there may be 
 many to designate (Number of store room, different 
 rows of racks along longest dimensions, etc.). 
 
 4. Start lettering and numbering from permanent 
 obstructions and floors and proceed outward and upward 
 
THE STORE ROOM 105 
 
 in lines of probable expansion. This allows the addition 
 or elimination of racks and bins on the end or on top 
 without confusion due to vacant designations for missing 
 positions. 
 
 Thus the shaded area in Fig. 14 represents, in plan, 
 the area occupied by one section of a standard rack, 
 corresponding to one house of several stories on a 
 street. Its index is B 3 C (side B of the store room, 
 row 3 down the main aisle, row C out from the wall). 
 
 This rack may be four stories high, then the location 
 of an article in a bin in the second story from the floor 
 
 Fig. 15.— Bin label. 
 
 would be B 3 C 2. It is well to have such designation 
 on the bins themselves; and on the balance sheet for 
 each article of material, the location, in case it is reason- 
 ably permanent, should be entered. Where locations 
 are constantly changing it may not be practicable to keep 
 the balance sheets posted for locations, but the per- 
 manent index should be on the bin and the storekeeper 
 required to keep a current card file showing just where 
 each article may be found, so that a new man can 
 immediately locate any article in the room. 
 
 Where a good system of stores and worked material 
 symbols is in use, it will often be found that the most 
 satisfactory method of storage is alphabetically by 
 symbol (see Chap. IX on Classification). With standard 
 interchangeable racks and bins such arrangement, 
 particularly in the metal-working store room, is easily 
 maintained, and aside from the symbols which are with 
 and identify each article no other indexing scheme is 
 necessary although even in this case a card index of 
 
106 FACTORY STORESKEEPING 
 
 location by name of article is often good insurance 
 against lost time on the part of a new attendant or where 
 the symbol does not appear on the issue slip. With 
 mnemonic symbols, however, the symbol of one item 
 may be SV-SS, the next SV-ST, the next SV-SW and so 
 on. Each of these items would be placed alphabetically 
 in the bins exactly as their symbols would appear in a 
 dictionary and when the symbol appears on the issue 
 slip the attendant may readily locate the article called 
 for. Such a systematic arrangement by symbol is not 
 always possible for all items nor desirable for all portions 
 of the room, however, and common sense must govern in 
 assigning locations and indexing. It would be foolish, 
 if not impossible, to store bar stock in long lengths 
 between screws and nuts, for instance, just because its 
 symbol might fall between the symbols of these articles, 
 nor would one logically store heavy, much used castings 
 away back from the door or elevator. Exceptions can 
 readily be made in such cases without destroying the 
 advantages of storage by symbol where this seems 
 otherwise desirable. In such cases, the rows of racks, 
 the individual racks themselves, and the separate 
 compartments within each rack must be numbered and 
 lettered with a cross index for each item, according to 
 some such definite plan as that outlined. 
 
 Equipment. — Racks and Bins. — The prime requisite 
 as regards the equipment of any store room is flexibility. 
 It is impossible to foresee all the ups and downs of inven- 
 tory, the exact space required for different articles, the 
 best arrangement and placing of each item to be stored. 
 Continual rearrangements, particularly in individual 
 racks and bins, are desirable or necessary in most store 
 rooms, and not infrequently the whole store room must 
 be picked up bodily and moved to another location. 
 The ease with which such changes may be made depends 
 directly upon the character of the racks and bins used. 
 
 The ideal store room, other things being equal, would 
 
THE STORE ROOM 107 
 
 be one on wheels. This being impracticable in most 
 cases, the next best thing is to have only movable, inter- 
 changeable storage units just so far as possible. Racks 
 and bins should very seldom be built-in or permanently 
 attached in any way to floor, walls, or ceilings, but on 
 the contrary should consist of standard racks of appro- 
 priate size which may serve as shelves where no bins are 
 required, and which in such cases may be constructed 
 without backs and so placed as to give shelves double the 
 width of each rack. Into all standard racks, however, 
 must fit interchangeably individual bins just as one file 
 drawer may be swapped with another in a block of 
 uniform letter file cabinets. The dimensions of the 
 racks do not matter so long as a suitable and convenient 
 standard be determined upon and adhered to, and 
 similarly the bins or individual storage compartments 
 which fit into these racks may be of various shapes and 
 dimensions as long as any bin or serviceable combination 
 of bins may be fitted into any standard rack. The racks 
 illustrated in the following drawings each have main 
 divisions 24,^^ in. square by 183-^ in. front to back 
 inside dimensions, and the bins are correspondingly 
 dimensioned to fit with ample play into these racks in 
 various combinations, and are typical of those commonly 
 used in metal-working store rooms. The exact dimen- 
 sions are unimportant, however, and I know of one 
 satisfactory arrangement where the main divisions of 
 such racks are 36 inches on all inside dimensions, with 
 bins to correspond. In some instances packing cases 
 may be used for racks, with similarly cheap construction 
 for the bins; sturdy construction is necessary, however, 
 where heavy articles are stored. 
 
 Figure 16 shows a standard wooden rack, which may 
 be four or more stories high by two wide, the inside 
 dimensions of each story being 24}^ in. wide, 243^^ in. 
 high and I'&^i in. deep. 
 
 These racks form the storage space for the whole store 
 room for all binned items, or the racks without bins or 
 
108 
 
 FACTORY STORESKEEPING 
 
 backs may be used where this is desirable. Into any 
 story of any such rack may be fitted the individual bins 
 shown in Figs. 17 to 21. Thus, one story or compart- 
 ment may contain one bin #1 (Fig. 17) ; another compart- 
 ment two bins #4 (Fig. 19); another two bins #5 (Fig. 
 
 h-/" 
 
 3'' 
 
 ->l k-// 
 
 24 
 
 36" 
 
 -Hh-/' 
 
 -.^ 
 
 -^4f 
 
 /!-> 
 
 ^..^J^..^42 
 
 ■±- 
 
 -\'^ 
 
 ' ParHhon for 
 using &in *I3 
 N as a drawer 
 
 £53" 
 
 ^.5 
 
 //--H 
 
 1^ 
 
 
 --I8f--A 
 
 Fig. 16. 
 
 -Drawing of standard rack into which fit interchangeably separate 
 bins as illustrated in Figs. 17 to 21. 
 
 20); another one bin #5 and two bins #8; while another 
 will accomodate eight bins #10, and so on. A typical 
 arrangement is shown in Fig. 22. 
 
 The advantage of such equipment is obvious. Not 
 only may the whole rack with bins be picked up and 
 removed to a new location, but as is more often necessary 
 any one of these bins with or without its contents may be 
 
THE STORE ROOM 
 
 109 
 
 pulled out and replaced by a different arrangement. 
 Thus, double bin 5^ for example, which now accommodates 
 
 Capaciiy - 4. 85 Cu. Ft per Bin 
 No, per Compar fmen / - / 
 Material - Poplar 
 Nails- Cement or Rosin Coaled 
 
 2 4" 6 . 8 10 
 
 ^\ 
 
 <^ 
 
 \ 
 
 1 
 
 t^ 
 
 
 4 
 
 24-, 
 
 -^ 
 
 Fig. 17. — Bin No. 1. One such bin occupies one compartment of the 
 standard rack shown in Fig. 16. 
 
 CapacitL/- B.35 Cu Ft per Bin 
 Noper Compartment- 1 
 Material - Poplar 
 Nails - Cemen t or Rosin Coaled 
 
 Fig. 18. — Bin No. 2. This is bin No. 1 divided in the middle for double- 
 binning purposes. 
 
 about 500 % by 2 in. carriage bolts in each half, 
 may be insufficient when it is decided to raise the hmits 
 
110 
 
 FACTORY STORESKEEPING 
 
 Capacity- 2.25 Cu. Ft per Bin 
 No.per Comparf-menf - 2 
 Maferial- Poplar 
 Nails - Cement or Roiin Coaled 
 
 'J. 
 
 --'''- 24f 
 
 Fig. 19. — Bin No. 4. Two such bins will occupy one compartment of the 
 standard rack shown in Fig. 16. Or one of these and, say, two bins No. 8 
 (Fig. 21) may be used in one compartment. 
 
 Qopacily -1.08 Cu. Flper Bin 
 No.per Compartment - 2 
 Material - Poplar 
 Nails - Cement or Rosin Coated 
 
 '4- ^\^ 4 
 
 ■^1^ 
 
 24. 
 
 ^ 
 ^ 
 
 Fig. 20. — Bin No. 5. This is bin No. 4 divided in the middle for double- 
 binning purposes. 
 
 CapacitLj - 0. 56 Cu. Ft. per Bin 
 Ho. per Compartment- 4 
 loafer/ a I -Poplar 
 Nails -Cement or Rosin Coated 
 
 ^'->l K-- 
 
 V-si. 
 
 
 <- 
 
 12' 
 
 Fig. 21. — Bin No. 8. Four such bins will occupy one compartment of the 
 Standard Rack shown in Fig. 16. Or various other bins may be used with 
 this one in the same compartinent. 
 
 / 
 
THE STORE ROOM 
 
 111 
 
 on this item to store say twice as many as heretofore. 
 In this case either one double bin 2 or two single bins 4 
 may be used, and usually a slight rearrangement of bins 
 will enable the storekeeper to use one whole compartment 
 
 12" 
 
 24" 
 
 36" 
 
 1 
 
 l_ 
 
 1 '' 
 
 
 5//5 
 
 
 din*9- 
 
 
 5iif!3 
 
 dirflZ 
 
 dirfl3 
 
 Bin^/3 
 
 
 
 
 
 
 \ 
 
 
 1 
 
 1 1 
 
 
 : 1 II 
 
 J u m 
 
 tU 1 
 
 
 
 
 
 B/r?^7 
 
 
 
 
 Bin ^10 
 
 Bin* 10 
 
 
 1 
 
 i 
 
 
 1 
 
 1 1 
 
 \ 
 
 
 Bir?#S 
 
 
 Bin*8 
 
 
 Bm*8 
 
 
 
 i i 
 
 ' i 
 1 1 
 
 1 
 1 
 1 
 
 1 
 
 i i 
 
 1 
 1 
 1 
 
 t 
 
 1 1 
 
 1 i 
 
 [ 
 
 p r- 
 
 i^ 1 
 
 
 Bm^^ 
 
 
 Bin *4 
 
 
 1 1 
 1 1 
 1 1 
 
 
 
 
 
 
 din ^4 
 
 
 \ \ 
 
 
 11 4_ 
 
 -\ ' ' 
 
 
 Bini^l 
 
 Bin^l 
 
 
 _ 
 
 
 Fig. 22. — Typical arrangement of various interchangeable bins in one 
 standard rack. Many other combinations are possible, so that rearrange- 
 ment of storage units is an easy matter. 
 
 of the rack so that all of this size bolts will be kept 
 together in adjacent bins. 
 
 In many store rooms, due to the inflexibility of equip- 
 ment, such rearrangement would be made only with the 
 
112 
 
 FACTORY STORESKEEPING 
 
 (Courtesy Universal Winding Co.) 
 Fig. 23. — Standard rack with interchangeable bins. 
 
 {Courtesy Universal Winfling Co. 
 Fig. 24. — Storage of bar and plate stock. 
 
THE STORE ROOM 113 
 
 greatest difficulty, if indeed it would even be attempted. 
 More commonly the increased supply would be dumped 
 into some vacant bin not within speaking distance of the 
 existing supply, thereby increasing the troubles of the 
 storekeeper. Only through interchangeable storage 
 units may all of each different item be kept together 
 without excessive space reserve. 
 
 Installation and proper operation of such equipment 
 has been known to cut down by more than half the 
 amount of storage space required for a given number of 
 articles. The reason for this is readily seen. Under 
 most conditions of storage, where rearrangements are 
 not easily made, the storekeeper plays safe by leaving 
 quantities of vacant space in which additions to stock 
 may be absorbed. It is the exception where the garden 
 varieties of bins are found more than half filled, with 
 the result that space utihzation is only 50 per cent of 
 what it should be. The waste of head room, moreover, 
 is frequently enormous. With racks and bins of the 
 type described, however, the storekeeper may ffil each 
 bin completely, knowing that with the contracting and 
 expanding requirements of the business he can readily 
 shift bins to meet current needs, keep all of any one item 
 together, secure maximum space utilization and largely 
 prevent ''overflow" bins. 
 
 Occasions arise, however, where overflow bins should 
 be used rather than undertake the rearrangement neces- 
 sary to provide for out-of-the-ordinary expansion. 
 When it is known that the increase in amount to be 
 carried is temporary, the permanent storage space may 
 be completely filled and the temporary excess placed 
 in an overflow bin (which may be simply an extra supply 
 of these standard racks and bins left vacant for the 
 purpose) located at any convenient point. In this case 
 a cross-reference overflow bin tag (see Fig. 25, page 114) 
 on the permanent bin tells the location of the overflow bin 
 for that item, and on the overflow bin the regular bin tag 
 (Fig. 30, page 119) is placed. No bin tag, but only the 
 
114 
 
 FACTORY STORESKEEPING 
 
 cross-reference tag, should be on the permanent bin, and 
 no issues must be made from this bin as long as the other 
 is in use, so as to insure that all issues be made from the 
 excess (overflow) stock in order that it will be disposed 
 of first, releasing this space and leaving eventually 
 
 only the permanent bin to be 
 looked after. The only excep- 
 tion to this procedure would be 
 where the material is subject 
 to deterioration and the over- 
 flow (usually the most recent 
 shipment received) must there- 
 fore wait until the older ship- 
 ments have been used up. 
 
 Except where requirements 
 may be very accurately fore- 
 told it is best not \o plan in the 
 original layout of the racks and 
 bins on using every bin of every 
 rack, but a vacant bin or com- 
 partment at regular intervals 
 This is for the 
 
 CROSS REFERENCE CARD 
 FOR BALANCE 
 
 SYMBOL 
 
 See tag in bin 
 
 refers the storekeeper to 
 
 of everflow stock which must be 
 
 disbursed first. 
 
 Fig. 25.— Overflow cross-refer- 
 ence bin tag. This card is placed should be left 
 
 on the regular issuing bm,^and p^j.pose of making rearrange- 
 ments more easily through 
 the ability to utilize this 
 space in case a bad guess is made or in case increased 
 room for one or more articles becomes necessary. Just 
 what proportion of space should be left depends on the 
 accuracy with which needs may be and have been pre- 
 determined and on the room available for storage; 
 ordinarily one-half of one compartment of every standard 
 four-story rack (Fig. 16, page 108) is sufficient with reason- 
 ably careful original layout. This is equivalent to a space 
 reserve of 6 per cent — much less than is usually found 
 necessary where flexibility in equipment is not provided. 
 The racks and bins here illustrated are made of 
 wood. 
 
THE STORE ROOM 
 
 115 
 
116 
 
 FACTORY STORESKEEPINO 
 
THE STORE ROOM 117 
 
 Depending upon the type of material to be stored, 
 various other types of racks and bins may be found 
 serviceable. For instance, the hopper bin illustrated 
 in Fig. 26 (page 115) has been found useful in some cases, 
 
 Fig, 28. — Vertical stowage of lumber in sizes up to 2 by 12 in. by 16 ft. 
 
 and of course for handling bar stock, castings, barrels and 
 such non-binned items, suitable storage facilities would 
 have to be provided in addition to the standard racks and 
 bins described. 
 
118 
 
 FACTORY STORESKEEPING 
 
 It may be well at this point to mention the advisability 
 of providing a ''morgue" or definite storage place for 
 semi-obsolete material which it is not desired to keep 
 with the active items. This may be a special part of 
 the regular store room devoted to the purpose, or a 
 separate room may be provided where less attention 
 need be given to systematic arrangement, storage, and 
 handUng. The same sort of provision for temporary stor- 
 age of strictly departmental 
 and personal articles has been 
 found extremely useful in 
 keeping the departments clean 
 and at the same time provid- 
 ing a definite and known 
 storage place for all such 
 miscellaneous articles. 
 
 Metal Racks. — There is 
 little question that racks and 
 bins constructed of metal 
 offer many possible advan- 
 tages over wooden equip- 
 ment, even though the original 
 cost be somewhat greater. 
 
 on^rTcdvirg^H'^-hfredoSS It is hopcd that eventually 
 ning is used, for recording receipts metal equipment embodying 
 
 the same degree of flexibility 
 and interchangeability as the wooden units described 
 will be placed upon the market. 
 
 Double Binning, — In choosing the types of racks and 
 bins and in laying out the store room very careful con- 
 sideration should be given to the question of "double 
 binning." This practice consists theoretically in divid- 
 ing each bin into halves by a partition, and thereafter 
 using one half as a receptacle for all incoming lots and 
 making all withdrawals for issue from the other half, 
 reversing the process when the latter becomes empty. 
 On each bin is -a bin tag, the incoming tag. Fig. 29, for 
 
 SE-i-AS 
 U.W.Co. 
 
 PARTIAL REC 
 PURCHASE ORDER P - 
 
 ■ EIPTS ON 
 
 OP 
 
 
 1 
 
 1 
 
 DATE 
 
 LOT 
 NO. 
 
 QUANTITY 
 RECEIVED 
 
 TOTALS 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
THE STORE ROOM 
 
 119 
 
 recording in totals the amounts received from time to 
 time,^ and the outgoing tag, Fig. 30, for entering each 
 withdrawal as it occurs and bringing down the balance 
 in this bin. Or should the unusual case occur where the 
 incoming bin becomes filled before the outgoing bin is 
 empty and overflow space is 
 not available, the matter may 
 be handled in a number of 
 ways according to the store- 
 keeper's judgment. For in- 
 stance, a hand count may be 
 made of what is left in the 
 outgoing bin, the new ship- 
 ment put in this bin with the 
 old stock on top, and the 
 amount added to this tag, 
 and future issues made from 
 this bin as before. This will 
 result in the new lot being 
 issued before the older mate- 
 rial in the incoming bin, which ^^°- so.-issuing bin tag placed 
 
 , on issuing bin where double-bm- 
 
 may or may not be serious; ning is used, for recording issues 
 •f- •. ■ ,1 1 only. This tag serves also with 
 
 it it IS, the same procedure as single bin method. 
 described may be followed 
 
 except that the tags are reversed and issues are made 
 from the previous incoming bin. 
 
 The principle of double binning may be used with a 
 great deal of profit in almost every store room and it 
 should be incorporated wherever possible. I say the 
 principle of double binning, for the method described 
 may be followed where the material is not binned at all 
 but piled or stacked on the floor or placed on trucks, 
 or put in racks as is the case with bar stock. One of 
 the two outstanding results secured through double 
 binning is accuracy of inventory — a consummation usually 
 
 1 A separate tag may be made out for each shipment received if desired, 
 and in many cases this is the best praciice. 
 
 SFIAS 
 U.W.CO. 
 
 T9I 
 DATE RECEIVED STORES SVMBOL LOT NO. 
 
 MONTH 
 
 DAY 
 
 s 
 
 DESCRIPTION 
 
 
 LOCATION 
 
 PURCHASE ORDER NO. 
 
 QUANTITY 
 RECEIVED 
 
 KIND OF 
 UNIT 
 
 DATE 
 ISSUED 
 
 QUANTITY 
 
 ISSUED 
 AND BAL- 
 ANCE ON 
 
 CHARGE TO 
 
 
 
 
 __ 
 
 1 1 
 
 
 
 1 
 
 
 
 CONTINUED ON SACK 
 
120 
 
 FACTORY STORESKEEPING 
 
 worth all it costs. It is secured in this way: Recog- 
 nizing that there is one and only one way to be sure of 
 what our inventory is — through an actual and careful 
 physical count at the bin — the requirement is set up that 
 whenever an issuing bin for any item becomes empty, or 
 whenever a new shipment is received, a hand count must 
 
 8.F. 3AS STORES srl>,t,OL 
 CO. 
 
 S 
 
 CREDIT TO 
 
 c 
 
 LOCATION 
 
 QUANTITY 
 
 BAL.ON HAND 
 
 KIND OF UNIT 
 
 UNIT PRICE 
 
 TOTAL VALUE 
 
 FOR 
 
 
 
 
 MONTH 
 
 DAY 
 
 YEAR 
 
 STORES ISSUE 
 
 STOREKEEPER: Please issue above stores 
 
 
 Written 
 
 19 
 
 
 Wanted 
 
 19 
 
 
 
 
 Issued 
 
 19 
 
 APPROVFP 
 
 REC 
 
 EIVED 
 
 
 
 
 
 
 APPOR- 
 TIONdB 
 
 TAG 
 
 BALANCE 
 SHEtT 
 
 
 COST 
 SHEET 
 
 STORFS DESCRIBED AeOV£ HAVE SEEN ISSUED 
 
 
 
 
 
 
 
 
 
 
 SIGNED Br STOREKEEPER OR REPRESENTATIVE 
 
 Fig. 31. — Stores issue. When properly filled in and signed this consti- 
 tutes storekeeper's authority to issue stores. It serves also as a record of 
 the transaction and for cost purposes. 
 
 be made of the amount actually on hand. Whenever a 
 bin tag becomes exhausted either because it is filled 
 with entries or because zero amount has been reached, it 
 must be sent at once to the balance clerk so that balance 
 on the proper balance sheet may be checked. Therefore 
 when the issuing bin becomes empty the balance on its 
 bin tag should be zero, thus dictating a physical inven- 
 
THE STORE ROOM 
 
 121 
 
 tory of the incoming bin. The result of this count is 
 entered on the regular issuing tag or on the existing 
 incoming tag, Fig. 29, which accompanies the bin tag, and 
 the two are sent to the balance clerk for checking, one 
 of whose duties is to see that such counts are made regu- 
 larly and accurately. It will be seen that this procedure 
 results in the taking of inventory every time the issuing 
 
 ^ STORES aYM COL 
 
 S.F. 4A8 
 CO. 
 
 CREDIT TO 
 
 c 
 
 LOCATION 
 
 QUANTITY 
 
 BAL. ON HAND 
 
 KIND OF UNIT 
 
 COST PER UNIT 
 
 TOTAL VALUE 
 
 PLEASE CREDIT WORKED MATERIALS OHDER NC 
 
 
 WITH 
 
 
 
 
 AND CHARGE BACK TO STORES. 
 
 NOTE: IF THIS 13 A TRANSFER TO ANOTHER ORDER, THIS CREDIT MUST BE ACCOMPANIED 
 
 BY A REGULAR STORES ISSUE AGAINST SUCH ORDER. 
 
 STORES CREDIT 
 
 MONTH 
 
 DAY 
 
 YEAR 
 
 1 HAVE R-CEIVED THE ABOVE STORES AND HAVE ENTERED THE QUANTITY RECEIVED ON 
 STORES BIN TAG, 
 
 TAG 
 
 BAL. 
 SHEET 
 
 COST 
 SHEET 
 
 
 
 BIG. CF INSPEC. 
 
 WHO DELIVERS 
 
 G'DS TO STOfiES 
 
 
 
 
 
 
 
 
 SIGNED BY STOREKEEPER 
 
 OR HIS REPRESENTATIVE 
 
 Fig. 32. — Stores credit. Used for returning unused stores; the reverse of the 
 stores issue shown in Fig. 24. 
 
 bin becomes empty and always for each item when there 
 is least on hand. 
 
 Another partial check between bin contents and book 
 balance may be secured currently between these physical 
 inventories. When a bin tag becomes exhausted, even 
 though the issuing bin is not yet empty, the amount on 
 hand in the incoming bin (obtained simply from the 
 entries on the incoming tags) may be added to the bal- 
 
122 
 
 FACTORY STORESKEEPING 
 
 ance on the outgoing bin tag and the sum entered on the 
 tag before it is sent to the balance clerk. This is simply 
 a paper check which may be used between the actual 
 physical count. Additional discussion of inventory 
 keeping will be found in Chap. X, under Inventories. 
 
 Sf 3 AP 
 CO. 
 
 Eet'd 
 Iss'd 
 
 c 
 
 MOVE ^"'2 MATERIAL 
 
 AS directed: 
 
 LOCATION 
 
 
 JOB NO. 
 
 
 
 
 
 
 FROM 
 
 EDILDING ON Pr.OOR 
 
 TO 
 WRITTEN T!V 
 
 HATE Ifl 
 
 HECEIVED RY 
 
 Tit 
 
 
 
 
 ROUTE 
 SHEETS 
 
 PAY 
 
 SHEET 
 
 COST 
 SHEET 
 
 1 HAVE MOVED THE MATERIALS AS SPECIFIED ABOVE 
 
 
 
 
 Signed 
 
 
 
 Fig. 33. — Move order. 
 
 The second, and in many cases equally important 
 advantage of double binning arises through the enforced 
 turnover of goods on hand. With the double-binning 
 method of storage it is impossible to let steel parts, for 
 instance, lie undisturbed in the bottom of a bin longer 
 than it takes to use what the bin holds. I have seen 
 iron washers dumped from the bottom of single bins so 
 completely rusted as to be quite worthless; they had 
 simply remained there while issues were made from the 
 top of the pile, or in other words from the supply most 
 
THE STORE ROOM 123 
 
 recently purchased. The necessity of thus turning over 
 stock arises with all materials which rust easily or which, 
 like rubber, are subject to deterioration in other ways. 
 The only way to enforce turnover is to make it automatic. 
 The double binning principle gives this automatic 
 feature, whereas the use of a red rag or board over the 
 "minimum" amount in the bin, besides other short- 
 comings, leaves this important matter to the carefulness 
 or whim of the storekeeper. 
 
 The fortunate thing about double binning or piling is 
 the fact that it ordinarily requires little more space than 
 does single binning. If we start with a single bin holding 
 a maximum of 8,000 bolts of a certain size and wish to 
 double-bin them, we would put a partition in the middle 
 with 4,000 on each side, and start issuing from one of these 
 halves. So far we have used no more space than origin- 
 ally, but since it is desired to keep new shipments out of 
 the issuing bin, the vacant space which is constantly 
 increasing in this bin is not available for storage, so 
 that if the maximum received at any time exceeds the 
 capacity of the incoming bin (in this case 4,000) addi- 
 tional space becomes necessary. Unless resort to over- 
 flow bins be constantly made, this means a larger bin 
 capacity than that required with single bins. With 
 a well arranged store room, however, the additional 
 space thus required for binned items does not ordinarily 
 exceed 25 to 35 per cent; for piled or racked materials 
 where overhead space cannot be so effectively utilized, 
 the percentage would be higher. This additional space 
 in all cases, however, may ordinarily be secured in the 
 average store room through attention to a more effective 
 layout and a better space utilization, particularly of 
 overhead room. 
 
 Minor Equipment. — ^As regards office equipment, 
 scales, ladders, trucks, tote cans and other minor equip- 
 ment of the store room little need be said, not because 
 such equipment is unimportant but because there is 
 
124 FACTORY STORESKEEPING 
 
 already a great body of descriptions and illustrations of 
 these things, because the investment in them forms a 
 comparatively minor element ordinarily, and because the 
 various dealers in them are ready to help in selecting 
 from the great variety offered the particular type of 
 equipment which best suits varying local needs. 
 
 It is undeniably convenient to have the latest counting 
 and weighing machines, automatic conveyors and similar 
 labor-saving equipment on hand when they are needed, 
 but on the other hand the cost of the use of these facili- 
 ties must be compared with the cost of their absence. 
 In very large store rooms there is little question that the 
 very best in such equipment is none too good and is a 
 safe investment; on the other hand, I have found many 
 cases where expensive tiering machines, counting and 
 weighing machines, scales and the like remained covered 
 with dust for long periods. The cost of having them on 
 hand for the few times they were needed far exceeded 
 what would have been the cost of using the good old 
 strong-arm methods during the exceptional times when 
 the latter became necessary. Just because these various 
 pieces of apparatus are on the market and in use in 
 many store rooms is no guarantee that they would be a 
 profitable investment for our particular conditions. If 
 we have only two or three men in the store room anyway, 
 all of the labor saving devices in the world might not 
 enable us to release one of them or to give much better 
 service. On the other hand, nothing should be sacri- 
 ficed to accuracy and speed in the receiving, storing, and 
 disbursing of materials, and in keeping inventory figures 
 correct, and if an otherwise overworked storekeeper is 
 kept busy an hour hand-counting items which could be 
 accurately machine-counted in 5 minutes it would be 
 niggardly not to supply him with scales for the purpose ; 
 and so on. The layout of the store room and the provi- 
 sion of interchangeable standard racks suited to the 
 business, as discussed previously are matters for very 
 
THE STORE ROOM 125 
 
 careful consideration because these features of the work 
 run quickly into thousands of dollars and vitally affect 
 the long-time efficiency of operation of the department; 
 mistakes, furthermore, once made are not easily or 
 cheaply rectified; as regards the minor equipment the 
 matter is ordinarily not so serious and conservatism is 
 the best policy until the need in any particular case is 
 fully proved. 
 
 There is a certain minimum of equipment, however, 
 which it would be foolish not to adopt forthwith in any 
 store room. In the case of trucks, it is frequently found 
 that not only are insufficient quantities of trucks pro- 
 vided, but that they have been poorly selected for the 
 purpose to which they are to be put, and that they 
 consist of miscellaneous kinds. It is always necessary 
 to provide a minimum of trucks in any given case. To 
 this minimum should be added a sufficient number so 
 that the work of the store room is not held up for lack of 
 a truck or while the storekeeper goes elsewhere to hunt 
 one up. In this connection pains should be taken to 
 see that trucks be properly loaded and expeditiously 
 despatched and that empty trucks be systematically 
 returned to designated stations. The type of truck 
 best adapted to our particular business should be care- 
 fully ascertained, although the tendency to stock up 
 with special trucks not suitable for miscellaneous moving 
 must be guarded against. 
 
 The same considerations apply to tote boxes and other 
 containers used for moving material on trucks or by 
 hand. A slight additional investment for a supply of 
 such equipment in addition to what the average store 
 room has on hand will save the storekeeper and trans- 
 portation men much time during the course of a few days. 
 
 An ample supply of suitable ladders will repay the 
 investment in them. These should be made with a 
 broad base, wide step, and plenty of room at the top 
 on which to set tote boxes or lay individual articles. 
 
126 FACTORY STORESKEEPING 
 
 They should be Hght and provided with substantial 
 casters whereby they may be quickly and readily moved 
 from place to place. 
 
 Finally in the list of necessities comes the question of 
 stowage "on wheels" for all materials where this method 
 is suitable. This refers to the stowage on elevating 
 truck platforms of items which are ordinarily piled, such 
 as paper, leather, shooks, cloth, box cartons in the flat 
 state, and similar items. With most of such materials 
 much unnecessary handling, both in the store room and 
 in the shop, may be avoided by providing a sufficient 
 number of platforms either with or without specially 
 constructed racks as found necessary, on which materials 
 may be piled instead of on the floor. In most cases 
 with the exercise of a little ingenuity these platforms 
 may be used to pile material to a considerable height; 
 and in some cases, above the practicable platform piling 
 height, a permanent storage rack is erected under which 
 sits the platform with its pile of material. Most advan- 
 tage will be secured in this method of storage if standard 
 lots may be determined upon as the amout to be piled 
 on one platform, so that no counting is necessary when 
 a withdrawal is made, the elevating truck being simply 
 run under the platform, raised, the load withdrawn, 
 transported to the point of use, deposited, and the truck 
 withdrawn for another load. The possibilities in saving 
 handling expense in the shop are very great with such 
 platforms. I have counted no less than seven unneces- 
 sary handlings of materials in process through different 
 machines, due to the unloading from the garden variety 
 of trucks to the floor, picking it up and putting it through 
 the various machines, piling it on the floor again, loading 
 it to the truck for transportation to the next machine, 
 and finally unloading to the fioor beside this machine. 
 Much of such handling, moreover, was done by the 
 mechanic who left his machine idle, although there was 
 plenty of work to be processed. 
 
THE STORE ROOM 127 
 
 Stowage. — The physical arrangement of goods in 
 stores, including the placement, removal, and general 
 rules for handling. The following definitions are given 
 in order that the terms used in succeeding discussions 
 may be clear. The illustrations, Fig. 34, show the same 
 thing graphically 
 I. Definitions: 
 
 1. Article. — Any one kind of material, as Machine 
 Bolts. 
 
 2. Item. — Any one size or variety of an article, as 
 Hex Head Machine Bolts, U. S. Standard, Y^' X 3>^". 
 
 3. JJnit or Piece. — Any single piece as one holt (as 
 above) . 
 
 4. Package. — A quantity in original container, as 1 
 box of bolts (as above) , 12 in a box. 
 
 5. Lot. — A quantity received and stored at any one 
 time, as 1 gross holts (as above) 12 hoxes, 12 in a hox. 
 
 6. Standard Lot. — A quantity determined upon as 
 most suitable for our particular conditions of use, as 50 
 holts (as above). 
 
 7. Column. — A number of units (or packages) in 
 vertical arrangement, one wide, one deep, two or more 
 high. 
 
 8. Row. — A number of units in fore and after arrange- 
 ment, one wide, two or more deep, one high. 
 
 9. Course. — A number of units in left and right 
 arrangement, two or more wide, one deep, one high. 
 
 10. Section. — A number of rows in vertical arrange- 
 ment, one unit wide, two or more deep, two or more high. 
 
 11. Tier. — A number of rows in left and right arrange- 
 ment, two or more units wide, two or more deep, one high. 
 
 12. Block. — A number of courses in vertical arrange- 
 ment, two or more units wide, one deep, two or more high, 
 
 13. Stack. — A number of tiers in vertical arrangement, 
 two or more units wide, two or more deep, two or more 
 high. 
 
 14. Wedge Stack. — An arrangement of units in the 
 form of a wedge, as illustrated by the storing of shells, 
 cans and other cylindrical bodies. 
 
128 
 
 FACTORY STORESKEEPING 
 
 15. Pyramidal Stack. — An arrangement of units in 
 the form of a pyramid as illustrated by the storing of 
 cannon balls and other spherical bodies. 
 
 16. Pile or Heap. — An irregular mass of pieces such as 
 a pile of coal. 
 
 ^ 
 
 ^ 
 
 f 
 
 ^ 
 
 ^ 
 
 ^ 
 
 ^ 
 
 f^ 
 
 
 ^ 
 
 
 ^ 
 
 
 y^ 
 
 
 y^ 
 
 
 ^y^ 
 
 
 ^^ 
 
 
 y^ 
 
 
 ^ 
 
 
 ^ 
 
 
 y^ 
 
 
 ^ 
 
 
 y^ 
 
 
 y^ 
 
 Column 
 
 {I- wide 
 
 Unit or 
 
 Package ^^'''"'^M-deep 
 /3-Un/f-j high 
 
 13-Unifs high 
 
 Block 
 
 \5-wide 
 l-deep 
 
 13-Un'ifs high 
 
 r 1 5- wide 
 
 Course I ,_j^^p 
 
 I- Unit high 
 
 10 
 
 Pyramidal Stack 
 (Balls) 
 
 Sfack(Bo.es){f-J,% f^ow[^£p 
 
 13-Unifs high l-Unif-high 
 Fig. 34. — Stowage units, illustrating the text on this subject. 
 
 Wedge Slack 
 (Cans) 
 
 II. Instruction for Stowage. — A few cardinal rules for 
 the stowage of materials, strictly observed, will facilitate 
 handling and taking inventory of stores. 
 
 1. Have a Designated Stowage Place for Each Item, and 
 so far as possible keep all of that item and no other in that 
 place, properly stowed. When it becomes necessary to 
 place different articles or items, or different lots of the 
 same item, in the same stowage space, separate the piles 
 
THE STORE ROOM 129 
 
 or stacks by at least 2 inches, if in bins, and by at least 5 
 inches if on platforms or in piles on floor between aisles. 
 Be sure that this arrangement is such that it never 
 becomes necessary to remove one item to get at another. 
 
 2. Arrange Items for Maximum Facility in Taking 
 Inventory. — In other words, as you face the stowage area 
 from the aisle, commence piling at the back left-hand 
 corner and complete this column to the top, then in 
 front of this build the next column and so on, com- 
 pleting the left-hand section. Similarly complete the 
 next section to the right, each column being completed 
 so that no vacant spaces will remain hidden, before a 
 new one is started, only the last column remaining 
 incomplete as shown at Fig. 34, No. 8. Placfe all labels 
 facing the aisle where possible. 
 
 In taking inventory, multiply number of packages or 
 units per block by number of full blocks, and add to 
 this the number of packages in the incomplete section.^ 
 Or for a wedge stack, number in block equals : 
 
 Wedge stack: 
 
 number on bottom course X {No. of courses + 1) 
 For a pyramidal stack: 
 
 number on bottom course (No. of courses + 1 ) (2 X No. of courses + 1 ) 
 
 _ 
 
 3. Provide for Securing Turnover of Stock. — The method 
 of doing this will vary somewhat as between single and 
 double binning, stacking, or piling : 
 
 A. Single Stacking. — Always issue from the right 
 hand side of the stack, starting with the incomplete 
 
 1 In some cases stowage may be arranged so that the taking of inven- 
 tory is even quicker than this. It is often possible with articles which 
 occupy space in direct proportion to quantity, to establish a scale or 
 gauge at the side of the stack, bin, carboy or other container which at a 
 glance indicates sufficiently accurately the quantity on hand. Familiar 
 examples of such scales of quantity are found in coal bins and in 
 lumber sheds, and the general method is applicable to the measurement 
 of many other materials if a suitable measure be devised. 
 
130 FACTORY STORESKEEPING 
 
 section (see Fig. 34) and working in the opposite direc- 
 tion (to the left) from that in which the stack was built 
 up. Remove each column and section complete before 
 another is disturbed. (If stacks tend to topple over, it 
 may be necessary to remove items by tiers, leaving the 
 top of the stack instead of the right hand section incom- 
 plete, and modify procedure accordingly. This, how- 
 ever, is more wasteful of stowage space and should not be 
 done unless necessary.) When a new lot of the same 
 item is received, pile it (as directed in 2 above) to the 
 left of present lot, removing the left hand sections of the 
 latter and putting these packages on the right hand side 
 as it becomes necessary to provide the necessary room. 
 The new lot may be placed flush with the old in single 
 stacking unless it is desired for identification purposes 
 to keep the two lots physically separate. Leave odd 
 packages on the right hand section of new lot where 
 separation of lots is necessary, or use more of the old 
 lot to fill in new stack complete where stacks are to be 
 flush throughout. Where it is impracticable or too 
 expensive to move the old lot to make way for the new, 
 the latter may be piled to the right of the present lot as 
 described in the next topic. 
 
 B. Double Stacking. — Where double stacking is prac- 
 ticed, it is necessary always to have space for two stacks, 
 one from which all issues are made, the other to which all 
 receipts are added. Each stack is built up as explained 
 in topic 2 above, and between the two, a vacant space of 
 not less than 5 inches should ordinarily be left. With- 
 drawals are made from right to left of issuing stack as 
 explained, and when issuing stack is exhausted start 
 issuing from the previous incoming stack, and put 
 future receipts in space just left vacant. Here again 
 procedure will have to be modified as suggested (3-^ 
 preceding) where it is desired to keep each lot separate. 
 Which stack or lot is outgoing and which incoming at 
 any particular time is indicated by the difference in bin 
 tags, or by a marker, if desired. 
 
THE STORE ROOM 131 
 
 4. Establish Standard Lots for Stowage and Issue of 
 Materials Where Practicable. — It is, unfortunately, seldom 
 possible to make the trade container, box, keg, carton, 
 etc., at once our unit of purchase, stowage and issue 
 throughout, although this should be done where possible. 
 In such cases the container need not be opened (except 
 for inspection and possible treatment against rust) 
 until it reaches the point of use. Clerical work in such 
 cases is much simplified, since the transactions relate to 
 a few packages containing many units. 
 
 Where this is not possible, however, it will facilitate 
 issuing and quick service if at the time of inspection 
 instead of putting the units back in original containers 
 or storing them loose in bins they are divided off when 
 being counted into predetermined standard amounts 
 which are suitable for delivery as separate lots to the point 
 of use. Such items as bolts and nuts, screws, special 
 castings and so on may always be needed for assembly 
 of a standard product in certain definite quantities; this 
 quantity would be sorted into suitable boxes or put into 
 strong bags and stored as a standard lot ready for issue 
 without further counting. 
 
 Again, the method of storing in bulk and issuing by 
 units described below under "Maintenance Stores" 
 (page 35) will cut down the clerical work incident to book 
 entries and to inventory taking. 
 
 5. Utilize Available Stowage Space to Utmost Capacity. 
 Study your requirements in each material and try to 
 have just enough and not too much space for each article. 
 By providing standard racks and interchangeable bins, 
 together with leaving vacancies every so often at the 
 start and providing overflow bins when necessary, one 
 may afford to be very miserly in alloting space for the 
 various items without fear of later confusion in case his 
 estimate was wrong. Readjustments in such cases may 
 readily be made. 
 
 The great obstacle to more effective space utilization 
 
132 FACTORY STORESKEEPING 
 
 is the lack of data showing how much space a given 
 number of any item will occupy, or how many may be 
 stored in the given space which is available. A start 
 has been made in the collection of such information and 
 some sample values are shown in the Appendix. 
 
 Protection. — From Fire and Explosion. — Since in the 
 normal factory the equivalent of more money is held 
 within the four walls of the store room than in any other 
 part of the establishment, it follows that every precaution 
 should be taken to insure against loss. The store room 
 should of course be of fireproof construction if practi- 
 cable. In any event, certain precautions must be 
 observed to prevent loss through explosion or fire. 
 
 No inflammable material, Such as gasoline, powder, 
 dynamite, and so on, should ever be allowed in the store 
 room itself. Such material should be stored in an iso- 
 lated position away from all buildings. 
 
 Within the store room itself, cleanliness should be 
 absolutely insisted upon. Oily waste, paper, burlap, and 
 all materials subject to spontaneous combustion, or 
 which readily serve to feed an incipient blaze, should be 
 rigorously excluded from the store room except as they 
 may be brought there, or accumulate temporarily, 
 pending prompt disposal. 
 
 All aisles must be kept absolutely clear of permanent 
 obstructions. The only obstruction which should be 
 permitted in any aisle is that caused temporarily by 
 men and trucks actually in process of delivering goods. 
 When a truck has been emptied or filled, it must not be 
 allowed to clog up the aisle, but should be taken immedi- 
 ately to designated positions. The possibility of con- 
 trolling a fire should not be lessened through unnecessary 
 obstructions. 
 
 It goes without saying that the most modern overhead 
 sprinkler system should be installed. Particular care 
 must be taken, furthermore, to see that the sprinkler 
 has a chance to perform properly through having plenty 
 
THE STORE ROOM 133 
 
 of room between sprinkler head and piles of material. 
 Having determined the minimum head room which 
 should be left, constant vigilance through systematic 
 inspection is necessary to prevent store room attendants 
 from encroaching upon this space. 
 
 An ample supply of hand fire extinguishers should be 
 provided at convenient points. An incipient blaze 
 may be extinguished through the use of such extin- 
 guishers before it has become sufficient to start the 
 sprinkler heads. 
 
 As an extra precaution, a hose connected to a head 
 different from that to which the sprinkler system is 
 attached should be provided. 
 
 As to the use of wood instead of steel storage racks 
 and bins little can be said as regards insurance rates 
 because conditions vary so widely, making individual 
 appraisals necessary in each case. For instance, the 
 difference in rates in any given case between sprinklered 
 and unsprinklered store rooms is very materially in favor 
 of sprinklers, and this holds true in general regardless of 
 what kind of storage equipment is used. In unsprink- 
 lered store rooms the use of metal equipment might 
 amount to as much as 20 per cent saving in rates over 
 wood equipment in some cases, whereas in others the sav- 
 ings would be negligible. With the use of sprinklers, 
 however, which is the only safe way, there appears 
 ordinarily to be little choice as against metal and wood as 
 far as insurance rates go. 
 
 Rust. — All material subject to deterioration through 
 rust must be treated by some one of the numerous 
 preparations available for this purpose. It must be 
 remembered that the chemical decomposition of metals 
 takes place much more rapidly during the warm humid 
 days of summer, and particular attention is necessary 
 at this time. Parts which are to be held in storage more 
 than a week should be given a coating of rust 
 preventative. 
 
134 FACTORY STORESKEEPING 
 
 Specifications, tests and prices of the various rust 
 preventing agents may be obtained from the vendors, as 
 may also the machines and solutions by which they may 
 be readily removed. Care must be taken to secure an 
 agent which does not readily evaporate and which does 
 not corrode or otherwise injure the surface of the metal. 
 
 In the discussion of double-binning methods, it was 
 emphasized that one of the prime advantages to be 
 derived through this method was the insurance of a 
 turnover of stock. Even with double-binning, however, 
 the turnover may be insufficient to prevent rust and this 
 method must be looked upon as a supplement to, and not 
 a substitute for, the use of rust preventing agents. 
 
 Hardening, Evaporation, and Similar Deterioration. — 
 In the case of materials such as rubber which hardens and 
 becomes useless with age, and in the case of certain oils 
 which solidify if left standing too long, the double- 
 binning principle comes fully into its own. The pro- 
 vision of one bin or aisle for all incoming material, its 
 brother being used for all issuing, as explained under 
 the discussion [of double-binning (pages 118 to 123) is 
 the only sure way to provide automatically and sys- 
 tematically for a regular turnover of stock. Since 
 double-binning requires somewhat more space than 
 single-binning, the principle may be used of course for 
 the storage of this kind of goods, while those not subject 
 to rapid deterioration may be single binned. The only 
 loss in the latter case is the loss of accuracy of inventory, a 
 sufficiently important consideration, however, in all cases. 
 
 Dust. — The prime prerequisite here is to keep the 
 store room thoroughly cleaned and to provide dustproof 
 racks for such articles as stationery, which would be 
 ruined should they become the least bit dirty. The 
 standard racks and bins described and illustrated pre- 
 viously are entirely adaptable to closed cabinets and 
 many such racks are in use today for the dustproof 
 storage of many different articles. 
 
THE STORE ROOM 135 
 
 Pilfering. — The success with which so many plant 
 activities may be controlled hinges at many points on the 
 accuracy of the inventory. Consequences have at 
 times been very distressing when 100 pieces were 
 supposed to be on hand when there were actually only 
 85. Accounting statements, furthermore, are mislead- 
 ing unless inventory of materials and work in process 
 be correct. Primarily, in order that any semblance of 
 control may be maintained, and only secondarily because 
 some of us have the habit of pocketing what does 
 not belong to us, a locked store room is necessary. 
 The psychological effect, furthermore, is excellent. 
 
 The temptation to petty theft is particularly strong 
 in the case of such handy household articles as tacks 
 and hammers, electric hght globes, ink, paper, mucilage, 
 and similar items. If such articles are left where they 
 may handily be slipped in one's pocket for home consump- 
 tion it is inevitable that that is what will happen to 
 many of them. Such temptations should be removed. 
 This does not mean, however, that we are to be parsi- 
 monious in furnishing supplies, or even that we may 
 not adopt a liberal policy in supplying at cost such 
 articles as the individual employees may desire. With 
 the locked store room and a tight rein generally, accom- 
 panied by a judicious amount of what workmen are 
 usually pleased to regard as ''red tape" most of the 
 needless requests and petty takings will disappear of 
 themselves and a liberal policy in these respects may 
 neutralize what might otherwise be considered irksome 
 system. It simply means knowledge at all times where 
 we stand and that insistence must be placed upon the 
 locked store room, the written requests, and the approval 
 of some responsible official before articles are furnished 
 for private consumption. 
 
 Maintenance Stores.— The adequate handling of 
 supplies used in the upkeep of plant offers peculiar 
 problems and difficulties because of the emergency nature 
 
136 FACTORY STORESKEEPING 
 
 of much of the maintenance work. Some factories 
 have made great strides in standardizing current inspec- 
 tion and repairs, and in planning and even paying a bonus 
 on the operations performed by this department, but 
 there is an irreducible minimum of hurry-up jobs which 
 places the retention of "system" in the maintenance 
 store room constantly to severe tests. On the one hand, 
 to maintain any semblance of control of inventory and 
 issue a certain amount of systematic routine must be 
 insisted upon; on the other hand a few seconds delay 
 when a steam pipe or water main bursts is not to be 
 tolerated. The question is how to secure control and 
 avoid delay. 
 
 Reference is made to preceding discussions of such 
 matters as organization, layout, the provision of adequate 
 equipment including standard interchangeable racks and 
 bins properly indexed with cross references, and operated 
 by double binning methods — all features of good store- 
 room management doubly important in this case. In 
 addition to these matters I wish simply to suggest 
 briefly means by which the work of the maintenance 
 department may be speeded up and yet controlled 
 in two features of its work which ordinarily cause most 
 concern — the handling of supplies and spare parts, and 
 the checking in and out of tools. 
 
 Supplies and Spare Parts. — It is needless to emphasize 
 the fact that the regulation of replenishment, follow-up, 
 inspection, storing, and balance sheet control previously 
 described is doubly important in the case of items which 
 have such potential possibihty of causing disaster through 
 an insufficient or unsuitable supply as have most of the 
 articles carried in the maintenance store room. Because 
 of their nature it also follows that a liberal policy as 
 regards amount of inventory must be adopted and that 
 this policy must be reflected in the setting of low limits 
 and amounts to order, and to such a plentiful allowance 
 must be added constant vigilance to anticipate extraordi- 
 nary requirements. 
 
THE STORE ROOM 137 
 
 Previously in this chapter, under Departmental 
 Supplies, two alternatives in charging, or allocating cost of 
 materials issued to the proper account, were indicated : 
 
 1. Charging departmental supphes simply to depart- 
 mental expense, to be taken up in overhead. 
 
 2. Charging departmental supplies to specific jobs 
 where desirable from a cost-finding standpoint. 
 
 In the case of maintenance department supplies both 
 methods are usually desirable — the first for small 
 inexpensive items, the second for expensive or special 
 materials which the particular job served should carry. 
 In cases where the reserve supply of those items which 
 are stocked is kept in a central store room from which 
 small current supplies are issued, the procedure described 
 under Departmental Supplies above, is applicable. 
 
 Where this is not the case, but the whole supply of 
 such parts as are needed for maintenance is stored in the 
 maintenance store room, a slightly different procedure 
 is necessary, in order that best results as a whole may be 
 obtained and the desired charges made between those 
 to be charged to departmental expense and those to be 
 charged special. 
 
 For those to be charged to departmental expense when 
 issued to the workman, the following will be found an 
 effective procedure : 
 
 A reserve supply will be kept in one bin, in original 
 package or in other standard lot as is desirable. On this 
 supply the regular procedure described for the central 
 store room will operate — in other words for each such 
 item there will be a balance sheet which controls replenish- 
 ment and records all transactions, and a bin tag at the 
 bin will be operated as described. Back to back or 
 alongside of this main bin will be another smaller bin 
 which is used for direct issue to the workman. When the 
 latter becomes empty, a transfer in bulk will be made 
 from the main bin, and at that time a stores issue will 
 be made for the quantity transferred, charging the 
 
138 
 
 FACTORY STORESKEEPING 
 
 amount to departmental supplies. The articles will 
 be placed loose in issuing bin, from which issues may be 
 made without further record. This procedure allows 
 immediate issue, gives accurate control of inventory of 
 main bin (upon which replenishment is based) and assists 
 in a turnover of stock. 
 
 For materials to be charged to specific joh number, 
 either those purchased specially or those of considerable 
 value, the proper charge is unknown until the use is 
 known. Where this use may be ascertained previous 
 to issue the stores issue may be filled out and placed 
 
 SF 7 AS U. M. CO. 
 
 CHECK NO.. 
 
 QUANTITY WANTED SYMBOL OF TOOL WANTED 
 
 DESCRIPTION OF TOOL WANTED 
 
 Signed by man receiving tools. 
 
 NOTE. ONLY ONE KIND OF TOOL CAN BE ISSUED ON 
 THIS CARD. BUT SEVERAL OF THE SAME KIND. 
 
 Fig. 35.— Tool check. 
 
 aside with the article until called for, which will expedite 
 action in delivery, but on a hurry-up j ob there is nothing 
 to do but give out the material as called for and attend 
 to the issues later. By following the procedure indicated, 
 however, the paper work at time of issue may be reduced 
 solely to rush jobs — a small proportion of the work in 
 well-run maintenance departments. 
 
 Tools and Fixtures. — A similarly simple procedure 
 covering tools will give the speed and definiteness 
 essential for effective work. Each tool, of course, must 
 have its own location, which must be so indexed and 
 cross indexed as to make it possible for an entire stranger 
 to find any tool in a very few moments, no matter 
 whether it is in its rack or in the hands of some mechanic 
 at the other end of the plant. 
 
THE STORE ROOM 139 
 
 This may be accomplished in the following way: 
 The tool racks must be plainly lettered according to a 
 systematic scheme. A card index of each tool refers 
 to the rack where it is stored. When a mechanic 
 desires a tool he comes to the window, fills out and signs 
 the tool check shown as Fig. 35, the attendant issues 
 him the tool, files the check by tool symbol, and in a 
 compartment with the mechanic's number on it files a 
 tag on which this tool's symbol is stamped. The whole 
 transaction should take but a moment. Looking at the 
 file of checks one may see just who has any particular 
 tool and where he has gone with it (in case recall is 
 desired in a hurry), and looking at the man's compart- 
 ment, one may see just what tools are now in his posses- 
 sion. When the tool is returned the mechanic is given 
 his check, the tag is replaced under tool symbol, and 
 the tool returned to its pigeonhole. 
 
CHAPTER IX 
 
 CLASSIFICATION AND SYMBOLIZATION OF 
 MATERIALS 
 
 Summary: Classification: Rules for Making — Symbolization: Rules 
 for Symbols — Basis of Industrial Classification — Basis of Mnemonic 
 Symbols — The Base Sheet of Mnemonic Classification — Classification of 
 Charges — Classification of Product — Classification of Stores — Other 
 Classifications. 
 
 A poor classification or a poor set of symbols is much 
 worse than none at all, while a sound classification with 
 suitable symbols is a remarkably effective tool. The 
 subject is too large for complete treatment in such a 
 volume as this, but at the risk of becoming somewhat 
 didactic I wish to point out how to avoid some of the 
 pitfalls as well as how to get a start in the classification 
 and symbolization of materials along lines which have 
 proved sound. 
 
 Classification. — First, the difference between classifi- 
 cation and symbolization should be kept in mind. 
 Classification is nothing more nor less than segregating 
 those things with which we deal into like and unlike 
 according to various bases — kind, purpose, effect and 
 so on. Classification is of course necessary for scientific 
 progress, and it is significant that little real progress 
 was made with any of our sciences until satisfactory 
 clasjifications had been developed. The difference 
 between empirical and scientific knowledge is largely a 
 matter of classification, and it should be looked upon 
 in the nature of providing a pigeonhole for each new 
 detail or fact as it is unearthed. To be of lasting ser- 
 vice a classification need conform only to the following 
 requirements : 
 
 Rules for Classification. — First. — The classification 
 
 140 
 
CLASSIFICATION OF MATERIALS 141 
 
 must be logical and utilitarian — on a basis proper to its 
 effective use, — and it must be consistent in adherence to 
 this basis. 
 
 Second. — It must proceed consistently from the general 
 to the specific. 
 
 Third. — It must be capable of being indefinitely and 
 consistently expanded. 
 
 Fourth. — It must be inclusive up to the present state 
 of knowledge. 
 
 Symbolization. — A symbol on the other hand is simply a 
 sign, letter, emblem or character of some kind which is 
 used to represent another, usually a longer, expression. 
 After a given classification is determined upon, the next 
 step is to assign to each component of the classification 
 a symbol which will appropriately represent it, so that 
 the act of symbolizing naturally succeeds and must 
 logically conform to the classification. Although 
 symbols are not indispensable they are exceedingly useful 
 if properly made, and we need only turn to the symbols 
 of chemistry as an example par excellence in this respect. 
 The requirements for an adequate system of symbols 
 may be stated: 
 
 Rules for Symbolization. — First. — The symbol system 
 must fit the classification. It must be elastic, and easily 
 and consistently expanded. The degree of subdivision 
 in the symbol should correspond exactly with the degree 
 of subdivision of the classification; that is, guard against 
 choosing a method (such as the decimal) which makes 
 necessary calling ''Physics" 570 while the coordinate 
 item ''Chemistry" must be 580.1, for example. In other 
 words provide for the maximum number of subdivisions 
 at any one stage ; thus there are twenty six letters but only 
 nine numerals available for use in any one position. 
 
 Second. — Symbols must be definite and clear. One 
 symbol must mean but one thing, and any one thing 
 must have but one symbol. A dropped symbol should 
 not be again used for at least a year. 
 
142 FACTORY STORESKEEPING 
 
 Third. — Symbols preferably should be capable of 
 being easily learned and easily remembered — mnemonic 
 and suggestive. Thanks to Berzelius, we are not likely 
 ever to forget that C stands for carbon, H for hydrogen, 
 and so on; few of us can remember for any length of time 
 that 598.761 represents a certain make of carbon steel 
 or that 500.16 indicates a departmental charge for mis- 
 cellaneous supphes furnished the machine shop. 
 
 Fourth. — Symbols preferably should be as simple and as 
 brief as is consistent with clearness and definiteness. It 
 is not only more mnemonic but much simpler and 
 briefer to write C instead of Dalton's hieroglyphic for 
 carbon. It is, moreover, perfectly clear and perfectly 
 definite. It may, on the other hand, be simple to write 
 H65 for ten-penny wire nails, but it is neither definite, 
 clear, nor mnemonic. 
 
 Fifth. — Symbols preferably should be as foolproof as it 
 is possible to make them. It should be difficult to make 
 and easy to catch mistakes in the writing and interpre- 
 tation of symbols. Thus, if we use both capital letters 
 and numerals in our symbol system, we must omit the 
 letters I (because it resembles the numeral 1), (resem- 
 bles zero), Q (resembles 2), and preferably U (resembles 
 letter V when hurriedly written). 
 
 Again, if we use letters at all we must preferably use 
 either all capital block or all small letters, because of the 
 resemblance as frequently written, of capital and small 
 A, C, E, J, M, N, 0, S, U, V, W, X, and Z. 
 
 Transposition of numbers, furthermore, is ordinarily 
 much harder to detect than is the case with letters. If 
 the symbol should be 7854.3, but is written 7845.3 by 
 mistake, there is nothing in the symbol itself to show that 
 the latter is wrong; on the other hand if instead of 
 SVSTR we should write SVTSR it would be detected 
 at once because we remember there is no such combination 
 as SVTSR in our symbols ; or, if there be such, the context 
 in which it is used will in most cases tell whether it is 
 
CLASSIFICATION OF MATERIALS 143 
 
 properly used. An observance of the foregoing rules I 
 believe will assist in avoiding the confusion so frequently 
 found in industrial symbol systems. 
 
 Basis of Industrial Classification. — In order that the 
 basis and details of the method of classifying and sym- 
 bolizing materials to be described may be clear, ^ it must 
 be kept in mind that all components of the business — 
 charges (both capital and revenue) ; tools, machines, 
 equipment, operations and functions, as well as materials 
 (both raw and worked) are tied together into one logical 
 system on one fundamental basis. This basis is costs — 
 the cost of doing business. Every piece of material 
 we buy, every piece of equipment we purchase, every 
 hour of labor we pay for — every step we take in other 
 words — costs us money, and through tying the classifica- 
 tion on to the dollar mark as a basis it is pretty sure to 
 be inclusive and of the utmost practical utility. The 
 general ledger accounts, therefore, serve as our starting 
 point, the base sheet of the classification comprising the 
 broad general subdivision of things for which money is 
 paid out. 
 Thus: 
 
 Capital investment in land and buildings. 
 Capital investment in machinery and equipment. 
 Cost of raw materials and supplies to run the business. 
 Cost of labor and material chargeable directly to 
 
 the product. 
 Cost of overhead expense for: 
 
 Direct manufacturing departments. 
 Commercial (or sales) department. 
 Business (or general office) departments. 
 Auxiliary manufacturing departments. 
 
 1 This method of classification and symbolizing, which meets industrial 
 requirements much more satisfactorily than any other which the writer 
 has encountered, was originally invented by Oberlin Smith of the Ferra- 
 cute Machine Co., and subsequently amplified by Henry R. Towne, 
 F. W. Taylor, Carl G. Barth, and others. 
 
144 FACTORY STORESKEEPING 
 
 Each of these primary groups of charges is then sub- 
 divided and re-subdivided to any degree we desire. 
 From the raw material group above is derived the 
 etails of the stores classification. 
 
 Basis of Mnemonic Symbols. — The basis of the make- 
 up of the symbols themselves is as follows: 
 
 First. — The symbol consists of a combination of 
 capital block letters (omitting I, 0, Q, U), and 
 numerals. 
 
 Second. — The groups, division, subdivisions, etc., are 
 represented by letters, these letters being assigned so far 
 as possible to give maximum suggestiveness (S for stores, 
 D for direct manufacturing departments, and so on) . The 
 significance of any letter depends upon its position in the 
 symbol (just as is true of our decimal system of number- 
 ing) ; a letter refers to and limits only that part of the 
 whole symbol which precedes it, it includes that' part 
 which follows it. 
 
 Third. — Numbers are used in all cases for designating 
 an individual unit (inserted ordinarily just before the 
 last letter of the symbol) ; for dimensions (inserted 
 ordinarily near the beginning of the symbol); for lot 
 numbers (written after the last letter of the symbol); 
 and for other purposes which need not be described here. 
 
 The base sheet is as follows : 
 
CLASSIFICATION OF MATERIALS 
 
 145 
 
 Expense or 
 Overhead 
 
 BASE SHEET (ON COST BASIS) 
 
 A. Auxiliary Departments Expense 
 
 B. Business (or general operating) Depts. 
 
 Expense 
 
 C. Commercial (or selling) Depts. Ex- 
 
 pense 
 
 D. Direct Manufacturing Depts. Expense 
 
 E. Erection (if in customer's plant) 
 
 F. Product (worked materials) which we 
 
 manufacture 
 
 G. Products (worked materials) which we 
 
 manufacture — Grinders 
 H. Product (worked materials) which we 
 
 manufacture 
 J. Product (worked materials) which we 
 
 manufacture 
 K. Product (worked materials) which we 
 
 manufacture 
 L. Product (worked materials) which we 
 
 manufacture — Milling Machines 
 M. Product (worked materials) which we 
 
 manufacture — Molding Machines 
 N. Product (worked materials) which we 
 
 manufacture 
 P. Product (worked materials) which we 
 manufacture 
 Product (worked materials) which we 
 
 manufacture 
 Stores, or raw materials and supplies Stores 
 Product which we manufacture 
 Product which we manufacture ■ Product 
 
 Product which we manufacture 
 
 Part construction — Light equipment 
 
 and tools Part Capital 
 
 Machinery and motive power — Heavy 
 
 R, 
 
 S, 
 T 
 
 V, 
 W, 
 
 X 
 Y. 
 
 Product 
 
 Z. 
 
 equipment and tools — Construction 
 Land and Buildings — Construction 
 
 Capital 
 
146 FACTORY STORESKEEPING 
 
 Each of these general ledger accounts is then sub- 
 divided. For instance, the Auxihary Departments 
 Expense would naturally be next subdivided into 
 the different departments considered directly auxiliary 
 to producing, thus: 
 
 Classification of Charges 
 
 Auxiliary Departments Expense A 
 
 AE. Engineering Department Expense. 
 
 AH. Heat — Light — Power Department Expense. 
 
 AK. Worked Material Store Room Expense. 
 AM. Maintenance Department Expense. 
 
 AP. Planning Department Expense. 
 
 AS. Stores Room Department Expense, 
 and so on.^ 
 
 At this stage the symbol designates the particular 
 department itself and furnishes the first subdivision of 
 Auxiliary Expense for cost collection purposes in properly 
 allocating overhead expense. 
 
 The next step is of course to separate out the different 
 kinds of overhead expense which are properly chargeable, 
 for instance to the Stores Room, thus 
 
 Store Room Expense AS 
 
 ASA. Miscellaneous Labor and Expense. 
 ASF. Furniture, Fixture and Apparatus-maintenance. 
 ASR. Reclamation of errors of this department. 
 ASS. Stores and Supplies used in Store Room. 
 ASW. Wages and Salaries of Store Room personnel. 
 ASZ. Building Repairs to this Department. 
 
 Thus, when a table used by the storekeeper is repaired, 
 the charge symbol for this work would be ASF which 
 
 ^ In practice, one sheet should be reserved for one step in the sub- 
 division, and all letters of the alphabet (except I, O, Q, and U) put down in 
 order. They may be needed later. 
 
CLASSIFICATION OF MATERIALS 147 
 
 at once tells the accounting folks that the cost of this 
 work is an Auxiliary overhead expense (A) to be entered 
 against the Store Room (AS) for furniture maintenance 
 (ASF). Similarly, stationery supplied the storekeeper 
 would be charged to ASS, and so on, the totals of the 
 AS- charges giving the total overhead expense of AS. 
 Likewise for each other Auxiliary (A) Dept., the total of 
 all such departmental charges constitute the total A 
 expense for the period. The individual and total B, C, 
 and D overhead expenses are secured in like fashion, 
 when they may be distributed to the product in any one 
 of a number of ways. 
 
 Classification of Product. — Worked Material Classifica- 
 tion. — The same sort of subdivision of each product 
 provides a pigeonhole for collecting direct charges in- 
 cident to manufacture. Thus M, molding machines, 
 may be subdivided into those types of machines which 
 we produce. 
 
 Molding Machines — M 
 
 M-C Core Ramming Molding Machines 
 M-H Hand Ramming Power Draft Molding Machines 
 M-R Plain Power Ramming Molding Machines 
 then each of these further subdivided until we get down 
 to individual parts, which gives the worked material 
 classification, for designating the worked materials with 
 the operations on each, and for allocating charges 
 against each separate product. 
 
 These illustrations have been given before taking up 
 the stores classification partly to familiarize the reader, 
 through simple examples, with the general method of 
 subdividing the classification and assigning symbols, 
 and partly that he may see the tie-in between the 
 stores and the other parts of this whole mnemonic 
 classification. This relation will become clearer later on. 
 
 Classification of Stores. — In subdividing the general 
 ledger account S Stores, we at once see that in those items 
 
148 FACTORY STORESKEEPING 
 
 which we carry regularly in stock, known as '' classified 
 stores," there are two main classes, viz. 
 
 1. those used for a specific purpose. 
 
 2. those used for various purposes. 
 
 Those stores used for specific purposes may be for 
 
 (a) some one of the departments 
 (6) some one of the products 
 
 (c) some special use which it may be desirable to 
 differentiate, such as forms for office use. 
 
 The first step in classifying stores, therefore, is to set 
 down under S the letters of the alphabet (always omitting 
 I, 0, Q, and U) and see that these specific purposes are 
 given a pigeonhole in accordance with the previously 
 devised symbol for each. Thus 
 
CLASSIFICATION OF MATERIALS 149 
 
 Stores — S 
 
 SA Special classified stores for Auxiliary (A) Depart- 
 ments only 
 
 SB Special classified stores for Business (B) Depart- 
 ments only 
 
 SC Special classified stores for Commercial (C) Depart- 
 ments only 
 
 SD Special classified stores for Direct Manufacturing (D) 
 Departments only. 
 
 SE 
 
 SF^ Printed forms of all kinds 
 
 SG Special classified stores for Grinders (G) only • 
 
 SH (Reserved for other products) 
 
 SJ (Reserved for other products) 
 
 SK (Reserved for other products) 
 
 SL Special classified stores for Milling Machines (L) 
 only 
 
 SM Special classified stores for Molding Machines (M) 
 only 
 
 SN (Reserved for other Products) 
 
 SP (Reserved for other Products) 
 
 SR (Reserved for other Products) 
 
 SS Office supplies, exclusive of Printed Forms SF 
 
 ST (Reserved for other Products, or sometimes used 
 for Tools'-) 
 
 SV^ Classified Stores used for a Variety of Products 
 
 SW (Reserved for other Products) 
 
 SX Part Construction (X) supplies, such as chairs, 
 typewriters, etc. 
 
 SY 
 
 SZ . 
 
 ^ May be used here only when not previously used to designate a 
 product, in which case it must be used to designate stores used only on 
 that product (as in the case of SG, SL, etc.). 
 
 2 Small tools purchased and stored in bulk in the store room under 
 symbol ST, disbursed in units and thereafter identified by symbol T. 
 
150 FACTORY STORESKEEPING 
 
 Subdividing the first four of these classes — SA, SB, SC 
 and SD, or those stores which are used in some specific 
 department only and which for the sake of definiteness 
 may as well be classified under that department — we of 
 course go back to the various individual departments 
 under Auxiliary, Business, Selling and Direct Manu- 
 facture, repectively, as listed above under "Classification 
 of Charges." Thus, subdividing SA, or the special 
 classified stores for Auxiliary (A) Departments only:; — 
 
 Stores for Auxiliary Departments— S A 
 
 SAA 
 
 SAE Stores for Engineering Department (AE) only 
 
 SAH Stores for Heat— Light — Power Department (AH) 
 only. 
 
 SAK Stores for Worked Material Store room (AK) only. 
 SAM Stores for Maintenance Department (AM) only. 
 
 SAP Stores for Planning Department (AP) only. 
 
 SAS Stores for Stores Room (AS) only. 
 
 The same subdivision is made for SB, SC and SD; 
 for instance: 
 
 SDF Stores for Foundry (DF) only. 
 SDM Stores for Machine Shop (DM) only, 
 and similarly for other D, C, and B Departments. 
 
CLASSIFICATION OF MATERIALS 151 
 
 The next step is to indicate the particular stores used 
 only in each of these departments, so that in the case of 
 the Power Department (AH), for instance, we have 
 
 Stores for Heat — Light — Power Department only — SAH 
 
 SAH-A 
 
 SAH-B Boiler Compounds 
 
 SAH-C 
 
 SAH-F Fuel 
 
 SAH-L Lubricants used only by Heat-Light-Power De- 
 partment (for lubricants used in other Depart- 
 ments as well as in this one, see SVL-, pages 155-6) . 
 
 This brings us to the general class of store, and the 
 next and final step in this case is to designate the particu- 
 lar item in each class. This, as was indicated previously, 
 is done by the use of a numeral before the last letter 
 of the symbol, thus: 
 
 Lubricants used by Heat-Light-Power Department only — 
 
 SAH-L 
 
 SAHIL Cyhnder oil 
 
 SAH2L Crankcase oil — heavy 
 
 SAH3L Crankcase oil — light 
 
 SAH4L Graphite — powdered 
 
 SAH5L Etc. 
 
 SAH6L 
 
 Because of the variety and quantity of forms custom- 
 arily required in the factory, it is convenient to group all 
 printed forms under SF, or in some other suitable place, 
 separate from other miscellaneous office supplies (which 
 may be placed under SS or less conveniently under SV). 
 The subdivision of SF, however, usually presents diffi- 
 
152 FACTORY STORESKEEPING 
 
 culties, in that there are many forms which do not pertain 
 solely to a particular department but travel around from 
 one to the other. The general rule is to pigeonhole a 
 form in the department which originates it where this is 
 possible, placing under the general office (see SFBN below) 
 those forms which may originate in any one of a number 
 of departments. This is illustrated below: 
 
 Printed Forms of All Kinds — SF 
 
 SFA Auxiliary Department (A) Forms only 
 
 SFAA 
 
 SFAE Engineering Department (AE) forms, only 
 
 SFAH Heat-Light-Power Department (AH) forms, 
 only 
 
 SFAP Planning Department (AP) forms, only and 
 so on. 
 SFB Business (or general office) department forms only 
 
 SFBA 
 
 SFBC Cost Department (BC) Forms only 
 
 SFBN General Management (BN) Forms only 
 
 Then taking the forms used only (or originated) in the 
 Planning Department SFAP, we get by the use of num- 
 bers as before, in this case used to designate the specific 
 form: 
 
 Printed Forms for Planning Department — SFAP 
 
 SFIAP Balance of work 
 
 SF2AP Master Route Card 
 
 SF3AP Piece Route Sheet 
 
 SF4AP 
 
 SF5AP 
 
 SF6AP Etc. 
 
 Continuing down the stores base sheet, the next item 
 is SG, or Special Classified Stores for Grinders (G on main 
 base sheet, page 145) only, then comes SLor Special Classi- 
 
CLASSIFICATION OF MATERIALS 153 
 
 fied Stores for Milling Machines (L) only, and SM fcr 
 Molding . Machines (M) only. Subdividing the latter 
 by way of example, we get S followed by the symbol of 
 the machine as explained above under "Classification of 
 Product," page 147, thus: 
 
 Special Classified Stores for Molding Machines 
 OnlySM 
 
 SMA 
 
 SMC Special Stores for Core Ramming Machines, 
 (M-C) only. 
 
 SMH Special stores for Hand Ramming Power Machines 
 (M-H) only. 
 
 SMR Special Stores for Plain Power Ramming Machines 
 (M-R) only. 
 
 Continuing the subdivision of each of these as sug- 
 gested under Classification of Product there is provided 
 a pigeonhole for such raw materials as are used in any 
 particular group or division of any product we manufac- 
 ture. Thus the symbol SM-RIB may designate a 
 special sand guard used on an M-R (Plain Power Ram- 
 ming Machine) only, B showing that it is part of the Base 
 Group of these machines and the numeral 1 designating 
 the specific part. It must be remembered that any 
 article designated by >S is a raw material upon which no 
 work has been done in our plant, and that therefore a 
 symbol >SM-R1B, aSM-R2B and so on must not be used 
 to designate a part which we have manufactured. If we 
 manufactured this sand guard, the S in the symbol would 
 drop out, leaving it M-RIB in accordance with the 
 worked material classification. This point may be 
 further explained in this way : if this sand guard (special 
 to this machine) were made in our shop through process- 
 
154 FACTORY STORESKEEPING 
 
 ing a casting purchased outside especially for the pur- 
 pose, the casting itself (being raw material to us) would 
 take the symbol SM-RIB, and it would retain this 
 symbol as long as it remained in the raw state. When we 
 have worked it, however, and made the finished sand 
 guard of it, the symbol of the guard would be M-RIB. 
 
 The next subdivision of S is SV or Classified Stores used 
 for a Variety of Purposes. Into this miscellaneous 
 pigeonhole should be placed only those articles remaining 
 after everything special to any department or product or 
 use has been placed. It is a catch-all, voluminous at best ; 
 it should not be made unnecessarily so through the inclu- 
 sion of articles which may be more definitely placed 
 elsewhere. A few illustrations of this part of the Stores 
 Classification will show the general method. 
 
CLASSIFICATION OF MATERIALS 155 
 
 Classified Stores Used for Various Purposes — SV 
 
 SV-A Miscellaneous stores not elsewhere classified. 
 SV-B Brass and Copper and products made chiefly from 
 
 same 
 SV-C Cast iron and products made chiefly from same 
 SV-D 
 SV-E 
 SV-F 
 SV-G 
 SV-H 
 SV-J 
 SV-K 
 SV-L Liquids and semi-liquids (see also SAHL for those 
 
 used only in the Heat-Light-Power Department) . 
 SV-M 
 SV-N 
 SV-P 
 SV-R 
 SV-S Steel, wrought iron and products made chiefly 
 
 from same 
 SV-T 
 SV-V 
 SV-W Wood and products made chiefly from same 
 
 sv-x 
 
 SV-Y 
 
 SV-Z Fastening devices — bolts, nuts, screws, etc. 
 
156 FACTORY STORESKEEPING 
 
 Under SAHL (page 151) was listed lubricants used only 
 in the Power Department, such as cylinder oil, (SAHIL). 
 heavy crankcase oil (SAH2L) and so on. To bring out 
 the difference in cases of this kind, the following illustra- 
 tion may be serviceable. 
 
 Liquids and Semi-liquids used for Various Purposes — 
 
 SV-L 
 SV-LA Adhesives 
 SV-LB 
 
 SV-LD Disinfectants 
 SV-LG Gasoline 
 Etc. 
 
 Liquids and Semi-liquids — Adhesives — SV-LA 
 
 SV-LIA Glue 
 SV-L2A Cico 
 SV-L3A Library Paste 
 
 As a final explanation of this part of the classification 
 we may take steel (SV-S) as best serving to illustrate the 
 finer subdivisions sometimes desirable and to show 
 designation of dimensions, makes, composition or other 
 information which may be necessary under particular 
 conditions : 
 
 Steel, Wrought Iron and Products — SV-S 
 
 SV-SA Angles 
 SV-SB ^a" Beams 
 SV-SC Channels, ''U" Bars 
 SV-SD Band Iron 
 SV-ST Tool Steel 
 
 Tool ^S^eeZs— SV-ST 
 SV-STA 
 SV-STB 
 
 SV-STC Octagonal Stock 
 SV-STD 
 
CLASSIFICATION OF MATERIALS 157 
 
 SV-STE 
 
 SV-STH Hexagonal Stock 
 SV-STN Rectangular Stock 
 SV-STR Round Stock 
 
 Round Tool .Steeds— SV-STR 
 
 SV-STIR Jessops-carbon 
 SV-ST2R Bethlehem H. S. 
 SV-ST3R Atha-carbon 
 SV-ST4R Allen's — air hardening 
 SV-ST5R 
 
 Insert dimensions between SV and S thus: 
 
 SV1MST2R Bethlehem High Speed Tool Steel, 
 
 Round, l^i" diameter. 
 
 Finally, in cases where it is desired to keep each ship- 
 ment of this or other material separate and designate it 
 as such, it may be given a serial lot number and stored 
 separately. In this case, as was indicated previously, 
 the lot number would appear at the end of the symbol, 
 so that the complete symbol for lot number 35 of this 
 steel would be 
 
 SV1MST2R35 
 
 Purchase specifications, data relating to tests, and all 
 other information as regards Bethlehem high speed 
 round tool steel would be filed in the office under the 
 symbol SV-ST2R. The same is true in the case of all 
 other articles. The balance sheets for each article 
 would of course also be arranged alphabetically by sym- 
 bol, and where practicable the articles themselves would 
 be located in the store room alphabetically by symbol. 
 
 Other Classifications. — Besides the classifications illus- 
 trated briefly in the preceding pages — the Charging, 
 Worked Material, and Stores Classifications — as part 
 of this composite mnemonic classification are also the 
 Tool, the Machine Equipment and Work Place, the 
 
158 FACTORY STORESKEEPING 
 
 Functional, and the Real Estate and Buildings classifica- 
 tions, the complete story tying together into one inter- 
 locking system all components of the business. As 
 such, it is in use today in a great many different industries 
 adapted of course to meet the special requirements of 
 each, but conforming extremely closely to the basic 
 elements as presented. Its principal value is realized 
 only when it is used in its complete form, although the 
 justification of this necessarily piecemeal presentation 
 lies in the fact that the Stores Classification may be used 
 alone with considerable benefit in definiteness and in the 
 saving of clerical work. 
 
CHAPTER X 
 
 MATERIAL ACCOUNTING; INVENTORIES; 
 STATISTICS 
 
 Summary: Material Accounting. Fundamentals of Accounting. 
 Opening Entries. Collecting Costs. Closing Entries. Summary of 
 Transactions — Method of Securing Perpetual Inventory — Pricing 
 Materials for Issue — Inventories: The Periodic Physical Inventory — 
 The Perpetual Inventory. Supplementary Checks on Book Balances. — 
 Inventory Adjustments — Statistics. 
 
 Material Accounting. Fundamentals of Accounting. — 
 Adequate accounting is as essential to material control 
 as is proper storage, replenishment and regulation of 
 issue, and the basis of such accounting is to tie the cost 
 figures into the general accounts. This means that: 
 
 I. Every expense incurred during the period must 
 eventually show on the books against Product, against 
 Plant, or against Profit and Loss, and 
 
 II. A perpetual book inventory of material, checked 
 frequently with material actually on hand, must be main- 
 tained. 
 
 A summary of the accounting transactions for materials 
 through which these objects are accomplished is: 
 
 I. The cost of all purchases of material must be 
 debited when bought to : — 
 (a) General Ledger (controlling) account Stores 
 
 and 
 (6) Subsidiary account by item purchased (on 
 individual balance sheets). 
 Such cost may or may not include trans- 
 portation charges, according to whether 
 these are added to the specific article affected, 
 which is the more accurate way, or taken to 
 an expense account. 
 
 159 
 
160 FACTORY STORESKEEPING 
 
 II. The cost of all material disbursed must be debited 
 to a specific charge account (plant, product, or 
 expense) and credited to 
 (a) Subsidiary account by item issued (on 
 
 individual Balance Sheets) and, 
 
 (6) General Ledger (controlling) account Stores 
 
 (or Worked Material). These principles 
 
 of accounting of materials may be illustrated by typical 
 
 book transactions with accompanying discussion and 
 
 explanation at various stages. 
 
 Opening Entries. — A purchase order for 300 ft. high 
 speed tool steel IM" diameter has been issued. The 
 cost comes to $1,430.40 including transportation charges 
 which in this case will be added to the unit cost. (See 
 Balance Sheet, Fig. 5, page 61.) When this bill is paid 
 the following entry is made in the ledger: 
 
 I. Stores (G. L. Acct.) $1,430.40 
 
 To {Cash') $1,430.40 
 
 At the same time this transaction will be entered in 
 the balance sheet (subsidiary account) for this high speed 
 steel, symbol (SVIM ST2R) which adds $1,430.40 to 
 the book inventory of this particular item of material. 
 Similarly for all other purchases, so that the sum of the 
 amounts on the various balance sheets should equal the 
 total debits to the general ledger account Stores. Should 
 some of this material be rejected upon receipt, a corre- 
 sponding credit slip must be put through to adjust these 
 accounts. 
 
 Collecting Costs. — Whenever any of this steel is dis- 
 bursed for any purpose a stores issue showing symbol of 
 material issued, and symbol of charge account, is made 
 out for the number of feet called for, say 30 feet. This 
 issue may first go to the balance sheet for this item to be 
 apportioned, when the material is wanted the issue then 
 
 ^ Intermediate entries omitted for brevity, since they illustrate no 
 additional point in this connection. 
 
MATERIAL ACCOUNTING 161 
 
 goes to the storekeeper and the 30 feet are disbursed. 
 The stores issue then goes back to the balance sheet 
 where the clerk multiplies the unit cost per foot, say 
 $4.00, by the number of feet issued and enters the trans- 
 action on the proper balance sheet, showing what account 
 is charged, say Shop Expense, symbol DMS. This 
 subsidiary account (balance sheet SVl^^ ST2R) thus 
 shows that Shop Expense, DMS, has been charged with 
 $120.00 worth of steel, and that the inventory value of 
 the steel itself as shown on its balance sheet has been 
 reduced by this $120.00, or to $1,310.40. 
 
 The value as shown on this issue slip (together with 
 others which follow the same procedure) then goes to the 
 general books where the entry is made : 
 
 II. Shop Expense DMS $120.00 
 
 To Stores $120.00 
 
 The procedure is exactly the same for all other dis- 
 bursements — thus instead of an issue of steel to be 
 charged to Shop Expense DMS, we may have $100.00 
 worth of this steel (25 feet) issued for use on product L, 
 Milling Machines; the issue will pass through exactly 
 the same transaction except that the amount will be 
 charged to L instead of the DMS thus : 
 
 III. Work in Process: Milling Machines L $100.00 
 
 To Stores $100.00 
 
 Or again a worked material part for Molding Machines, 
 symbol M, made previously for stock at a cost of $50.00 
 and charged to Worked Material in Stores M, may be 
 issued for use on product Grinders, G-. In this case work 
 in Process G must be charged and Worked Material in 
 Stores M — credited: — 
 
 IV. Work in Process: Grinders G $50.00 
 
 To Worked Material in Stores: Mold- 
 ing Machines M $50.00 
 
162 FACTORY STORESKEEPING 
 
 Where material has been issued in excess or is other- 
 wise to be turned back to the store room after having 
 been charged out, a credit slip is made, showing 
 again the symbol of material and the account (originally 
 charged to) which should be credited: thus $5.00 worth 
 of the above worked material M- may not be needed on 
 product G-. This credit passes through the same 
 routine as the issue described except that the entries are 
 reversed so that the quantity and value returned are 
 added on the proper balance sheet M-, the slip then 
 passing to the general books where : 
 V. Worked Material in Stores M- is debited $5.00 and 
 Work in Process G- is credited. Similarly for other 
 credits. 
 
 Closing Entries. — Actually of course each slip does not 
 pass directly to the general books for individual entry, 
 but after clearing through the balance clerk they are 
 filed by charge symbol, allowed to accumulate for a few 
 days or a week, and from time to time those on hand are 
 summed and entered on cost collecting cards from 
 which at the end of the period summary statements are 
 sent to the general books. Some of these statements 
 follow : 
 
 The original debit to Stores is made from the in- 
 voice. For subsequent transactions, however, the book- 
 keeper has no way of knowing what credits should be 
 entered to Stores or other accounts, or what accounts 
 should be charged with the issues unless he is told by the 
 cost clerk who receives, files, and summarizes the stores 
 and worked material issue and credit slips. At the end 
 of the period, therefore one summary statement is sent 
 to the bookkeeper showing the total stores disbursements 
 chargeable against various accounts. This is simply 
 a summary of stores issues less stores credits against each 
 charge symbol: — 
 
MATERIAL ACCOUNTING 163 
 
 Distribution of Stores for Period Ending — 192 — 
 
 A $1,000.00 
 
 B 500.00 
 
 C 300.00 
 
 D 120 . 00 (See transaction II above) 
 
 G 800.00 
 
 L 100.00 (See transaction III above) 
 
 M 3,000.00 
 
 T 50.00 
 
 Y 1,500.00 
 
 ,370.00 
 
 This total amount of $7,370.00 would thereupon be 
 credited to Stores by the bookkeeper as is illustrated by 
 the single entry in transaction II above, and at the same 
 time the Work in Process accounts (G, L, M and T) as 
 well as the expense (A, B, C and D) and construction (Y) 
 accounts would each be debited for its respective amount, 
 as illustrated in transaction III. 
 
 Where some of the product turned into the store room 
 is either partly finished or may be used on products other 
 than that whose symbol it bears and for which it was 
 originally made, it is necessary to transfer material and 
 values between these accounts and to present a state- 
 ment of these transfers so that they may be taken up on 
 the general books. This case is illustrated in transac- 
 tion IV above where $50.00 worth of parts previously 
 placed in stores for product M- were issued to make 
 product G-, in transaction V an unused portion of this 
 being later credited back. The cost clerk must in such 
 cases note from which Worked Material in Stores 
 accounts the good were issued (as shown on worked 
 material issues), and the total credit to these must equal 
 the total debits to the Work in Process accounts. This 
 statement to the bookkeeper would look as follows:— 
 
164 FACTORY STORESKEEPING 
 
 Debit the following Work in Process Accounts 
 
 D 1185. 
 
 G 45. (See transactions IV and V above) 
 
 L 75. 
 
 M 290. 
 
 T 65. 
 
 Y 700. 
 
 $1,360. 
 
 Credit the Following Worked Material in Stores 
 Accounts 
 
 G $600. 
 
 L 90. 
 
 M 45. (See transactions IV and V above) 
 
 T 625. 
 
 $1,360. 
 
 Summary of Transactions. — Transactions have been 
 indicated as follows. These will first be shown indi- 
 vidually : 
 
 L Purchase 300 feet l^i in. high speed tool steel (SVl?^ 
 ST2R) for $1,430.40,. or $4.77 per foot (here called $4.00 
 to avoid decimals) : 
 
 Stores 
 Cash 1,430. 40T~ 
 
 II. Issue of 30 feet SV1% ST2R at $4.00 for Shop 
 
 Expense DMS. 
 
 Shop Expense DMS 
 Stores 120.00 | 
 
 III. Issue of 25 feet SVl^.^ ST2R at $4.00 for Work in 
 
 Process L: 
 
 Work in Process L- 
 Stores 100.00 I . 
 
MATERIAL ACCOUNTING 
 
 165 
 
 IV. Issue of $50.00 worth of Worked Material in Stores 
 M-, for Work in Process G : 
 
 Work in Process G- 
 
 Worked Material in 
 Stores M-... 50.00 
 
 V. Credit of $5.00 worth of Worked Material in Stores 
 M-, to Work in Process G. 
 
 Work . in Process G- 
 
 Worked Material 
 in Stores M- 
 
 5.00 
 
 Each of these transactions would be entered on the 
 respective balance sheet (stores or worked material) for 
 the item in question. 
 
 Posting from the statements sent to the bookkeeper 
 and taking a balance of these accounts at this stage 
 (assuming that these are the only transactions) would 
 show : 
 
 Cash 
 
 ^^. Stores..... .. . $1,430.40 
 
 Stores 
 I. Cash $1,430.40 
 
 1,430.40 
 
 II. Shop Expense 
 
 DMS 120.00 
 
 III. Work in Pro- 
 cess L- 100.00 
 
 Balance 1,210 .Jf.0 
 
 M30.40 
 
 Balance 1,210.40 
 
 Shop Expense DMS 
 
 II. Stores, 
 
 120.00 I 
 Work in Process L- 
 
 III. Stores, 
 
 100.00 
 
166 
 
 FACTORY STORESKEEPING 
 
 Work in Process G- 
 
 IV. Worked Material 
 in Stores M-. . 50.00 
 
 Balance. 
 
 50.00 
 45.00 
 
 V. Worked Ma- 
 terial in Stores 
 
 M- 
 
 Balance .... 
 
 Worked Material in Stores M- 
 
 V. Work in Proc- 
 ess G 5.00 
 
 Balance. . . 45.00 
 50.00 
 
 IV. Work in Proc- 
 ess G 
 
 Balance 
 
 Summary of Balances: 
 
 Stores 
 
 1,210.40 I 
 
 Shop Expense DMS 
 120.00 I 
 
 Work in Process L- 
 100.00 I 
 
 Work in Process G- 
 45.00 I 
 Worked Material in Stores M- 
 
 5.00 
 
 4-5.00 
 50.00 
 
 50.00 
 
 50.00 
 45.00 
 
 45.00 
 
 Stores thus started with a debit of $1,430.40 when the 
 steel was bought, then this was reduced by $120.00 for 
 the benefit of Shop Expense DMS and by $100.00 
 for Work in Process L-, leaving a closing balance of 
 $1,210.40 as the total current inventory of goods on 
 hand. Running through the individual balance sheets 
 we should find the same balance shown there, in this case 
 
MATERIAL ACCOUNTING 167 
 
 the example has been confined to the high speed steel 
 SVl^^ ST2R which on its balance sheet was originally 
 charged with the $1,430.40 purchased but which now 
 would show that this value has been reduced to $1,210.40 
 through the issues against DMS and L-. In order to 
 make these figures reliable, constant care must be exer- 
 cised to see that the inventory on the balance sheets 
 agrees with the actual physical inventory in the store 
 room, or to make an inventory adjustment (see topic, 
 page 172) in case they do not agree and cannot otherwise 
 be brought into harmony. 
 
 Method of Securing Perpetual Inventory. — The method 
 of securing a perpetual inventory of work in process and 
 of worked material in stores is also illustrated in the 
 preceding transactions. To complete this part of the 
 record, at the end of the period the bookkeeper must be 
 sent also a statement showing the cost of each class of 
 product finished or partly finished so that the proper 
 transfer may be made on the books from Work in Process 
 to Worked Material in Stores or to Product, and a state- 
 ment showing the distribution of direct wages and a 
 statement of miscellaneous charges for similar posting. 
 With these statements, handled in just the same way as 
 those illustrated, a complete running inventory of Stores 
 (raw material and supplies), Worked Material in Stores 
 (partly worked parts). Work in Process (that currently 
 in the shop), and Product (completely finished work) is 
 maintained so that the books may be completely closed 
 at any time with greater accuracy than is usually 
 obtained at the annual, semi-annual, or quarterly closing 
 where complete physical inventory must be taken. 
 
 Pricing Materials for Issue. — In the preceding trans- 
 actions it was assumed that the price at which materials 
 were ''sold" by the store room upon issue, or ''bought" 
 back upon credit, was the weighted average cost, includ- 
 ing transportation charges, of all of that item of materali 
 which had been received: This is but one way. The 
 alternative methods of pricing materials for issue are : 
 
168 FACTORY STORESKEEPING 
 
 1. Keep each lot distinct and issue each at actual 
 price paid for the lot. 
 
 2. Combine lots and issue all at cost or current market 
 price, whichever is lower. 
 
 3. Combine lots and issue all at current market price. 
 
 4. Combine lots and issue all at weighted average 
 price to date. 
 
 5. Issue all materials at predetermined ^^ standard" 
 price, regardless of actual cost except as this may lead 
 to a modification of the ''standard." 
 
 Each of these methods has its adherents, and much 
 time may be wasted scrapping with different cost 
 accountants as to the theoretical accuracy of one or 
 another. In finally choosing between them, however, 
 certain practical considerations must govern: — 
 
 1. A theoretically accurate cost may not be worth the 
 expense of obtaining it. The clerical labor involved 
 must always be considered as must also the chances of 
 wrong results through mistakes in figuring complicated 
 methods. 
 
 2. Cost finding and price-making are only distantly 
 related in that many factors other than cost (no matter 
 how accurately determined) must be considered in 
 setting prices. A cost should tell the facts as to what the 
 actual expenses of manufacture were, after which allow- 
 ances for current fluctuations in material prices and 
 other factors may be considered in setting prices. Do 
 not destroy the possibility of finding actual profits by 
 letting fictitious figures get into costs. 
 
 3. The intent at time of purchase should be considered 
 in the distribution of costs — if the purchase was for a 
 long period the costs may well be spread over the whole of 
 that period, and so on. 
 
 4. What it is desired that the cost figures show will 
 affect the treatment of expenses. Thus costs obtained 
 through methods 1, 2 and 3 will follow the ups and downs 
 of the market ; method 4 will spread these fluctuations out 
 
MATERIAL ACCOUNTING 169 
 
 into a smoother curve; while 5 does neither of these 
 but results in a straight line which tells the truth neither 
 as regards current market fluctuations nor actual average 
 prices paid. 
 
 In practice the methods most widely used are 1 and 4, 
 both of which tell the truth but with slightly different 
 emphasis and either of which tells it in a way ordinarily 
 serviceable for all practical cost purposes. Method 4 
 is advocated in most cases because it requires less clerical 
 work when both current posting and checking periodical 
 inventories are considered, because it results in less 
 "jumpy" material cost figures, and because a direct 
 summing up of outstanding values on the various individ- 
 ual balance sheets checks (or should check, without the 
 necessity of multiplying each lot of each item by its 
 actual cost) with the lump sum inventory balances as 
 shown on the General Ledger. This method (4) may be 
 seen in detail on the balance sheet illustrated in Chap. V, 
 page 61. 
 
 Inventories. — -At various places in the preceding 
 discussions the question of inventory keeping with the 
 resulting book transactions has been touched upon. 
 These loose ends will be gathered together in a summary. 
 
 The Periodic Physical Inventory. — The periodic physical 
 inventory (annual, semi-annual, or quarterly), with its 
 bustle, confusion and inaccuracies, is no longer tolerated 
 by the best managers, if for no other reason than because 
 modern business demands a more immediate and reliable 
 knowledge of progress than can be secured in this way. 
 The physical inventory (the actual counting of stock on 
 hand) is indispensable and the results of this count must 
 be checked with the books, but at the end of twelve, six 
 or even three months is not the time to do it. The 
 manufacturing industry is yet to be found where the 
 perpetual inventory is not perfectly applicable, more 
 accurate, cheaper, and of infinitely greater utility than 
 is the periodic. It is simple to initiate, easy to operate, 
 
170 
 
 FACTORY STORESKEEPING 
 
 and, with proper checks, accurate even beyond practical 
 requirements. 
 
 The Perpetual Inventory. — This may be secured in one 
 or more of several ways, the central idea being simply 
 that the balances on hand, both in quantity and in value 
 of each item, be kept reasonably correct at all times. 
 These ways are as follows: 
 
 1. The storekeeper is given each day a few items to 
 count or the balance clerk may make the count, so that 
 
 BF5AP 
 L M.Co. 
 
 STORES INSPECTION REPORT 
 
 Please send an Inepeotion report of the amount of the following goods on hand 
 
 at 
 
 hour 
 
 month 
 
 daj 
 
 year 
 
 To: 
 
 Symbol 
 
 De3cr'ption 
 
 (Quantity 
 onTas 
 
 Quantity on Hand 
 
 Quantity on 
 Balance Carus 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Signed: 
 
 Fig. 36. — Stores count. The only way accuracy of perpetual inventory 
 records may be assured is through an actual physical count. This illus- 
 trates one method of reporting the results of such a count. 
 
 in the course of say four months every item in the 
 store room will be covered at least once. Such counts 
 may be made whenever work is slack, and consists in 
 actually counting balance on hand in the bin or pile and 
 reporting quantity found to the balance clerk (see Fig. 
 36) . The balance clerk then checks the amount actually 
 in the store room with the balance as shown on the 
 individual balance sheet, making such inventory adjust- 
 ments as may be necessary upon investigation. 
 
 2. When a new lot of any item is received, a bin tag 
 for quantity accepted is made out in the receiving depart- 
 ment, this tag accompanying the goods to the store room, 
 where it may be checked by the storekeeper. The 
 storekeeper then counts the balance on hand which 
 
MATERIAL ACCOUNTING 171 
 
 should agree with the balance on the old tag, notes any 
 discrepancy on old tag and sends it to the balance clerk 
 where it is checked with the proper balance sheet. The 
 quantity on hand is entered on the new tag, added to the 
 quantity shown as just received, and new tag and new 
 lot placed in the bin. This procedure allows the count to 
 be made when there is least in the bin. 
 
 3. Where a separate bin tag is made out and retained 
 at the bin for each separate lot received, when a tag 
 becomes exhausted or shows zero balance, a count may be 
 made of quantity on hand (including all lots), this 
 checked with the sum of balances as shown on the 
 several tags, the actual quantity on hand entered on the 
 exhausted tag and this returned to the balance sheets 
 for checking. 
 
 4. Where all new lots received are entered to one 
 bin tag, when this becomes full a count is made, the 
 result indicated on exhausted tag which is sent to balance 
 clerk and a new tag made for future use. 
 
 Supplementary Checks on Book Balances. — Intermedi- 
 ate checks may be secured which will aid in keeping 
 the books and the bin contents in agreement between the 
 physical counts. These, however, should be looked upon 
 simply as auxiliary checks, since nothing should be 
 allowed to replace the actual physical count for any 
 length of time. Such checks are: 
 
 (a) The balance as shown on the bin tag may be entered 
 on each stores issue after it is filled. This issue, when 
 it reaches the balance clerk provides a current check on 
 book and tag balances (but not on actual goods on hand). 
 
 (6) When a tag becomes exhausted the balance, as 
 per this tag, or the sum of the balances on the remaining 
 individual lot tags, may be entered and the tag sent to 
 the balance sheet. 
 
 The utilization of one or more of these methods will 
 result in accurate, current knowledge of amounts of 
 material on hand with the least work on the part of the 
 
172 FACTORY STORESKEEPING 
 
 storekeeper and with no interruption to the regular 
 activities of the shop. Equally important, it will enable 
 a closing of the books as regards inventory at any time 
 without confusion and with maximum accuracy. In 
 this connection it must be remembered that records of 
 inventory, whether periodic or perpetual, must be 
 retained in such permanent form as to enable the auditor 
 to make what checks he desires. 
 
 Inventory Adjustments. — It has been stated that a 
 physical count is the only way to make book records of 
 inventory dependable. Clerical errors will unavoidably 
 occur in the mere recording of transactions so that the 
 figures themselves will be incorrect; besides this, from 
 various causes the amount actually on hand will be greater 
 or less (usually the latter) than the balance shown on 
 the books even with no mistakes in entry. An accurate 
 count at frequent intervals is necessary to keep the two 
 in reasonable adjustment. 
 
 When a discrepancy is discovered an Inventory 
 Adjustment must be made so that the books shall tell 
 the truth. This may be done in one of two ways. 
 Assume that the books show 100 units on hand, total 
 value of $200.00, or $2.00 per unit, but that a hand count 
 shows only 98 in the bin and investigation has failed to 
 account for these two missing parts: 
 
 1. The value of the missing items may be absorbed 
 by the remaining items, thus : 
 
 On Hand Total Value Unit Value 
 
 100 $200.00 $2.00 
 
 98 As per count $200.00 $2,041 
 
 Future issues would be priced at $2,041 each. In 
 this case no adjustment is required on the general 
 ledger, since the total value of the inventory has not 
 been changed. 
 
MATERIAL ACCOUNTING 173 
 
 2. The value of the missing items may be charged to 
 an Inventory Adjustment account or taken direct to 
 Profit and Loss thus : 
 
 On Hand Total Value 
 100 $200.00 
 2 Inventory 4.00 
 Adjustment 
 
 Unit Value 
 $2.00 
 
 $196.00 $2.00 
 
 Future issues would be priced at $2.00 each. In this 
 case Stores on the general ledger would be credited 
 and Inventory Adjustment debited for the missing $4.00. 
 
 It will readily be appreciated that the first method, 
 (that of covering the loss through absorption by the 
 remaining stock), is not one to be encouraged, although 
 the bookkeeper should not be burdened with a multitude 
 of insignificant adjustments. The middle road consists 
 in establishing maximum amounts which may be 
 absorbed by method 1, supplemented by the requirement 
 that discrepancies (either for any amount or only for 
 amounts above this maximum) be sent to the proper 
 official for approval. 
 
 Statistics. — In addition to the statistics, quotation 
 summaries, charts, curves and so on which form part 
 of the equipment by which the purchasing agent follows 
 market trends and general business tendencies, much 
 internal information covering material may be system- 
 atically gathered for the guidance of various officials. 
 The following table indicates some of the more important 
 reports, who uses them and for what purpose, source 
 of information, how often compiled and best form for 
 presenting data. The classes of information needed in 
 different industries will of course vary and those listed 
 below are intended to be suggestive only. 
 
174 
 
 FACTORY 8T0RESKEEPING 
 
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APPENDIX 
 
 The following table shows the result of a prehminary 
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 different standard articles commonly carried in every 
 metal working store room. The table is presented 
 primarily in the hope that further investigation may be 
 found practicable, in view of the striking similarity of 
 results so far obtained. 
 
 175 
 
176 
 
 FACTORY STORESKEEPING 
 
 
 
 
 
 
 
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INDEX 
 
 Accounting for materials, 159-69 
 
 basis of, 159-60 
 
 charges for materials issued, 
 
 8, 101, 137-8, 160, 167-9 
 
 perpetual inventory control, 
 
 167, 171-2 
 pricing materials for issue, 59, 
 
 96, 167-9 
 statements, 163-4 
 transactions, 160-7 
 Adjustments in inventory, 172-3 
 Administrative control of mate- 
 rials, 3, 8, 15, 35, 51-2, 70, 
 72-5, 99-101 
 Allowance in setting low limits, 47 
 Amount to order, determination 
 
 of, 44, 73-5 
 Anticipatory purchasing (see 
 
 Speculative Purchasing) . 
 Apportionment of material needs, 
 7, 11-12, 43, 45, 57, 59, 
 62-6 
 Approval of replenishment orders, 
 19-20, 28, 51, 72-4 
 to change amount requisi- 
 tioned (Fig. 10), 73 
 Article, definition, 127 
 Auditor, function, 29, 95-7 
 
 B 
 
 Balance clerk, function and qualifi- 
 cations, 27 
 
 perpetual inventory, 58, 119- 
 21, 170-1 
 
 sheet for materials, choice of, 
 53-4 
 
 files (Fig. 9 and text), 68 
 
 location, 35 
 
 use, 19, 54-60 
 
 see Classified Stores Balance 
 Sheet. 
 
 Balance clerk. Unclassified Stores 
 Balance Sheet. 
 Worked Material Balance 
 Sheet. 
 Bill of material, use, 18 
 Bins, capacities of various, 131-2, 
 Appendix 
 and racks (see Store Room 
 Equipment) . 
 Bin label, sample (Fig. 15), 105 
 use, 21 
 tag, sample (Figs. 29-30), 
 118-119 
 use, 21, 91-2, 170-2 
 Block, definition, 127 
 
 Cancellation of -purchase orders, 
 
 notice of, 58 
 Capacities of storage units, 131-2, 
 
 Appendix 
 Cash discount on purchases, 
 
 95-7 
 Centralized vs. decentralized store 
 
 rooms, 100-102 
 Charges for materials issued, 96, 
 
 101, 137-8, 160, 167-9 
 Classes of materials, 15-6 
 Classification, 140-158 
 
 basis of industrial, 143-6 
 
 of mnemonic, 144 
 definition, 140 
 of charges, 146 
 of product, 147 
 of stores, 147 
 other, 157-8 
 rules for, 140-1 
 samples of, 140-158 
 Classified stores, definition, 16 
 
 balance sheet, basis of 
 operation, for apportion- 
 ment, 44-5 
 
 177 
 
its 
 
 INDEX 
 
 Classified stores, requirements of, 
 for apportion- 
 ment, 40, 42-52, . 
 54-66 
 sample (Fig. 5), 61 
 for minimum limit, 
 40, 41, 54 
 sample (Fig. 4), 55 
 for schedule, 40, 52, 
 66-7 
 sample (Fig. 6), 65 
 steps in setting up, for appor- 
 tionment, 
 45-52 
 in operation of, for 
 apportionment, 
 57-60, 62-6 
 use, 19 
 Column, definition, 127 
 Contracts, recording changes in 
 
 purchasing, 80, 96 
 Cost department, function, 29 
 
 location, 35-6 
 Course, definition, 127 
 Credit memorandum (see Stores 
 
 Credit) . 
 Cycle in material handling, 17 
 
 D 
 
 Delivery times and dates, 32, 47) 
 
 72, 77, 79, 80, 82 
 Departmental store rooms and 
 
 supplies, 100, 101, 137 
 Departments, location of various, 
 
 34-7 
 Double binning,bins for, 109-10, 112 
 definition, 118 
 inventory control, use in, 
 
 119-122 
 operation of, 118-123, 130 
 space required, 123 
 turnover of goods, use in, 
 122-3, 134 
 Dust, protection against, 134 
 
 E 
 
 Engineering department, function, 
 26 
 
 Engineering department, responsi- 
 bility for quality and 
 inspection, 26, 28, 30- 
 31, 83, 87, 89, 90, 92-5 
 for specifications, 45-7, 
 92 
 Equipment of store room (see Store 
 
 Room). 
 Explosion, protection against, 132 
 
 Factory supplies, definition, 15 
 and spare parts, control, 
 136-8 
 
 Fire protection, 132 
 
 Flexibility in store room equip- 
 ment, 106-13 
 
 Follow-up of outstanding pur- 
 chases, orders, 78-83, 95 
 
 Forms, size and color of paper, 18 
 use of various, 18-23 
 
 Freight register, use, 20, 88-9, 96 
 
 Function of manufacturing plant, 1 
 
 H 
 
 Hand count (see Physical Count). 
 Heap, definition, 127 
 
 Ideal material system, 6-8 
 Identification tag, use, 22 
 Importance of material function, 3 
 Indexing store room equipment 
 
 (Fig. 14), 104 
 Information necessary for material 
 
 control, 23-4, 45-52, 53, 
 
 56-60 
 Inspection, function, 92-5 
 kinds of, 94-5 
 report (see Material Inspection 
 
 Report). 
 responsibility for, 26, 28, 
 
 30-1, 83, 87, 89, 90, 
 
 92-5 
 Instances of material losses (see 
 
 Savings Possible). 
 
INDEX 
 
 179 
 
 Interchangeable racks and bins 
 
 (see Store Room). 
 Inventory, adjustments, 172-3 
 
 control in accounting, 167, 
 171-2 
 through double binning, 
 
 119-122 
 in maintenance dept., 135-9 
 periodic physical, 169-70 
 perpetual, 58, 119-21, 170-73 
 supplementary checks on book 
 balances, 171-2 
 Invoice, checking and paying, 95-7 
 
 copies, 95-7 
 Item, definition, 127 
 
 Layout of store room, 99-104 
 Location of various departments, 
 
 34-7 
 Losses in material handling (see 
 
 Savings Possible). 
 Lot, definition, 127 
 Low limit, determination of, 43-4, 
 
 47-8 
 
 . M 
 
 Maintenance stores, 135-9 
 Market as basis of material replen- 
 ishment, 38 
 Materials, accounting for (see 
 Accounting) . 
 
 administrative control, 3, 8, 
 15, 35, 51-2, 70, 72-5, 
 99-101 
 
 classes of, 15-6 
 
 control, necessary for efficient 
 production, 1-14, 17 
 rules for, 24-5 
 
 cycle, 17 
 
 data sheet (Fig. 2), 46 
 
 function in manufacturing, 
 scope of, 1-3, 17, 23-5, 
 26, 30, 34, 39, 53, 70, 85, 
 98, 136, 140, 159 
 
 information necessary for con- 
 trol of, 23-4, 45-52, 53, 
 56-60 
 
 inspection report, use, 20 
 
 Materials, receipts, summary (see 
 also Notification of 
 Material Received), 92 
 regulation, a function of pro- 
 duction dept., 8, 15, 35, 
 51-2, 72-5 
 replenishment (see Replenish- 
 ment) . 
 rules for control of, 24-5 
 simplification of, 3-6, 93 
 standardization of, 3-6, 93 
 statistics of, 53, 173-4 
 system must be adapted, fore- 
 word, 18, 26, 29, 30, 33, 
 37, 41, 42, 49, 53-4, 56, 
 84, 98-100, 102, 107 
 system not self -operating, 8, 
 
 36, 60 
 theory of supply service, 6-7, 
 23 
 Metal racks and bins, 118 
 Minimum limit, dangers in use of, 
 11-2, 41-2, 54 
 definition, 40 
 Mnemonic classification (see 
 
 Classification) . 
 Modification of purchase contracts, 
 
 recording, 80, 96 
 Morgue store room, 118 
 Move order, sample (Fig. 33), 122 
 use, 22 
 
 N 
 
 Notification of materials received, 
 copies of, 91, 95-7 
 requirements of, 91 
 sample (Fig. 13), 91 
 use, 20, 58 
 
 O 
 
 Oral orders, 72 
 
 Order point (see Amount to Order). 
 
 Ordering materials (see Purchase 
 
 Order, Purchasing Dept., 
 
 Replenishment). 
 Organization for material control, 
 
 29-33, 35, 37, 70, 86-8, 
 
 93, 100-1 
 
180 
 
 INDEX 
 
 Organization, chart (Fig. 1), 33 
 Overflow bins, 113-4 
 
 bin tag, sample (Fig. 25), 
 114 
 
 use, 21, 113 
 
 Package, definition, 127 
 
 Parts list, use, 18 
 
 Percentage for safety in setting 
 
 low limits, 47 
 Periodic physical inventory (see 
 
 Inventory). 
 Perpetual inventory (see In- 
 ventory). 
 Personnel dealing with material 
 control, 26-9, 30, 49, 70 
 high grade help necessary, 8, 
 27, 60, 85 
 Phj'sical count (see also Inventory), 
 170 
 form for (Fig. 36), 170 
 inventory adjustments, 
 
 172-3 
 location of oflBces, 34-7 
 necessity of, in perpetual 
 inventory, 58, 120, 170 
 supplementary checks on 
 book balance, 171-2 
 Piece, definition, 127 
 Pile, definition, 128 
 Pilfering, protection against, 135 
 Planning department, function, 29, 
 35 
 location of, 35 
 Postal follow-up of purchase or- 
 ders (Fig. \2A-B), 81 
 Production department, function, 
 scope of, 1-2, 35 
 responsible for material con- 
 trol, 8, 15, 35, 51-2, 
 72-5 
 for quantity, 2, 31, 51, 
 
 72-5 
 responsible for time to 
 renew, 32, 47 
 dependent on material con- 
 trol, 1-14 
 
 Production department, require- 
 ments as basis of material 
 replenishment, 6, 38-52 
 types of, as related to material 
 replenishment, 39, 54 
 Protection of materials, 103, 132-5 
 from deterioration, 134 
 dust, 134 
 
 fire and explosion, 132 
 pilfering, 135 
 rust, 133 
 Purchase order, cancellation of, 
 copies of, 58 
 original, 78, 79 
 requisitioner's, 78, 79 
 purchasing department by 
 serial number, 78, 
 80, 96 
 tickler copy, 78, 80-2 
 balance and receiving, 58, 
 78, 82, 89-90, 95-7 
 other copies, 78 
 follow-up of, through tick- 
 ler, 78-83, 95 
 by postal, 81 
 frequency of issuing, 48-9 
 requirements, 77-8 
 sample (Fig. 11), 76 
 short carbon for receiving, 
 
 89-90 
 use, 20 
 requisition (see Replenishment 
 
 Order) . 
 specifications, kinds of, 92-5 
 responsibility for, 45-7, 92 
 use, 3-6, 18 
 Purchasing, speculative (see Spec- 
 ulative Purchasing). 
 indication of where to pur- 
 chase, 50-1 
 contracts, modifications of, 80, 
 
 96 
 department, 70-84 
 function, 70-84, 93 
 location, 36 
 records, 77-84 
 responsibility for cost, 32 
 for time to renew, 32, 47, 
 72, 77, 78 
 
INDEX 
 
 181 
 
 Q 
 
 Quality and inspection, responsi- 
 bility for, 26, 28, 30-31, 
 83, 87, 89, 90, 92-5 
 
 Quantity, responsibility for, 3, 31, 
 51, 72-5 
 
 Quantity held in various bins, 
 131-2, Appendix 
 
 Quantity to order (see Amount to 
 Order) . 
 
 R 
 
 Racks and bins (see Store Room 
 
 Equipment) . 
 Raw material, definition, 15 
 Receiving department, 86-92, 93 
 copies of purchase order 
 
 for, 89-90 
 function, 28, 31, 86-7, 89-92 
 location, 34 
 Replenishment — bases of, 38-52 
 through amount on hand, 40, 
 41 
 sample balance sheet for, 54 
 through amount available, 40, 
 42-52 
 isample balance sheet for, 
 44-5, 54-66 
 through a schedule, 40, 52 
 sample balance sheet for, 
 66-7 
 Replenishment order, approval of, 
 19-20, 28, 51, 72-4 
 to change amount ordered 
 (Fig. 10), 73 
 copies of, 52 
 requirements, 50 
 sample (Fig. 3), 49 
 use, 19, 75 
 Reports, 163-4, 173-4 
 Requisition (see Replenishment 
 Order), Stores Issue, Worked 
 Material Issue). 
 Reservation of material (see 
 
 Apportionment) . 
 Returned- goods report, use, 21 
 Row, definition, 127 
 
 Rules for material control, 24-5 
 Rust prevention, 133 
 
 S 
 
 Savings possible through material 
 control, 9-14, 30, 31, 34, 
 35, 38, 40, 41-2, 45, 52, 
 53, 60, 71, 80, 85, 93, 
 94, 95, 100, 106, 111-113, 
 122, 124, 126, 129, 140, 
 158 
 Scheduling material needs, 40, 
 
 52, 66-7 
 Section, definition, 127 
 Short carbon of purchase order for 
 
 receiving, 89-90 
 Simplification of materials, 3-6, 
 
 93 
 Space reserve in storage bins, 114, 
 
 131-2 
 Specifications (see Purchase Speci- 
 fications). 
 Speculative purchasing, 8, 24, 
 31-2, 38, 51, 72-5 
 approval to change amount 
 requisitioned, 73 
 Stack, definition, 127 
 
 pyramidal, definition, 128 
 wedge, definition, 127 
 Standard lot, definition, 127 
 use, 131, 137 
 racks and bins (see Store 
 Room Equipment). 
 Standardization of material, 3-6, 
 
 92-3 
 Statistics of material, 53, 173-4 
 Stores, definition, 15 
 
 classified, definition, 16 
 count, sample (Fig. 36), 170 
 
 use, 23, 58, 170-1 
 unclassified, definition, 16 
 Stores credit, sample (Fig. 32), 121 
 use, 22, 162 
 issue, pricing, 96 
 
 sample (Fig. 31), 120 
 use, 22, 160 
 system (see Material System). 
 Storekeeper, function, 28, 29 
 
182 
 
 INDEX 
 
 Storekeeper, physical count, 58, 
 
 119, 120, 170-71 
 Store room, 98-139 
 
 arrangement, layout, 99- 
 
 104 
 capacities of various bins, 
 
 132, Appendix 
 centralized or decentralized, 
 
 100-102 
 equipment, standard racks 
 and bins, 106-123 
 samples (Figs. 16-24, 26- 
 8), 108-112, 115-117 
 minor, 123-126 
 flexibility in equipment, 
 
 106-13 
 indexing, 104-106 
 location, 34 
 protection, 132-5 
 requirements, 98, 102 
 space reserve in bins, 114, 
 131-2 
 Stowage, capacities, 131-2, Ap- 
 pendix 
 definition, 127-8 
 rules for, 128-32 
 units (Fig. 34), 128 
 Summary of material receipts, 92 
 Supplies and spare parts, control 
 
 of, 136-8 
 Supply service, theory of, 6-7, 23 
 Symbolization, 140-158 
 definition, 141 
 rules, 141-3 
 examples, 140-158 
 System (see Material System). 
 
 Tag (see Bin Tag, Identification 
 Tag, Overflow Bin Tag). 
 
 Theory of material supply service, 
 
 6-7, 23, 39 
 Tickler copy of purchase order (see 
 
 Purchasing Order, Copies 
 
 of). 
 Time to renew supply, 32, 47, 72, 
 
 77 
 Tier, definition, 127 
 Tools and fixtures, control of, 
 
 138-9 
 Tool check, sample (Fig. 35), 138 
 
 use, 138-9 
 Ti-affic department, function, 28, 
 
 86, 88-90 
 location, 34 
 Transportation men, function, 28 
 Turnover of goods, savings 
 
 through, 13-14 
 through double binning, 
 
 122-3, 134 
 
 U 
 
 Unclassifies stores, balance sheet, 
 operation, 67-8 
 sample (Fig. 8), 66-7 ^ 
 use, 19 
 definition, 16 
 Unit, definition, 127 
 
 W 
 
 Worked materials, balance sheet, 
 operation, 67 
 sample (Fig. 7), 65 
 use, 19 
 control similar to stores, 16 
 credit, use, 22 
 definition, 15-6 
 issue, use, 22 
 received in stores, use, 22 
 Works manager, function, 28, 
 51-2