Advantages - Disadvantages of a Centralized Stores





The organization set-up of the stores depends upon the requirements, and have to be tailor-made to meet the specific needs of an organization.
There are two broad classifications of Stores :

Functional Stores and Physical Stores based on physical considerations.

Physical considerations: There can be various types of stores based on the quantity of stocks held or distance from the point of usage, like central stores sub-stores, transit stores, site store etc.

Central store:
There can be a central store serving three or four factories or several shops in a large factory or it can be a central warehouse containing finished goods. The word ‘central’ only denotes that it severs various units each of which may have separate sub-stores or departmental stores. Central stores also exists in multi-plant situations.

Usually for better control, Organization keeps a Central Stores which is usually responsible for all activities mentioned above for entire organization and then sends them on ,as and when basis, to other stores which are usually attached to the production capacities located at various places.

For example a hospital may have a central stores with separate ones for each category of ward i.e. stores for linen, surgical instruments, drugs, and general requirements.

The stores in an airlines company may have the following sections – receipts, quarantine (pre-inspection), commercial stores, general paint and oil stores, stationary stores, raw materials stores, aircraft spares subdivided into engine spares and accessories, general, radio, instrument and maintenance.

Advantages of a Centralized Store :

Centralized Store can offer a wider range of goods is provided for all users than is possible in smaller stores.

2. Inventory can be minimum as material is ordered based on requirement of all other attached parties and material can be shunted to and from one store to other one attached to the Central Stores. This is especially so in the case of tools fixtures, equipment and spares.

3. Better control is possible.

4. Economies in storage is possible. Goods in bulk will occupy less space.

5. Bigger storehouses enables better and more modern handling methods (mechanical or automatic).

6. Delivery at a single point decreases cost of delivery.

7. Receipt and inspection of goods can be more efficiently organised.

8. Opportunities of standardization are improved.

9. Stock turnover is increased and the probability of deterioration during storage is correspondingly decreased.

10. Less personnel will be required for managing. Unnecessary duplication of records takes place in decentralized Stores. For example, one may have ten different Kardex cards for one martial stocked in ten places. Similarly, accounting work is multiplied.

Disadvantage of a Centralized Store:

Extra handling is involved and staff will be required for transportation from stores to the various production units.

2. If the system is not well organized there can be severe shortages at work places causing unnecessary interruptions in production. Inefficiency can also result in Production keeping some buffer inside the unit, which can lead to cluttering of space, and to pilferage because of the absence of security.

3 More internal documentation may become necessary

4. If a fire takes place there is a greater risk, because entire stocks can be lost bringing production to a total halt.

5. It is apparent that there can be myriad’s of types of materials which are stores, depending upon the type and complexity of the industry which the Store serves. There can be small items like nuts and bolts or heavy items like steel plates, there can be gases in cylinders (like LPG or oxygen), powders, liquids, some of them dangerous like sulphuric acid, or inflammable, like petrol, and so on. The variety is almost infinite.




Read on ...more Stores topics

Inventory Control
Stores relationship with other Functions
Advantages of a Centralized Store
Responsibilities of Stores
Store Planning and Layout