Stores definition
/What are Stores?
The stores term refers to the materials maintained by a business in inventory. The term can also refer to the function of holding and issuing inventory, such as a warehousing operation. In either case, an inventory tracking system is needed to ensure that the materials management staff has correct information about the number of units on hand.
Characteristics of Stores
The key characteristics of stores are as follows:
Stored for future use. Stores consist of materials or products that are held in inventory until they are needed for production, resale, or business operations.
Categorized into different types. Inventory within stores can be classified as raw materials (basic materials used in production), work-in-process (partially completed goods), and finished goods (completed products ready for sale).
Requires proper storage and handling. Stores must be properly stored and organized to prevent damage, spoilage, or loss. Perishable goods require refrigeration, while fragile items need special handling.
Managed through inventory systems. Many businesses use ERP (Enterprise Resource Planning) software or barcode scanning systems to track inventory levels in real time.
Valued in financial statements. Inventory is recorded as a current asset on a company’s balance sheet and plays a crucial role in cost accounting and financial reporting.
Affects production and sales efficiency. Having the right amount of stores ensures that production continues without delays and customer demands are met on time. Overstocking, however, can increase holding costs.
Prone to shrinkage. Stores can be affected by theft, mismanagement, or spoilage, leading to inventory shrinkage. Businesses implement security measures and audits to minimize losses.
Stores Tracking
There are several options available for stores tracking, which are as follows:
Bin system. Under the bin system, inventory items are piled up in storage receptables. No attempt is made to keep track of the number of individual units. Instead, when the quantity in the bin falls below a line painted on the side of the bin, the stores person places a replenishment order. This approach is used for very inexpensive items.
Individual tracking. Under the individual tracking system, each unit is assigned to a specific storage location, and tracked in a computer database. When units are added to or removed from this location, the change is noted in the database. Ongoing cycle counts may be used, to verify that the amount on the shelf matches the amount in the database. This approach is used for more expensive items.