| Inventory control is a significant aspect of | | | | major objective of the stores department or function. |
| management accounting. One aspect of inventory | | | | Having a ready supply of raw materials is critical to the |
| control is storage of raw materials. Businesses and | | | | production process. When supplies drop below the |
| organisations have important reasons for storing | | | | buffer stock level, this can have serious business |
| source materials for the production process. Once a | | | | implications -particularly when production is delayed as |
| business decides to store materials, there are storage | | | | a result. Having up-to-date records and being able to |
| objectives that are critical to an effective and efficient | | | | locate and identify stock allows the stores function to |
| inventory control system. These include:a) Efficient | | | | identify when material supplies are too low or nearing |
| issue of materials for the production processb) | | | | capacity. |
| Maintenance of adequate inventoryc) Full identification | | | | Full identification of materials for production allows the |
| of materials in stockd) Proper mechanisms for locating | | | | business to keep track of financial and non-financial |
| stocke) Protection of stock from damage | | | | aspects of storing raw materials. It also facilitates other |
| deteriorationf) Proper securityg) Efficient use of | | | | objectives like proper security and speedy issue of |
| storage spaceh) Accurate and up-to-date records | | | | materials. It is no use to store materials, if they are |
| affiliated with inventory | | | | susceptible to damage and deterioration. Inadequate |
| Arguably, the most important objective is efficient issue | | | | protection from this defeats the main objective of |
| and receipt of raw materials, especially for production | | | | maintaining inventory. Protection from damage is |
| runs that depend heavily on timing. Businesses store | | | | separate from security, which addresses issue like |
| raw materials to ensure their availability, but that would | | | | theft, pilferage and hazards, such as fire. |
| be less significant if they could not be issued quickly | | | | The stores function also needs to use space |
| when demanded. In addition, efficient issue links to | | | | efficiently, since wastage of space can increase a |
| other objectives, such as having a proper mechanism | | | | firm's holding costs and/or increase its ordering costs. |
| for locating raw materials and identifying them properly. | | | | The objectives of materials storage is acutely |
| Inability to locate raw materials properly can also lead | | | | important, since a properly functioning inventory control |
| to misleading inventory records, which can undermine | | | | system relies on the primary objectives of storing |
| the entire inventory control system. | | | | materials being fulfilled. |
| Maintenance of adequate inventory levels is also a | | | | |