How can the efficiency of the stores function be measured?

Expert Answers
M.P. Ossa eNotes educator| Certified Educator

The function of "stores," as the name implies, is storage, receiving, protecting, and keeping products within a contained environment. In any professionally managed store, the receiving incoming products is called the receiving bay and the process of keeping them safe and stored for as long as needed is known as custody. Any movement of the product outside of the contained storage is called the issue. All manufacturers that operate legally and with a degree of organization will constantly refer to these three processes, understanding that they operate like a cycle that keeps the stores active. 

This being said, receiving, custody, and issuing, are the main activities to measure when it comes to determining whether the store is actually efficient or not. 

The best measurement tool to determine whether the processes of receiving, custody, and issue are being properly followed is inventory control. 

Inventory control, or inventory management, takes into account every single thing ever received at the store. It keeps records of everything incoming, stored, and outgoing. This is done to control the amount of things coming in and out, and also to provide documentation of when it was received, how long it remained in custody, and when (and how) it was issued. This is proper accounting and auditing at its best. It protects everyone, too, as every product is accounted for and in place. If inventory control were not to be conducted, imagine what would happen: any product could be taken from the store without precedence, and there would be a mayhem in keeping track of what is available and in what quantity.

Therefore, efficiency is measured through record keeping in the form of inventory control. It is no difference than what we do with things we are taking care of and need to protect. We list them down, and whatever movement that product does needs to be documented. Any issuing, or any change in placement, goes down on record. This is not only effective and efficient, but it also keeps the store protected from any accusation that products are being misused or mishandled. 

 

krishna-agrawala | Student

The term store is applied to a warehouse as well as a retail stores. I will answer this question for stores in the sense of a warehouse. The main activities of the a store include receipt, storage, and issue. Thus the main output of a store are volume of receipt and issue transactions, and the volume of material stored. The major inputs that go into producing these outputs include manpower, storage space and facilities, and the stock maintained in the store.

The efficiency of store is measured in terms of ratios of of different combinations of outputs per unit of inputs. For this purpose outputs may me measured in units like value or quantity of material received, issued or stocked. This quantity may be the  quantity of material measured in term of values, numbers, weight, or volume. It is also common to measure in terms of number of transactions such as number of issues or receipt transactions.

Measurement of inputs depends on the nature of inputs. The stock maintained is usually measured using the same units as for measuring output quantity. The quantity storage facilities used are measured in terms of investment in such facilities, and storage space in terms of total storage area or volume available. Manpower is measured in terms of total number of employees, man-hours worked , or wages paid. Other inputs are generally clubbed together and measured in terms of the corresponding operating cost incurred.

With this kind of different combination of input and output measures it is possible to design scores of different measures of stores efficiency. No store needs to use such a large number of different measures. In most of the cases about half a dozen different type of measures are adequate. Each store need to use a set of such selected measure, depending on the nature of their operations, environment and objectives. One of the most commonly used of such measures is the turnover ratio. IT is defined as the ratio of stocks issued in a year divided by the average inventory held. Total cost of stores operation expressed a percentage of turnover or stocks maintained is a commonly used measure of store performance.