Indian Railway Codes and Manuals-Mechanical code (Rolling stock )-Chapter- 5 (V)

 

CHAPTER 5

Materials Management in Railway Workshops

501. Introduction From the point of view of indenting, the requirement of materials for PU/Workshop/LCDs can be divided into following three categories: (i) Stock items – These are items of regular requirement which are stocked in the stores depot and indented by Stores department. (ii) Non stock items – These are the items which are indented as and when required. (iii) M&P items – In a workshop Machinery and Plant are required in the conversion process of incoming material into finished Goods. From the point of view of processing, the stock and non stock items can also be classified as raw material, semi-finished goods and finished goods.

502. Sources from which Materials are obtained by shops and maintenance depots Materials for jobs undertaken in the workshops are obtained from following sources:- a. Workshop Stores Main Depot, attached to workshops. b. General Stores Depot c. Other Division or Railways d. Workshops (manufactured items) e. Orders placed by Principal Chief Material Manager (PCMM) for direct delivery of non -stock items M&P items from suppliers against orders placed by PCMM/COFMOW(Central Organization for Modernization of Workshops).

503. Matching Budget with Demand for Materials Materials are purchased based on estimated annual requirement for stock items. In case of non stocked items, the demand for materials matches with the budget provision. In case of stocked items there may arise a situation wherein, the demand for quantities made by the end user may not match the budget provision. The mismatch may happen when the Budget provided does not match the projected cumulative Estimated Annual Consumption (EAC) value in a year. To avoid such situation, it shall be necessary that provision in the budget of the end user matches with the approved Estimated Annual Consumption for stock items of end users. The budget thus provided will have contra provision in Stores Budget as provided in Stores Code Chapter31.

504. Workshop Inventory Management - stock and non-stock items Stock items inventory is covered in the stores code and management of stocks in the stores depots is the function of the stores department. However, stock items are often drawn in excess of a day‘s / week‘s requirement and this forms part of workshop inventory and the cost passes through the workshop manufacturing suspense. A foolproof system of accountal of drawal of stock items and usage and a periodic accountal of shop inventory is essential. For each job / job lot, material drawn and utilized has to be reconciled before closure of the job card. Non-stock items inventory is in charge of the shop supervisor. It is essential to keep a record of all items lying on the shop floor and these have to be stocked in countable/weighable lots for inventory checks. For non -stock items the shop in-charge should maintain a record of receipts, utilization, stock on hand and price at which procured. This will avoid multiple and wasteful procurement of non -stock items. Non-stock items, which are regularly procured, should be converted to stock items.

505. Raw material norms The quantum of raw material for a job is computed on the basis of size and shape of the semi-finished / finished product, the standard size of raw material supplied as available in the market and the cutting diagram. At times the raw material standard sizes undergo changes and it may be economical to redo the cutting diagram with a view to reduce cutting wastages. Raw material norms should be worked out for every major job and revised once in 3 years, keeping in view availability of new sizes of raw materials. Responsibility for this should be clearly defined in the organization of the PU/ Workshop or the sheds/depots . This should result in reduction of wastage and cost savings.

506. Sub-stores Every segment of a PU/ workshop as well as LCDs should have an attached sub -store under the control of the shop supervisor. The sub store should have a proper storage system with enough capacity to store one full working day‘s requirement and entire materials drawn by NS indents. The item locations should be properly labeled and documented. Drawal from main stores to sub-stores should be on a daily basis against stock requisitions. Accountal against job and cards should be on basis of actual usage. The items in the sub stores will be on shop suspense account till it is charged to the job card.

507. Pairing of Issue Notes.— Workshop issue notes prepared by the Workshop Stores Depot on the form prescribed in paragraph 10523 of the Indian Railway Code for the Stores Department would be received daily in the Workshop Accounts Office, after scrutiny by the Officer-in-charge of workshop or other officer of the Mechanical Department. On receipt of the above issue notes, the Workshop Accounts Office is responsible for seeing that— 1. the shop serial numbers (i.e. Requisition Numbers) of the issue notes for each shop are continuous and that breaks in such continuity if any, are satisfactorily explained; 2. the issue notes are received strictly according to schedule i.e., by the evening of the day following the date of issue; 3. the issue notes have been correctly prepared according to the instructions issued for this purpose; and 4. The issue notes are 'paired' with the Bill copies with the Store Debit summary of Issues as laid down in paragraph (508). In a computerized system of generation of ‘issue notes’ for the complete requirement of a work order, such pairing procedures may become either fully or partially redundant, to be done in a much simplified form.

508. The copies of the issue notes received from Shop Foremen through the Officerin-charge of workshop should be sorted out and arranged in chronological order. Each of these issue notes should be paired with the corresponding one received with the Store Debit summary from the Stores Accounts Office and the former compared with the latter, in respect of allocation (work order number) and quantity of stores shown as having been received in the shop.

509. Provisional Adjustment of Issue Notes.— If any issue note is not received from the shop in time and the allocation on the copy of the issue note accompanying the Store Debit summary is incomplete, efforts should be made to ascertain the work order number to which the amount is chargeable. If the allocation cannot be ascertained before the month's accounts have been closed, the amount of each such issue note should provisionally be adjusted against a suspense work order entitled "wrong work order" which should be cleared in the subsequent month by being finally adjusted against the correct work order or work orders on receipt of the shop copy of the issue note. A register showing the issue notes thus adjusted provisionally should be put up monthly to the Workshop Accounts Officer by the first week of every month, who would be responsible for seeing that the correct allocation is ascertained as expeditiously as possible and that the appropriate adjustments are made.

510. Main Stores Sub-ledger. After the pairing referred to in paragraph 608 has been carried out, which should be completed expeditiously on receipt of Stores Debit Summary in the Accounts office, the value of stores should be abstracted for each shop under the various work orders in the stores sub-ledger. A sample sub ledger form in the computerized format is enclosed as Annexure 6.1, which is common for all types of labor and stores charges. Railways can redesign this form to suit their working.

511. Adjustment of cost of stores received from depots. The grand total of all sub ledgers shall be struck and agreed with the totals of the monthly stores Debit summary. After this is done, the debit raised by the Stores Accounts Office, shall be accepted and allocated to "Workshop Manufacture Suspense Account."

512. Stores purchased Direct.— As soon as the stores are received against the orders placed either by the Principal Chief Material Manager (PCMM) or by the depot store officer, Executive officer of workshop should send a copy of receipt note / receipted challan to the Workshop Accounts Officer.

513. On receipt of the receipted challan /receipt note referred to above, the Workshop Accounts Officer should price it at the rate quoted therein, after verifying the rate with that given in the Stores Order.

514. The amount of the receipted challan/ receipt note should then be journalized by credit to "Purchases" and debit to "Workshop Manufacture Suspense Account.''

515. The amount thus debited to the head "Workshop Manufacture Suspense" should be summarized by individual work orders in a separate Stores Sub-ledger to be posted for each shop separately from the receipt notes received from the officerin-charge of workshop vide paragraph 612 above.

516. At the close of the month, this Stores Sub-ledger should be totaled and summarized. A sample summary sub ledger format is shown in Annexure 6.2 which can be modified to suit Railway’s requirement.

517. The grand total of this summary should be agreed with the total credits to "Purchases" during the month.

518. Stores Sub-ledger for Credits Detailed instructions for the accountal of "Returned Stores" and "Manufactured Stores" and for the preparation of forms of "Advice Notes" and "Material supplied to Stores" in connection with such stores have been laid down in chapter 15 of the Indian Railway Code for the Stores Department. The credits received in connection there with should be summarized as credit Stores in the Sub –ledger to be maintained for each shop, separately for "Returned Stores" and "Manufactured Stores". The reconciliation of these credit stores sub-ledgers with the monthly credit summary received from Stores accounts office should be carried out in the manner as for debits.

519. Stores Sub-ledger for Out-turn of Process shops The debits to work orders from the Manufacturing Accounts of Process Shops are explained in Chapter 7. These also should be summarized in a separate Stores Sub -ledger in the same form as used for the main Stores Sub-ledger.

520. The Stores Sub-ledger referred to above should be closed by the 12th of the following month and the grand total reconciled in the manner stated in the following paragraph.

521. The total of the Stores Sub-ledger, referred to in paragraph 619 above, should be agreed with the total issues shown in the manufacture out-turn statements of the various process shops and other shop manufactured items handed over to stores for consumption during POH in workshops.

522. Stores Charges Write-back Order Stores drawn against Standing Work orders should not be used later on for different works. Materials for more than one work order generally should not be drawn against one issue note. In case of violation, Write Back Order (WBO) to be issued immediately for accountal in the same month (Ref: Stores Code Vol II para 1514)To regularize any incorrect allocation of stores charges to' work orders, write - back orders should be made out given in Annexure 6.3 and debits to the correct work orders and minus debits to work orders from which the charges are written back should be summarized in a separate Sub-ledger technically called the Adjustment Sub-ledger, to be prepared for each shop separately.

523. Before inclusion of the write-back orders in the Stores Sub-ledger, it should be seen that the work order numbers quoted therein are current, the reasons for the adjustments have been clearly given in sufficient detail, the arithmetical calculations are correct and that the write-back orders bear the signature of an officer.

524. Other Miscellaneous Charges Besides the labour and stores charges which have been described in the preceding paragraphs certain miscellaneous charges are also booked to ―'Workshop Manufacture Suspense Account ― .These charges are generally comprised of the following items: — (1) Municipal Taxes as Wheel Tax and License for Motor Lorries. (2) Cost of electric current. (3) Water charges. (4) Shunting charges. (5) Demurrage charges. (6) Carriage of materials. (7) Other charges

525. Miscellaneous Stores Sub-ledger.— All bills in connection with the above items should first be got verified and allocated by the Officer-in-charge of workshop or other Departmental Officer concerned and thereafter passed for payment, or adjusted in transfer, by debit to relevant work orders and abstracted in the Miscellaneous Stores Sub-ledger to be maintained for each shop separately.

526. Summary Sub-ledger.— In addition to the Sub ledgers for different shops, a summary of all Sub-ledgers should be prepared in a form similar to Annexure 6.2, showing the total amount under the various sub-ledgers referred to above.

527. The totals of the various columns shown in the summary sub-ledger should be checked with reference to the following: — (1) Store Debit Summary received from the Workshop Stores Main Depots as well as from General Stores Depots. (2) Debits raised by divisions and foreign railways (3) Cash Book debits, i.e., payments made for municipal taxes, license fees and direct purchases of stores. (4) Issues from workshop manufacturing accounts. (5) Write-back orders.

528. This summary should then be submitted to the Section Officer (Accounts) for his signature, who should, before signing it, satisfy himself about the correctness of the entries included therein.

529. The charges abstracted in the various Stores Sub-ledgers (referred to in earlier paragraphs) by shops and by work orders should be transferred to the main stores sub-ledgers of the respective shops, after the correctness of the former has been verified.

530. The charges for stores booked on each work order in the main Stores Sub ledgers of different shops should be posted in the Workshop General Register shop by shop, in the same way as the charges for Labour. Annexure 5.1 Labour & Stores sub ledger for the month of _______ year_____________ Allocation WO No. Lab. hrs. Lab. chgs. Bonus Amt. Stores Dbt. Lab. on cost Mat. on cost Admn./ Prof. on cost Total Stores Crt. Ret. stores Total Annexure 5.2 Summary of labour & stores sub ledgers for the month of ______year___________ Annexure 5.3 Railway____________________________ Department_________________________ Office__________________ Adjustment memo by the ___________ showing adjustment to be made in the accounts for the month of ______ year _______ No.__________________________ Dated_____________ Forwarded to the _______________________________ _____ ________________________ for acceptance allocation and early return. Signature ________________________ Designation_____________________ No.______________________ ____ Dated________________ Accepted for Rs.________________ from the accounts for month______________ year ___________ By debit to Revenue/Capital Signature of Accepting Officer____________________ Designation_______________ Shop Lab. hrs. Lab chgs. Bonus amt. Stores. Dbt. Lab. On cost Mat. On cost Admn./Prof. on cost Total Stores Crt. Ret. stores Total Grand Particulars of Transactions Circumstances under which the write-back is proposed or authority for transfer Amount Head of account to be credited Head of account to be debited Rs. P.

Multiple choice questions:

1. From the point of view of indenting, the requirement of materials for PU/Workshop/LCDs can be divided into which categories?

A. Stock items, Non-stock items, M&P items

B. Raw material, Semi-finished goods, Finished goods

C. Consumable items, Durable items, Capital items

D. Workshop stores, General stores, Maintenance stores

Answer: A. Stock items, Non-stock items, M&P items

2. Which of the following is NOT a source from which materials are obtained by shops and maintenance depots?

A. Workshop Stores Main Depot

B. General Stores Depot

C. Direct purchase by Workshop Manager

D. Orders placed by PCMM for direct delivery

Answer: C. Direct purchase by Workshop Manager

3. What is essential for managing non-stock items inventory?

A. Regular auditing by external auditors

B. Keeping a record of all items lying on the shop floor

C. Storing items in inaccessible areas

D. Multiple and wasteful procurement of non-stock items

Answer: B. Keeping a record of all items lying on the shop floor

4. How often should raw material norms be revised?

A. Every year

B. Every 2 years

C. Every 3 years

D. Every 5 years

Answer: C. Every 3 years

5. What should every segment of a PU/workshop as well as LCDs have attached?

A. A main store

B. A sub-store

C. A central warehouse

D. A storage depot

Answer: B. A sub-store

6. Which department is responsible for the management of stock items inventory in stores depots?

A. Engineering department

B. Workshop department

C. Stores department

D. Finance department

Answer: C. Stores department

7. What is the primary purpose of pairing issue notes in the workshop accounts office?

A. To ensure continuous requisition numbers

B. To check the accuracy of preparation

C. To match allocation and quantity of stores

D. All of the above

Answer: D. All of the above

8. In the event of provisional adjustment of issue notes, where are the amounts adjusted if the allocation cannot be ascertained before month's account closure?

A. Workshop Manufacture Suspense Account

B. Wrong Work Order

C. Stores Ledger

D. Accounts Receivable

Answer: B. Wrong Work Order

9. What is the workshop inventory management requirement for stock items?

A. Keeping excess inventory for a month

B. Drawing stock items in excess of daily/weekly requirements

C. Drawing minimal stock to avoid excess

D. Not drawing stock items at all

Answer: B. Drawing stock items in excess of daily/weekly requirements

10. When should the value of stores be abstracted for each shop under various work orders in the stores sub-ledger?

A. Weekly

B. Monthly

C. Quarterly

D. Annually

Answer: B. Monthly

11. What should be done upon receipt of receipted challan or receipt note for stores purchased directly?

A. Ignore the receipt

B. Send it to the central warehouse

C. Price it at the rate quoted in the note

D. Return it to the supplier

Answer: C. Price it at the rate quoted in the note

12. Where should the amount of the receipted challan/receipt note be journalized?

A. Workshop Manufacture Suspense Account

B. Purchases

C. Sales

D. General Ledger

Answer: A. Workshop Manufacture Suspense Account

13. Who is responsible for sending a copy of receipt note or receipted challan to the Workshop Accounts Officer for stores purchased directly?

A. Principal Chief Material Manager (PCMM)

B. Depot store officer

C. Executive officer of workshop

D. Shop supervisor

Answer: C. Executive officer of workshop

14. What should be done if an issue note is not received from the shop in time?

A. Ignore the issue note

B. Allocate it to a suspense work order

C. Allocate it to the next month

D. Send it back to the shop

Answer: B. Allocate it to a suspense work order

15. What should the sub-store have enough capacity to store?

A. One full week's requirement

B. One full month's requirement

C. One full working day's requirement

D. No specific requirement

Answer: C. One full working day's requirement

16. What should be done at the close of the month with the Stores Sub-ledger?

A. Discard it

B. Total and summarize it

C. Forward it to the central warehouse

D. Archive it

Answer: B. Total and summarize it

17. The grand total of the Stores Sub-ledger summary should be agreed with which total?

A. Total debits from purchases

B. Total credits to "Purchases" during the month

C. Total inventory levels

D. Total labor charges

Answer: B. Total credits to "Purchases" during the month

18. What is the purpose of the Stores Sub-ledger for Credits?

A. To account for "Returned Stores" and "Manufactured Stores"

B. To track new purchases

C. To record labor hours

D. To manage shop supplies

Answer: A. To account for "Returned Stores" and "Manufactured Stores"

19. By when should the Stores Sub-ledger be closed each month?

A. By the 1st of the following month

B. By the 5th of the following month

C. By the 12th of the following month

D. By the end of the following month

Answer: C. By the 12th of the following month

20. What should be agreed with the total issues shown in the manufacture out-turn statements of various process shops?

A. The total of the Stores Sub-ledger

B. The budget summary

C. The labor costs

D. The miscellaneous charges

Answer: A. The total of the Stores Sub-ledger

21. What should be issued immediately in case materials for more than one work order are drawn against one issue note?

A. A purchase order

B. A Write Back Order (WBO)

C. An inventory adjustment form

D. A requisition note

Answer: B. A Write Back Order (WBO)

22. What should the adjustment sub-ledger contain?

A. A summary of all expenses

B. Debits to the correct work orders and minus debits to work orders from which charges are written back

C. All new purchase orders

D. Inventory levels

Answer: B. Debits to the correct work orders and minus debits to work orders from which charges are written back

23. What types of charges are booked to the "Workshop Manufacture Suspense Account"?

A. Only labor charges

B. Only stores charges

C. Miscellaneous charges such as municipal taxes, electric current, and water charges

D. None of the above

Answer: C. Miscellaneous charges such as municipal taxes, electric current, and water charges

24. What should be done with bills for miscellaneous charges?

A. Ignore them

B. Verify and allocate them, then pass for payment or adjust in transfer

C. Send them to the central warehouse

D. Archive them without action

Answer: B. Verify and allocate them, then pass for payment or adjust in transfer

25. What is the purpose of the summary sub-ledger?

A. To provide detailed instructions for accountal of returned stores

B. To show the total amount under various sub-ledgers

C. To track employee work hours

D. To record shop supplies

Answer: B. To show the total amount under various sub-ledgers

26. Who must sign the summary sub-ledger before it is finalized?

A. The workshop manager

B. The storekeeper

C. The Section Officer (Accounts)

D. The purchasing officer

Answer: C. The Section Officer (Accounts)

27. Where should the charges abstracted in the various Stores Sub-ledgers by shops and by work orders be transferred to?

A. The central ledger

B. The main stores sub-ledgers of the respective shops

C. The monthly report

D. The annual budget

Answer: B. The main stores sub-ledgers of the respective shops

28. What is the purpose of the Workshop General Register?

A. To track all workshop activities

B. To post charges for stores and labor

C. To manage shop supplies

D. To record purchase orders

Answer: B. To post charges for stores and labor

29. How should incorrect allocation of stores charges to work orders be regularized?

A. By issuing new purchase orders

B. By issuing Write Back Orders (WBO)

C. By creating new work orders

D. By transferring the charges to a suspense account

Answer: B. By issuing Write Back Orders (WBO)

30. In the miscellaneous stores sub-ledger, how should charges be allocated?

A. Randomly

B. Based on the most recent invoices

C. By verifying and allocating them to relevant work orders

D. By using a fixed percentage allocation

Answer: C. By verifying and allocating them to relevant work orders

 

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