Storage may be short-term for goods in transit or long-term to accumulate working stock that can be used for long-range planning and distribution, or used as a contingency.
The stock in the warehouse acts as a regulating buffer between supplies (stock entries) that are normally intermittent and needs (stock deliveries) that are normally regular or unexpected (emergency). Stock management involves managing an appropriate level of stock in the warehouse for regular needs as well as a certain level of supplies in case of emergencies. Stock has a cost-the price of items plus the warehousing charges (rent, human resources and materials). A good stock management system requires the right balance between costs and response to need.
The decision to create stock depends on several factors. First, you have to balance the benefit of holding stock against the cost of doing so. Second, you need to think about:
- protecting against uncertainty-if deliveries are late, sufficient inventory protects from stock-out
- bulk purchasing-prices are generally lower
- anticipating fluctuations or emergencies.
Warehouses contain different items identified as:
- fast/slow movers.
Items with a fast turnover, in terms of consumption, need good planning. Variations such as monthly consumption, delivery lead time (time period between accepting an order and the actual delivery of that order), expiry date (if applicable) and destination (what is going where) need to be monitored closely.
The quantity per item of stock required is based on two elements:
- Buffer stock-the buffer stock is the necessary quantity to supply the ongoing programmes without using the contingency stock.
- Contingency stock (or minimal stock)-the contingency stock is for unexpected events. Only vital articles form contingency stock. The contingency stock level is the result of coordination between the logistic department and the programme department. The contingency stock depends mainly on the humanitarian and security situation.
The following data are necessary to determine the buffer stock per article:
- estimated monthly consumption of the article
- frequency of orders to replenish the stock
- standard delivery time of the orders.
- Decide on the level of stock required and ensure good stock management.
- Determine storage space requirements based on the level of stock required.
- Select a warehouse that meets adequate design requirements including security, access, size, ventilation, location and utilities.
- Ensure all goods are received by the storekeeper and inspected on delivery.
- Ensure the warehouse space is organised to facilitate effective storekeeping and comply with safety standards, and allow sufficient space for delivery and packing.
- Implement good piling/stacking practices.
- Implement an appropriate rotary system for the order of stock coming in and out, considering expiry dates.
- Ensure food storage complies with a food safety checklist.
- If good quality warehouse options are not available, consider emergency storage solutions such as containers and Rubb halls.
- Implement minimum standards for warehouse management tools, including the use of waybills, and other standard warehouse and inventory management documentation.
- Put in place adequate warehouse staffing including storekeeper and loaders.
- Consider sharing warehouse space with other NGOs as a cost-saving measure but ensure very clear delineation of space, controls and liabilities.
- Supply the warehouse with adequate levels of materials and equipment.
- Ensure safety measures are in place including safety equipment and practices.
- Put controls in place to minimise security risks to warehouse and stock.