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Quality System
Procedure
QSP- 5762-01 Storage and Assessment
Revision No. : 1
Effective Date: February 14, 2014

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Purpose

Purpose of this procedure is to provide a consistent procedure for the storage to prevent damage
or deterioration of product, pending use pr delivery.

Scope

This procedure is responsive to element 5.7.6.2 Storage and Assessment, of API Specification Q1
Ninth Edition.

Responsibility

a)

Logistic Coordinator shall:

Ensure assigned personnel are appropriately trained to operate material handling

equipment.

Manage product handling and storage activities

Perform product handling and storage activities

b)

Logistic Managers shall:

Received the materials supplied by the suppliers or sent by the user departments with
return notes or transferred from other units.

Arrange physical and quality inspection.

Maintain records of rejection goods and return these to the suppliers.

Lodge claims against supplier/ carriers for storages/ damages

Arrange surplus/ redundant stores and scrap material, maintain records for the same and
arrange their disposal.

c)

Housekeeping and other allied work relating/ stores

Maintain records/ book relating to the above functions

All PT BORNEO MANDIRI INVESTMENT
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Any personnel who is assigned to perform the relevant work of storage, must perform it.

Details of Procedure

4.1

Receipt
a. Any items of goods or materials that enters the organization always enters through the
stores. Similarly, every item unless specifically excluded, has to leave through the store.
Store is the final account keeper of all materials. Fills it in the Receiving Inspection Form
(LOG-563-01).
b. All the incoming materials from suppliers and other units of the organization shall be
received at stores. Check that the goods being received match the specifications provided
in the information.
c. Arrangement need to be made for transportation, unloading and receiving of materials,
and handling over the same custody group checking up of packages, checking up
materials with details of invoices and purchase order, identifying discrepancies, if any,
record keeping, preparation of stores receiving cum inspection report, and for arranging,
despatches of materials-returned to suppliers, sent for repair or transferred to other units of
the organization. Claims for short delivery, non-delivery or damages en-route are required
to be lodged in time with the underwriters, carriers and suppliers as per the provision of
contracts. Replacement suppliers need to be arranged for above losses and also for
technical rejections (Supply of wrong or substandard materials by suppliers)
d. Once the adequacy is established and quantity is verified the material is sent for testing for
quality parameters.
e. Sometimes quality control tests are elaborate and time consuming. If the policy of receipt
is to unload the material subject to quality control acceptance, it is cleared for unloading.

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f. Unloaded material is kept on the hold if it not yet cleared by quality control department. If
the material is rejected it is sent back to the supplier after clear.
g. This includes the physical unloading of incoming transport, checking, recording of
receipts, and deciding where the received goods are to be put away in the warehouse. It
can also include such activities as unpacking and repackaging, quality control checks and
temporary quarantine storage for goods awaiting clearance by quality control.
4.2

Inspection
a. Quality and quantity check of the incoming goods for their required characteristics.
b. It has to be ensured that every item received in stores is checked from quality angle. Any
failure of poor quality materials may put the organization to heavy losses, especially those
of components of vital equipment.
c.

Inspection can be carried out by Logistic Coordinator. Stores, however, it is required to

maintain continued and sustained liaison with inspection people for prompt inspection.

4.3

Repackaging
a. Incoming lot may be having non-standard packaging which may not be stored as it is in
the respective location. In those cases these materials have to be pre-packed in unit loads/
pallet loads suitable for storage.
b. Makes sure that the goods being packed match the required specifications.
c. Protect the goods from damage while they are being packed.
d. Pack the goods using the correct type and quantity of packing materials and minimize any
wastage.

4.4

Sortation

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a. This enables goods coming into a warehouse to be sorted into a specific customer order
immediately on arrival. The goods then go directly to order collation. It is sorted by
location or where inventory needs to be put according to the category of items or products
based on class, rating, material etc.
4.5

Storage
a. Storage should also ensure protection against deterioration, damage and pilferage. The
premises should be clean, well ventilated and maintained at even dry temperature to
minimize the effect of condensation.
b. Storage practices include:
i.

Confirm the area to be used for storage and ensure it is suitably prepared to receive
the goods.

ii.

Identifying any health, safety and environmental issues relating to the goods to be
stored.

iii.

Storage racks will be provided for storing tools and hoses and must be marked
with maximum loading values.

iv.

Stored items should be clearly identified with labels and signs designed to suit the
storage environment. Items must not protrude beyond the sides of the rack or shelf.

v.

Racks should not be overloaded. Any indication of overleading or stress in racks

and shelves e.g. sagging, cracks or buckling must be reported, the items
immediately removed and the shelf or rack repaired or discarded.

vi.

Heavy items that are manually handled must be stored at a low height to minimize
damage associated with a potential fall. Access should be provided that allows for
removal of items by use of mechanical aids.

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vii.

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Any material stored at height in the warehouse must be strapped to the pallet and
any small items on pallet must have a pallet collar. Stepladders or similar approved
means should be used for safe access to storage areas that are above the users
shoulder height.

viii.

Storage facilities will be provided for files, personal protective equipment,

cleaning materials, etc. Storage items on the top of cabinets or other furniture and
fittings not specifically designed for storage is not permitted.

c. Detailed system is adopted for location and labelling of items while in storage. Storage
plan is made keeping in mind,

Nature of the product-physical state, toxicity, rust level and other hazards.

Volume and weight-heavy or light

Movement frequency-fast moving or slow moving

Point of use

d. Materials are stored on the basis of groups and equipments. General shop supply items
like nuts, bolts, rivets, etc are kept at one place.
e. Bigger items like wire ropes, steel materials etc. are kept in sheds outside.
f. The store items are stocked in such a way that all the items are easily accessible for the
purpose of issue and for the counting, measurement, weightment etc. at the time of
physical verification.
g. It is covered under the form Storage Record Form (STO-5762-01) and Stock Log Book
(STO-5762-02).
4.6

Packing and Shipping

a. Picked goods as per the customer order are consolidated and packed according to
customer order requirement. It is shipped according to customer orders and respective
destinations.
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Delivery

Fulfilling customer demand for the item in minimum time, keeping quality high and cost
minimum is issue.

Quantity issued against the requisition will be clearly stated.

When issuing the products, care will be taken to ensure that it is issued on the basis of
first in, first out.

The person presenting the products requisition will be allowed to take delivery of the
products against the requisition provided he is in a position to give proof of his identity.

For all products issued and going out of place area, (to a contractor for fabrication, for
example), delivery will be prepared.

At the end of each day the completed product requisitions will be forwarded to the ledger
section of the account department with a summery of store requisitions.

4.8

Housekeeping
a. Maintenance of spic and span cleanliness in the store and ensuring principle of place for
everything and everything in its place is fully implemented.
b. Every individual is responsible for maintaining the site in a clean and orderly manner this
includes, but is not limited to:

Equipment is stored in the correct location

Tools should be returned to their storage area after use.

Cleaning routines, methods and materials for specific items of equipment.

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Horses are rolled up and stored where possible elevated from the ground. Hoses
should never be left lying across walkways, without appropriate controls being
implemented.

Rubbish is disposed of in an appropriate waste disposal area/ bin, including

appropriate disposal of PPE, e.g., gloves and ear plugs.

Process spills including both liquid and dust releases should be contained and
cleaned up within a reasonable timeframe.

Bunds should be clear of rubbish and in the event of a spill, cleaned and decontaminated.

Walkways should be clear of equipment, tools and rubbish.

c. Safety consideration for housekeeping

In addition to the site mandatory PPE requirements ensure:

Gloves are worn and are the appropriate type for the activity and, if chemicals are
present, check the material safety data sheets prior to starting activities.

4.9

Consideration should also be given to the use of respiratory protection equipment.

Surplus Management
a. Effective disposal system for unneeded material to reduce inventory cost and proactive
measures to eliminate deterioration and obsolescence.
b. Obsolete items are good in all respect but have no useful role in the company due to
changes that have occurred in the course of time.
c. Surplus items are those that have accumulated due to faulty planning, forecasting and
purchasing. Hence a usage value is associated with these items.
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d. Scrap is wastage generated due to processes like turning, or due to bad manufacturing.
4.10

Verification

a. Stock verification to eliminate gap between information and physical stock. In stores
some items are maintained as stock items. The stores triggers the procurement cycle for
such items when a predetermined reorder level is reached. Hence correct stock position
through verification is critical to ensure no shortage and no excess for the items.
b. Excesses and deficiencies found during verification are properly investigated, explained
and account for. It is covered under the form of Ecess/ Deficiency/ Damage Report
(EDDR) (STO-5762-03).
c. Frequency of verification:
Perpetual verification/ count of stores and spares will be carried out through the year,
annual programme of verification will be prepared before the commencement of the year
and got approved from the competent authority. The programme will be evenly distributed
throughout the year.
d. Inventory count sheet:
Stock verifiers will record result of verification initially in their field books from which
results will be entered into the inventory count sheets. The count sheets will show the
location description of item verification, part no.
Actual balance found excess or shortage, value of the excess or shortage, etc. in the count
sheet will be signed by the store officer or his representative in acceptance of the physical
balance. A copy of count sheet will be given to the store officer for receipts.
e. Following given guidelines will be observed for stock verification:
i.

Usually one days notice will be given to the storekeeper in regard to the group of
stores verification of which is proposed to start.
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ii.

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Normally all articles in the stores will be given verification by physically

measuring, counting, welding, etc. these may, however, be some exceptions to the
general rule e.g. packages of electrical material liable to damage or certain items of
ball bearing etc. which have to be preserved in the manufacturers original
packing. In such case, the stock verification will obtain a certificate from the stores
officer that the quantities shown on the packages are correct.

iii.

Stock verification will not enter the book balances in the count sheet from the
cards or the store ledger before completion of verification of the items in question.

iv.

He will obtain a certificate that all available stores have been presented for
verification.

v.

Presence of logistic coordinator or his representative is required during stock

verification. The representative of stores shall sign token of his acceptance of
verification results.

vi.

Large discrepancies found during verification will be investigated in accordance

with the prescribed procedure.

vii.

In addition to the physical verification of stock, the stock verifier will also look
into the following:

Case of errors classification i.e. items which have not been classified
correctly.

Adequacy of security arrangements

Items declare surplus but not moved for one year thereafter.

Unauthorized or unaccounted stock, if any, where unaccounted material is

found, proper investigation will be made to ascertain how the material
found its way to the warehouse.
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Whether issues being made on age basis.

f. Discrepancies during stock verification

The logistic coordinator will explain the discrepancies found as shown on the count sheet
within one month of receipt of such sheets. While explaining the differences, following
will be kept in view:
i.

The discrepancies between the physical balance and card balance adjusted with the
approved of the competent authority. Appropriate certificate that the discrepancies
have been adjusted after due examination will be recovered by the logistic
coordinator on the count sheet.

The difference between the physical balance and the store ledger balance will then be
valued, and the total amount of difference will be transferred to account code store
suspense account by credit/ debit to the relevant inventory account code with the
approval of the head of the unit.
These differences will be properly investigated and submitted to the board for approval of
write off the shortages and adjusted of surpluses.
g. Monthly/ Quarterly report on stock verification
A monthly/ quarterly report on the progress of stock verification will be sent by the unit
accounts department to the corporate accounts department detailing the number of items
held in stock, number verified during the month/quarter, progressive total, variances and
value of variances.
4.11

Records

a. Maintaining records of receipt and issue.

b. Updating the stock levels as per movement of materials

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c. Basic records of store are bin card and stock register log book.

Bin card is placed on the bin in which items are stored. This gives information
about receipt, issue and balance.

4.12

Storage record and its log books must kept

Overview of Procedure Flow

Overview of storage procedure flow is concluded in Figure 1 of Appendix A.

5.0

Security of the Stores

Following guidelines will be observed for safe custody of materials in this regards:
i.

Items which are of the pilferable nature will always be kept under lock and key.
All issues of such items must be personally supervised by the store keeper.

ii.

While closing the store at closing hour, it will be ensured that all strong rooms,
cupboards, lockers etc., are properly locked.

iii.

Proper duty list of different personnel will be prepared and observed.

iv.

All stores premises including warehouse, store yard etc. shall be protected against
fire risk by provision of fire extinguishers, and other fire fighting equipment. In
stocking of materials care will be taken so as to restrict the fire hazard.

v.
6.0

Storage of proper types will be provided for different categories of stores.

Storage Assessment

In order to prevent deterioration, the condition of products or constituents parts in stock shall be
assessed at least once quarterly or when it is necessary. Storage assessment is covered under the
form of Storage Assessment (SA) Form (STO-5762-04).
Storage assessment details include:
a. Inspect the warehouse to determine whether:
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i.

The arrangement of inventory is such that an accurate count is possible.

ii.

The inventory is in good condition with adequate storage space, and whether items
are properly packed and binned in a convenient manner for counting.

iii.

Scrap, obsolete and damaged goods adequate identified and segregated.

iv.

Inventories appear to adequately safeguard against access by unauthorized persons

and protected against deterioration.

b. Keep stock at required levels

i.

Checking the existing stock against the stock levels by referring to the Stock Log
Book (STO-5762-02).

ii.

Observe inventory being counted and personally perform test counts to verify
counts.

iii.

Check and calculate the stock on hand by finding out the quantity of stock on hand
(inventory control card, bin card, stores record or any records of store).

iv.

Identifying damage or faulty stock, or out of date items.

v.

Check whether the stocks are labelled/ tagged and positioned properly and
accurately. And checks that quantities and description are properly shown on
lavels/ tags.

vi.

Check the latest update of stock levels

vii.

Identifying any problems with keeping stock at the required level, and take the
appropriate action to deal with them.

c. Packaging of stored goods

i.

Obtain relevant information and confirm the goods that require packing.

ii.

Check that the goods being packed match the specification provided in the
information.

iii.

Check that the goods are packed by using the correct type and quantity of packing
materials and minimise wastage.

iv.

Check that the packages are labelled with the correct information.

v.

Identify any health, safety, and security issues relating to the packing of goods, and
make provision for them in accordance with organizational procedures.

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Identify any problems with packing the goods and take the appropriate action to
deal with them.

d. Test obsolete, slow-moving, scrapped or damaged listing

Determine whether slow-making, obsolete, scrapped or damaged items have been
adequately identified by:
i.

Obtaining and receiving a schedule of items that have shown little or no recent
movement.

ii.

Tracing information obtained during the observation of the physical inventory to

management reports of slow moving, obsolete, scrapped of damaged item.

iii.

Reviewing detailed inventory records, bin cards, etc.

iv.

Reviewing periodic reports to management concerning such information.

v.

Discussing management quantities in the light of current production requirements,

sales order received and future marketing forecasts; examine documentation,
including where appropriate, aged listings of inventory balances, substaining the
information obtained.

vi.

Discussing with management whether any substantial inventory amounts may not
be realizable because of major delays or disputes, defective work, etc.

7.0

Method of Storage

7.1

Basic Method for Storing

It shall be necessary for PT Borneo Mandiri Investment to select the most optimum method
taking into account the nature, size and weight of materials and capacity of the warehouse and
open storage area.
The basic method of storing are categorized and shown below:
a. Case pilling up
This method is suitable for items packed in same size and type of cases.

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b. Ground storing or floor storing

This method is suitable for extra heavy items

c. Plate stacking
This method is suitable for plates

d. Cross-wise stacking
This method is suitable for square timbers or the like to keep them stable and dry.

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e. Stepped stacking
This method is suitable for cylindrical items, such as pipes, drums etc.

f. Pyramid stacking
This method is suitable for small cylindrical parts or the like

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g. Offset stacking
This method is applied, when quantity check of the items is required.

h. Boxed storing
This method is suitable for fragile items, such as electric bulbs.

i. Pallet storing or skid storing

This method is applied, when transportation of items in certain unit is required.

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j. Vertical storing
This method is suitable for flat items such as gaskets, reducers, flanges etc.

k. Hanger storing
This method is suitable for wires, ropes or small cables

l. Hooked nail storing

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m. Bag piling
This method is suitable for items in bags. The directions of bags shall be changed at each
layer.

Reference
a) Quality Management System (QSM-01 Rev.2)
b) Preservation of Product API 6D (QSP-5762-6D)

Appendix

Appendix A

Overview of Storage Procedure Flow chart

Appendix B

Receiving Inspection Form (LOG-563-001)

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Appendix C

Storage Record Form (STO-5762-001)

Appendix D

Stock Log Book (STO-5762-002)

Appendix E

Excess/ Deficiencies/ Damage Report (EDDR) (STO-5762-003)

Appendix F

Storage Assessment (SA) Form (STO-5762-004)

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Appendix A: Overview of Storage Procedure Flow chart

Stage
1. Receipt

2. Inspection

3. Repackaging

4. Sortation

5. Storage

Procedure low chart

Receives incoming goods at
the store

Responsibilities
Logistic Coordinator

Checks the goods with Purchase Order and

relevant documents.

Logistic coordinator

Quality inspections such as dimensional etc

Logistic coordinator

If the existing packaging does not fulfill the

requirement, it needs to be repackaged.
Otherwise, this step can be skipped.

Logistic coordinator

The items/goods are sorted based on category,

class, rating, material, etc.

Logistic coordinator

Label and marks the items/ products properly

for storage. It is stored based on the
requirement specified by items/ products.

Logistic coordinator/ logistic

manager

Picks goods as per the customer order are

consolidatedofand
packed
based need
on customer
Verification
items/
products
to be
order
requirements
and
ships
itrecords
according
carried
out to
any excess
or to
Maintain
allidentify
the
relevant
destination
deficiencies. Ifrequired
found any
excess/ deficiencies,
it must be investigated.

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6. Packing and
shipping

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Logistic coordinator

7. Verification
Logistic coordinator/ logistic
manager
8. Records
keeping

Appendix B: Receiving Inspection Form (LOG-563-001)

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Appendix C: Storage Record Form (STO-5762-001)

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Appendix D: Stock Log Book (STO-5762-002)

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Appendix E: Excess/ Deficiencies/ Damage Report (EDDR) (STO-5762-003)

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Appendix F: Storage Assessment (SA) Form (STO-5762-004)

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Continued in the following page.

Continued
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